Is Eliminating Performance Ratings a Red Herring?

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Despite overwhelming evidence that annual performance reviews and ratings should be abolished, proponents continue to weigh in on behalf of this much-maligned HR program. PricewaterhouseCoopers (PwC) is the latest authority to lend support to the traditional performance process, labeling the current focus on eliminating ratings a “red herring”.

Performance Evaluations Still Have Value

I understand both sides of this argument well. Having spent 20 years advocating for, and administering, annual performance reviews, ratings and, yes, the ranking of employees, I can recite the pro-arguments:

  • Employees need to know where their performance stands relative to peers
  • Candid feedback is the best policy
  • Companies need to “weed out” the bottom performers, i.e., the bottom 10%
  • “C” players will be motivated to become “A” players
  • “A” players should be identified, recognized, developed, celebrated and richly rewarded
  • Performance ratings are needed to support compensation and/or termination decisions
  • The annual review is a tool for performance feedback and employee development

I could go on, but we’ve heard all of this before. Many of us have stood in front of large numbers of managers and employees earnestly presenting the above “facts.” While the statements are certainly true on the surface, there is one deep and abiding problem with all of them.

The pro-arguments rely on supervisors and managers being able to assess and deliver effective and accurate evaluations of employees’ performance.

Alastair Woods, director of reward consulting at PwC, said that organizations “should be focusing greater attention on equipping managers with the appropriate skills to deliver effective and motivational performance conversations on an ongoing basis and creating a culture where employees can grow and develop.”

Gee, I wished HR had thought of that!

Seriously, how much money and how many hours have been spent over the past two decades “…equipping managers with the appropriate skills to deliver effective and motivational performance conversations….” ?

Most managers are smart, dedicated and want to do a good job. And I’ve come across not one person who doesn’t believe that employees want and deserve regular feedback about their performance. Likewise, developing employees’ skills, knowledge and abilities is a universally agreed upon goal.

So why haven’t we been able to train managers to evaluate people as “A”, “B” or “C” players? Why can’t we get managers to accurately place employees on a performance scale of 1 -5 and “effectively” communicate those scores to employees?

Eliminating Performance Reviews? Let’s Try Rethinking Them

It’s because the current practice of performance evaluation is subjective and frequently biased. It has been generations since we worked in industries where an employee’s production could be measured in widgets produced by time spent — probably the only truly objective performance measure that ever existed.

No amount of training is going to make managers effective at communicating information they inherently know is flawed. It’s not a red herring; it’s time to give up the practice of rating people.

Without the distraction of performance ratings and rankings, managers will finally be able to focus on delivering performance conversations designed to provide constructive feedback and develop skills. Without the chore of delivering bogus ratings to rightfully defensive employees, perhaps managers will be willing to communicate openly more often than once a year.

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  1. Good post! In all my years of helping managers with annual reviews, I saw all kinds of problems with things like inconsistent ratings and inaccurate feedback. I like the idea of freeing everyone from rankings and ratings and moving toward a system of ongoing feedback. Such a system makes sense and is more productive for managers and employees. It also shifts the focus from an annual piece of paper to realtime feedback and open communication.

    Stephanie Hammerwold

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