A performance rating is the step in the work measurement in which the manager observes the employee's performance and records a value representing that performance relative to the concept to standard performance. Performance rating helps people do their jobs better, identifies training and education needs, assigns people to work they can excel in and maintains fairness in salaries, benefits, promotion, hiring and firing. Most employees want to know how they are doing in their roles. It's important for employees to understand how they are performing at their job. Other than fundamental decisions about how to use competencies as part of the employee performance management process (core, leadership, functional,etc), and which specific competencies are important to the organisation/to a department or role. Deciding what is best fit for the organisation is challenging.
Here are some guidelines to help determine the needs of the organisation and select an appropriate rating method for the performance appraisal process.
Questions management should ask:
- How important is the skill to the role
- Do other employees across the organisation demonstrate similar competencies in the same way?
- Do employees need to specifically understand what their core competencies are or should be?
- how many rating levels should be documented (i.e. performed yes/no; pass/fail; 1 to 5 rating, etc).
- Will ratings drive compensations or employee rewards?
Whichever employee rating scheme is selected, a rating scale needs to be decided. It may be easier to select a universal rating to evaluate all competencies; however there may be times when different scales are better suited to different types of competencies. the rating scale can be as simple as “achieved/not met” or can also include several levels of performance “5 = superstar; 4 = good, 3 = average, 2 = to be improved, 1=off track. When choosing an appropriate rating scale, first think about the use of the rating information and then decide how many data points. If the organisation is using competency ratings to drive compensation or employee rewards, a large enough scale to differentiate between levels of performance. (5 point scale is typically effective). However, if the company does not need to differentiate between levels of performance, a simple 2 point rating scale should suffice.
Every performance rating, whether it be a 2-point scale, or a 5 point scale, should have objective comments accompanying each. The comments should be reflect the rating and should be written in a way that positive or constructive. If the employee has not performed to the standards expected of him/her, the manager should give a comment that assists the employee to rectify the problem areas.