workplace

Here’s how to make a performance rating scale

November 29, 2019
5 minute read

Here’s how to make a performance rating scale

By Lisa Black November 29, 2019

When it comes to rating employee performance, everybody can think of a different way to do it. But if you wing it, performance appraisal can become super subjective. After all, it’s tricky to compare and rate people who do vastly different jobs.

Employee performance reviews become much more objective when you use capability models and performance rubrics. These delineate what’s required at each level of performance. 

If you don’t have a performance rating scale or system in place yet, that’s okay! Here’s one way to start thinking about and tracking performance while you work on getting a more formal review process in place:

Separate the top performers and the non-top performers.

The first step in making an employee performance rating scale? Look at each person in your company—managers and employees—and decide whether they’re a top performer or not.

This can be hard in a high-performing company. That’s because, in the highest performing organizations, it can be easy to say that everyone is a high performer. But even in those environments, some people shine brighter than the rest. 

Don’t consider too many people to be shining stars. Top performers should make up about 25% of your population. 

Identify the best of the best.

Now that you have a 25/75 split of top performers and non-top performers, go ahead and identify your very best. The best of your high performers are your role models and mentors. Don’t be too generous here; the best of the best should make up only 5-10% of your population. 

Label these best of the best employees a five

Once you have your fives identified, everyone else in your top performer bucket becomes a four.

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Sort through the remaining 75%.

It’s time to split up and categorize everyone who’s not in the top performer bucket. It’s easier to start from the bottom of the list and work your way up. 

You (hopefully) will only have a handful folks who may be on PIPs—or people who just aren’t making it work at your company for one reason or another. Your lowest performers should make up at most 2-5% of your population.

Label these lowest-performing employees a one.

Next, label anyone who’s not meeting performance expectations but isn’t yet problematic enough for a PIP a two.

Your twos likely need a bit of additional training or mentoring. Or they might do better if moved to a role they are better suited for. Twos should make up perhaps 5-10% of your population.

By this point, you’ve classified your high-performers (your fives and your fours). You have also identified your lowest performers (your ones and your twos). Label everyone else a three.

Your threes are your average employees. Remember, “average” is relative to your organization. What’s average performance at one company won’t necessarily be average performance at another. 

What your employee performance rating scale might look like

Reserve your top 15-25% for the high performers, and your bottom 5-15% for your low performers. That leaves about 60-70% of your population in the average zone, which is perfectly okay. 

Your employee performance rating scale might end up looking like this:

5: 10% best of the high performers

4: 15% high performers

3: 60% average

2: 10% low performers

1: 5% worst of the low performers

Without setting up a range of performance ratings like this, it’s hard to do analyses to uncover factors that might predict performance. 

It can also be difficult to build a robust performance management system without well-defined ratings. If your top performer bucket is too large, employees will see differing levels of performance all being rated identically. This is confusing and demotivating.

Performance ratings by role

When you start rating employees, stick to similar roles. For example, rate all your developers or all your customer service reps. Newbies often struggle to rate the performance of a developer and a customer service rep on the same level as they perform fundamentally different tasks.  

But if you identify metrics for success within each role, you can then determine who among those roles meets and exceeds those expectations, and who serves as a mentor for their peers.  Those people are the highest performers and should be identified as such. From there, the process listed in this guide can be completed for all levels of performance.

The relationship between engagement and performance

Engagement predicts a certain amount of performance. That’s why companies who work hard to build and maintain high employee engagement enjoy better performance than companies that don’t. One Gallup report found that “businesses with a critical mass of engaged employees outperformed their competition” to the tune of 147% higher earnings per share.

The PI Employee Experience Survey™ can show you exactly how engagement affects performance in your organization. It’s the best way to uncover what’s driving engagement and disengagement—both at the team and company-wide level.


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