“Everyone is above average!” or Why Your Performance Ratings Need Work

You may have noticed a trend in companies where, because of skews in performance ratings, most employees are labeled as above average. You may have even heard a quote like this: 

“I’m happy to report that almost everyone at our company is above average. They’re mostly high-fliers and we’re lucky to have them.”

In this case, who’s average, you ask? That’s simple: 

“Some other company must have them because nearly everyone we have is top notch. We don’t hire mediocrity here.”

You don’t need to do much number crunching to understand why this is a problem. By thinking so highly of your employees (and therefore, of yourself as the hiring manager), you might actually be doing them a disservice.

Telling truly average performers that they are doing above average work signals that on average you actually expect below average work. Needless to say, this practice is not a part of building a high performance culture

By the same token, mischaracterizing employee performance like this may also stifle professional growth. In this environment, truly average workers don't get feedback telling them that need to improve and develop their skills, likely despite signs to the contrary. Research has shown employees want that critical feedback.

Fortunately, you can get your performance ratings back on track with these three tips:

Create a Well-Defined Ratings System: Having a system in place that clearly defines what separates exceptional from above average and average from below average sets the stage for accurately measuring performance. The ratings do not need to be tied to the concept of average performance, though. Others use easier to define terms such as “meeting” or “exceeding expectations.”

Regardless of the terms you use, make sure that they are defined in a way that is easy to understand and are clearly tied to each employee’s goals. Finally, once the system and definitions are set, be sure to communicate them to your employees at all levels.

Also consider the Deloitte technique of asking managers to rate their own feelings rather than employees skills.

Stick to It: Sticking to your system can be the trickiest part. Line managers that only oversee a few employees may find it difficult at first to determine how their team members are performing relative to the rest of the company. At this stage, HR or more senior managers can help make necessary adjustments during performance reviews.

Additionally, as you near the end of your review cycle, assess the distribution of the performance ratings. While we don’t advocate for a stack rankings system, the performance ratings in your company should still naturally follow somewhat closely to a normal bell-curve distribution with the majority of your employees falling in and around average.

Recalibrate As Needed: If you are actually finding that most of your employees are in the above average range based on your system, part of the problem may also be that you need to bump up your definition of average. Since one of the goals of a talent management process is to steadily improve the quality of your workforce, adjusting your definition of “average work” in the positive direction is a great thing.

Of course, the opposite may be true, and your expectations may be too high. In either case, recalibrating your ratings system is an important part of making sure that it is accurate. When you do recalibrate, make sure that you adjust your thresholds for each performance level based on data that you receive from your review process.

Have you seen this issue in your own company? What were some adjustments that you made to your performance ratings?