A New Scoring Approach to Talent Assessment and Annual Performance Reviews

Anthony is the new HR director at a 200-employee aerospace manufacturer, and he’s onboarding just as the company is preparing to roll out annual performance reviews. He researches last year’s overall scoring results and quickly notices a problematic pattern: Everyone is a “superstar” across the enterprise. Anthony speaks with his HR team about last year’s results and hears, “It’s always been that way” and “No one wants to upset anyone,” basically rendering the organization’s performance management program and system useless.

He needs to find a way to persuade senior leaders and front-line managers to change their mindset and move the performance management program in a new direction. That will be no easy feat, according to his staff, and they warn that he’ll likely face stiff resistance because, “We’re not good at holding people accountable and tend to avoid confrontation whenever possible.” How can Anthony make this safe and easy for leaders to adopt and the employees on the receiving end of the message to accept? A new approach to rater definitions may do the trick.

A Four-Point Scale and New Performance Definitions

The organization currently rates employees on a four-point scale: Exceptional Performance, Superior Performance, Fully Successful Performance, and Unsuccessful Performance. Anthony believes that the four-point scale and rating categories are a good start. First, this system avoids the “Meets Expectations” designation that most employees equate with a grade of “C” in school. “Fully Successful Performance” sounds a lot better and is something to be proud of and celebrated. Second, it avoids differentiating between “Partially Successful Performance” and “Unsuccessful Performance,” which could just be managers splitting hairs about how poorly a worker performed.

Anthony notices, however, that the descriptions immediately following these definitions are not clear or well-developed. He therefore builds the following definitions into the template:

• Exceptional Performance. Clearly and consistently demonstrates extraordinary and exceptional achievement in all major areas of responsibility. Others in similar roles rarely equal performance of this caliber.
• Superior Performance. Performance is continually and consistently superior and regularly goes beyond what is expected. Performance frequently exceeds expectations.
• Fully Successful Performance. Performance consistently fulfills the critical requirements and responsibilities of the position to the expected standard and demonstrates achievement, competent execution, and meaningful contributions to the team and organization’s overall objectives.
• Unsuccessful Performance. Performance does not consistently meet or may occasionally fall below what is required of the position. Improvement in specific areas may be required, and immediate and sustained progress is mandatory.

Clarifying New Definitions and Interpretations with Benchmarks

With these clarified definitions in hand, Anthony meets with his boss, the CEO, to explain the circumstances that typically trigger the scores above.

Exceptional Performance

• Generally considered the top 5 percent of all employees in their classification.
• From a succession planning standpoint, is ready to step into superior’s position right now (without the need for additional time in role or training).
• Extraordinary circumstances may have taken place during the review year (for example, role-model leadership during the pandemic) that may justify a rating of this caliber.

Superior Performance

• Generally considered the top 20 percent of all employees in their classification.
• From a succession planning standpoint, may be ready to step into superior’s position in one to three years with additional training and organizational exposure.
• Extraordinary circumstances may not have been available during the review period.

Fully Successful Performance

• Category 1
  • Consistently performs well and is reliable, courteous, dedicated and efficient.
  • Works hard and looks for opportunities to acquire new skills but doesn’t necessarily perform with distinction.
  • Solid communicator and team player; dependable, accountable and willing to help.
• Category 2
  • Consistently performs well but may be challenged in particular performance areas.
  • May perform well because of tenure in role and familiarity with workload, but does not appear ambitious about learning new skills, expanding beyond comfort zone or helping others.
  • Conduct at times may be problematic, and employee may experience challenges working on a team.

Unsuccessful Performance

• Performance generally falls below the minimum standards and expectations of the position.
• May not be able to demonstrate and sustain consistent improvement.
• May perform well but conduct is so problematic that it invalidates the entire year’s contribution.
• May have received significant progressive disciplinary action during the review period. Position may or should be in immediate jeopardy of being lost.

“Helping your CEO understand the benefits of differentiation is always the best place to start,” said Kathie Nirschl, vice president of human resources at the Aquarium of the Pacific in Long Beach, Calif. “And making a clear case for the differences in rating categories makes for a compelling story that most CEOs and business owners will want to adopt to give more legitimacy to their performance management program and to focus on becoming a true pay-for-performance enterprise.” 

With C-suite buy-in, it then becomes easier to roll out the program to the senior management team. “You can probably bet on getting some form of resistance, especially from longer-term leaders who have been doing performance management ‘the old-fashioned way’ for decades,” Nirschl said. “But with your CEO’s support, you can explain how these differentiators work in a clear and compelling way.”

Communication to Staff

Anthony believes he can convince and persuade the leadership team to implement this new program effectively. But he knows their initial resistance will lie in communicating these revised scores to staff members.

“If you’ve been the best thing since sliced bread year after year at annual performance review time and you’re now receiving a ‘Fully Successful’ rather than ‘Exceptional’ score, who wouldn’t panic if they were downgraded two tiers on the rating scale?” said Marlene Baez, vice president of human resources with Paramount Global/CBS Studios in New York City. “Your senior leadership team may be walking on eggshells at the time of initial rollout and will likely request your help in explaining the new grading practices to their staff members. They may not want to be the ‘bad guy,’ and the more they can point to the company doing this as a whole, the better. That’s where you have your greatest opportunity to shine as an HR professional.” 

Your communication to individual workgroups might sound like this:

“Everyone, your department head, Sally, invited me to join you for this meeting to explain how we’re taking the annual performance appraisal process in a new direction this year. When I began here three months ago, I noticed that the organization tended to engage in what’s known as ‘grade inflation,’ meaning that most employees were assigned the highest performance review scores available in the past. That’s not realistic, it’s not in sync with leadership best practices, and it holds back employees in terms of their career and professional development because there’s little room to grow and few goals to set if you’re graded as outstanding and amazing every year.

“We want to assign more realistic ratings this time around. We want to bring the whole organization down to reality so that employees have a clearer understanding of their roles and contributions and, more importantly, can then focus on developing new muscle and goals around their performance, conduct, collaboration, agility, innovation, team building and more. That’s where you come in. I’m going to explain how we’re interpreting the scores in just a moment, but please don’t think that we believe you’re doing less of a job than you’ve done in the past.

“For the most part, everyone’s scores will be realigned with the new criteria that I’m about to lay out. And while this is the first time that we’re adopting this new approach to scoring assessments and distributions, this should become our new normal going forward. We want to become known as a performance-driven and continual learning organization, but we want to start with the basics first and explain our logic and revised approach to performance management. Allow me to describe how we’re interpreting the various performance rating categories so you can give some thought to this before you meet with your manager one on one to review your results.”

Mission accomplished: Anthony persuaded his CEO to take a renewed look at the entire performance management program, introduced the new strategy and philosophy to the senior and operational leadership teams, and then rolled out the program to staff members. He made himself available to managers who might have challenges codifying their employees’ contributions and to employees who might take offense at any score less than an “Exceptional” ranking. Overall, he realigned the performance management program to reflect reality while also making room for employees to focus on their career and professional development. That’s a very healthy start to creating and sustaining a true pay-for-performance culture, and it opens up potential opportunities to introduce succession planning, high-potential and emerging leader programs, along with retention and employee recognition opportunities.

This article is adapted from Paul Falcone’s book The Performance Appraisal Tool Kit: Redesigning Your Performance Review Template to Drive Individual and Organizational Change. Paul is also the author of 2600 Phrases for Effective Performance Reviews, 2600 Phrases for Setting Effective Performance Goals, and Leadership Offense: Mastering Appraisal, Performance, and Professional Development (HarperCollins Leadership and AMACOM Books).