Employee Appraisal Scores can be DECEPTIVE

By: Gireesh Sharma
Date: March 30th, 2009
Posted in: Employee Appraisals, Human Resources, Performance Management | 11 Comments »

Recession has done at least one good thing for organizations. Shifting the FOCUS from Gut-feelings to qualitative and quantitative analysis of business performance and decisions.

“I think Steve is a great guy.” doesn’t work anymore. It has to be “Look at John’s sales performance report. It says he is doing great job.”

The next thing that comes into picture is Employee Performance Appraisals. More than ever organizations are looking to set SMART goals and conduct performance appraisals honestly. But does HONESTY itself gives accurate results?

Consider the case of three managers in the same department of an organization in Year 2007. The performance of the teams of these managers was at par with marginal differences.

Manager A: Ram is one of the youngest managers and hails from Generation Y. He is very optimistic and looks for positive side of the employees. He believes in motivating by carrots.
Manager B: Sonia is in the middle of her career. She has high career prospects in the company and looking for promotion in 1-2 years. She likes to play safe.
Manager C: Johnson is an ex-government employee. For him discipline and loyalty come foremost. He cannot tolerate any deviation from policies and authorities. He believes in the stick.

Here are the scores given by each of them to their team members on the scale 1- 10:

Ram		Sonia		Johnson
Name	Scores	Name	Scores	Name	Scores
Meera	10	Amar	5	Mohan	7
Scott	7	Steve	6	Lada	6
Sunil	8	Phillips	5	Harris	5
Tim	6	Lacey	7	Adam	4
Nita	9	Edwards	5	Mike	6
Peterson	6	Mary	6	Jackson	4
John	5	Kate	7	Reema	5
Rob	7	Seema	6	Sheela	4
Mukesh	8	Peter	8	Lucy	5
Sarah	9	Ramesh	5	Olang	7

If HR looks at the employee scores and rank performance according to the scores obtained in the appraisals, the following picture will emerge:

Top Performers		Mediocre Performers		Bottom Performers
Meera	10	Rob	7	Lucy	5
Nita	9	Scott	7	Reema	5
Sarah	9	Lada	6	Harris	5
Mukesh	8	Peterson	6	John	5
Peter	8	Seema	6	Edwards	5
Sunil	8	Tim	6	Phillips	5
Mohan	7	Mike	6	Ramesh	5
Olang	7	Steve	6	Adam	4
Kate	7	Mary	6	Sheela	4
Lacey	7	Amar	5	Jackson	4

Inferences that can be drawn from the above table are:

• Most of the top performers are from Ram’s Team.
• Most of the bottom performers are from Johnson’s Team.
• The best of Sonia and Johnson are nowhere near Ram’s team members.
• Ram has no bottom performer.

The questions that arise?

1. Is Ram performing because he has got all top performers?
2. Is Johnson such an effective manager that he can drive results even with mediocre and bottom performers?

The above table clearly shows that using the “employee appraisal scores as it is” doesn’t provide accurate information about an employee’s performance. It also indicates that there are personal biases/ nuances in the scores. It will, thus, not be prudent to plan succession, compensation and more importantly “Firing Decisions” based on these numbers. What’s Next?

There are two processes that can help remove the personal biases from appraisal scores: Normalization of Appraisal Scores and Relative Grading. Read more about Normalization of Appraisal Scores in a White Paper by Maj Gen Bhatia.

And watch out this blog later for a new blog post on Relative Gradings.