Which performance rating scale is best, and what should an employer consider in adopting a performance rating scale?

Rating scales are used in performance management systems to indicate an employee's level of performance or achievement. These scales are commonly used because they provide quantitative assessments, are relatively easy to administer and assist in differentiating between employees.

Although there is no consensus on which specific scale works best, most performance rating scales used by employers share common elements.

Rating scales may be numeric (e.g., 3, 4, 5) or alphabetic (e.g., a, b, c), with numbers or letters corresponding to an adjective, such as "5 = excellent" or "c = satisfactory." Rating scales also may be narrative. For example, one element on a scale may be "unacceptable performance," described as "fails to meet basic requirements and objectives." Scales that provide a positive message have become more popular. For example, a scale may include ratings such as "acceptable," "effective" and "very effective." 

Five-level performance management scales are most commonly used, but employers may choose alternatives. Each approach has advantages and disadvantages. For example, a simple three-level rating scale may be enough to capture a job's critical objectives while reducing the burden of the performance review process. A five-level scale may provide an opportunity to better differentiate between employees by offering two superior performance levels, a satisfactory level and two less-than-satisfactory levels. However, there is evidence that managers are not effective in making such fine distinctions and that they often focus on the middle ratings or tend to drift upward in ratings. Four- and six-level scales are also used and may reduce the tendency to drift upward or focus on the center.

Regardless of the number of points on a rating scale, each level must be clearly defined, used consistently by managers and fit with the organization's culture. Raters should be provided with examples of behaviors, skills, measurements, and other data that will assist them in deciding the performance level. This level of detail is particularly important in numerical scales, where one person's '5' is another person's '4'.

Another type of performance management scale is the Behaviorally Anchored Rating Scale (BARS). This appraisal tool generally contains a set of specific behaviors that represent gradations of performance and are used as common reference points called "anchors" for rating employees on various behavioral dimensions. For example, teamwork may be a dimension on a BARS tool, with anchors such as "participates in team meetings from time to time," "frequently participates and contributes new ideas in team meetings," and so forth. BARS scales are not commonly used and developing a BARS assessment tool can be a time-consuming process. BARS may provide a greater degree of accuracy relative to performance appraisal, but improved accuracy under BARS is dependent on developing language that is precise, concise and readily understood when defining each competency and behavioral attribute.