10/10? How to Choose the Best Performance Rating Scales

Your employees are among the most important investments your business will ever make, so you should have clear processes in place to measure and represent how people are performing. 

One of the ways to go about this is by using employee performance rating scales, which can give you the data you need to assess workforce productivity and ensure you're well-informed when making decisions like:

• Offering promotions
• Increasing compensation
• Planning training and development programs

However, this approach can also have its drawbacks if it's not organized, executed and monitored properly, so it's worth taking the time to ask whether you're using the right performance review rating scale for your needs.

Why employee performance rating is important

Following a defined workflow to evaluate the performance of your employees can deliver a number of positive outcomes, including increased transparency for all parties. It's important for line managers and department heads to keep track of standards in their section of the business, but workers should also have a clear picture of how they're progressing and developing, as well as what's expected of them.

Ambitious individuals who are keen to move up the career ladder and access new opportunities within the business should know what targets they have to reach to achieve their goals. A clear and accessible rating system can provide this information and supply the structure people need to evolve and excel in their roles.

However, this process isn’t without its challenges. Among the potential issues to be aware of common biases in the review process, such as leniency bias, which could see people receiving higher ratings than their performance deserves, or certain individuals having an unfair advantage over others.

Another key consideration is whether your evaluations are actually delivering results in terms of driving productivity, motivating workers and informing business decisions. Rating your staff may be an accepted part of your broader HR function, but is it having a measurable impact on standards in the workforce and outcomes for the business? 

It's also important to acknowledge that some people within the company could view this approach to staff appraisals as reductive, or even harmful if some employees disagree with their review outcomes or feel they're being treated unfairly.

Finding a rating scale that works for you 

To overcome these challenges, you need to find a performance rating system that delivers benefits for staff and the business as a whole. That means having a good understanding of the various methodologies available and their unique pros and cons.

1. Three- to five-point rating scales 

One of the most common strategies is to rate employees using scales broken down into anywhere between three and five points. This could range from simple descriptions such as 'below expectations', 'meets expectations' and 'exceeds expectations', to scales that give people a rating between one and five in particular disciplines and areas of work. 

While a simple three-point scale could be sufficient to give you a general overview of employee performance, a five-point structure will be preferable if you want to go into greater depth and build a more detailed picture.

Another important point to consider is whether you want to focus on numbers or use more descriptive ratings, such as 'needs development', 'consistently meets expectations' or 'outstanding'. The latter gives you the scope to be specific about what the different points on the scale actually mean and where people are in their development journeys.

2. Above-average performance scales 

One of the most useful functions of performance rating scales is the recognition of staff who are excelling in their roles and deserve to be rewarded with fair compensation, verbal praise and promotion opportunities. After all, it's these individuals who will drive the business to lasting success and growth, and who should be the focus of your talent engagement and retention efforts. 

You're likely to find that a system such as a three-point rating scale for the entire workforce doesn't provide enough detail and nuance to acknowledge those who are making a real difference to the business. 

Consequently, it's worth considering the option of a dedicated structure for those whose performance is regularly above-average, which could include descriptions such as:

• Consistently meets expectations
• Consistently exceeds expectations
• Far exceeds expectations
• Sets new standards of performance and inspires co-workers

3. Soft skill evaluation scales 

Soft skills - from emotional intelligence and communication to teamwork and time management - have a vital part to play in maintaining a healthy workplace and, consequently, a successful business. 

If this is an area you're focusing on in your learning and development activities, it could prove beneficial to come up with a dedicated rating scale to evaluate these capabilities. 

One approach is to draw up a list of behaviors you would like to see in the workplace - such as treating all co-workers with respect and maintaining a professional attitude during times of stress or adversity - and monitoring how frequently they're observed, using the following scale: 

• Almost never
• Rarely
• Sometimes
• Often
• Almost always 

Exploring, understanding and comparing the various methods of rating performance will help you find the ideal approach for your business and employees. In the long term, this will translate into a more satisfied, engaged and productive workforce.