Recently, we had an interesting discussion in our weekly executive meeting. At our company, we’re just wrapping up our annual performance evaluations. We were talking about how the process went this year and what we could do to improve it. One of our senior team members said our evaluation system can actually hurt morale.
Here’s his point. Our performance evaluation system includes ratings of outstanding, exceeds expectations, meets expectations, needs improvement, and unsatisfactory. As a company, we expect the distribution of the appraisals to be somewhat of a bell curve that is SLIGHTLY skewed to the top end. That is, we expect the majority of our employees meet our expectations and we have a few more who exceed the middle rating than fall below it. The problem is that the employees see a “meets expectations” rating as a “C” or just average. If “outstanding” is an “A,” and “exceeds expectations” is a “B,” then a “meets expectations” must be a “C.” Of course, the next two ratings would be “D” and “F.” See how it all works?