Employee performance suffers when ratings are removed from the performance management process, according to consulting firm CEB. On average, performance dips by 10% when ratings are dropped, largely due to the inability of managers to effectively manage people without the use of ratings.
While there is often an initial positive reaction amongst employees to the elimination of ratings, key performance outcomes such as the quality of manager feedback and employee engagement eventually suffer, CEB argues. This has a greater impact on high-performing employees than average or low performers, as the former group becomes less satisfied with the amount of time managers spend on their performance management and general dialogue.
CEB says:
‘On the other hand, lower performing employees are happy when ratings are removed and they are not confronted with a score.’
Brian Kropp, HR practice leaders at CEB, adds:
‘When performance ratings are removed, two things happen for managers – they spend less time on performance management and they have difficulty providing concrete evidence of how the employee is performing and progressing.’
He recommends organisations focus on improving their performance management in three ways: