To weight or not to weight?
For employees at companies that use weighted performance appraisals, some yearly goals or other job expectations count more than others. However, some HR professionals say it’s time for organizations to scrap performance appraisal systems like this and try something new.
Weighting can be used to emphasize the performance elements an organization considers most important for each position, according to Barbara Swanson, SPHR, HR director for Avila Retail. In a SHRM Connect message, Swanson told SHRM Online that employees at her company are evaluated using a customized performance evaluation form so that employees in different kinds of positions have emphasis placed on different attributes.
“Our sales associates have a higher weight applied to things such as customer service and sales,” she wrote, while “less weight is given to leadership and operations.” Similarly, managers are evaluated using a form that places a higher weight on leadership and teamwork. Executive performance evaluations emphasize problem solving, she added.
Other organizations use a similar system, but place greater weight on goals and less on behaviors or competencies.
David Larson, PHR, is the human resource manager for Kemin Industries Inc., a global bio-life sciences organization headquartered in Des Moines, Iowa. In an e-mail to SHRM Online, he explained that, at his company, 60 percent of an employee’s performance is evaluated on his or her achievement of specific goals tied to his or her position. Most employees have three goals, he explained, which can be weighted further in comparison to one another based on their relative importance. “We feel this really allows employees a focus and points of emphasis throughout the year,” he wrote. “They know they will ultimately be held accountable for achieving those measures.”
Link Performance Expectations to Organizational Goals
Weighted performance appraisals are meaningless, of course, if there’s no connection between employee performance and organizational performance.
“When assigning weights to competencies and goals on an employee evaluation form, it’s important to ensure that these truly reflect your organizational values and priorities,” notes an article titled “Using Weighting to Prioritize Competencies and Goals,” published by Halogen Software, a performance management software provider.
Sources consulted for this article agree. “In theory, if each individual’s goals are tied to the organizational goals, the results should mirror one another,” Larson wrote. “If an organization fails to meet its corporate goals yet their employees receive high performance ratings, there is a disconnect between the two.”
The design of a performance management system should also reflect the organization’s culture, size and focus on development, according to Kevin M. Horan, vice president, Human Resources and Corporate Services, at International Lease Finance Corporation (ILFC), an aviation company headquartered in Los Angeles. In a LinkedIn message to SHRM Online, Horan wrote that he used performance weights at a previous employer that was “statistically focused” and “wanted the complexity.” At that company, employee performance was measured with equal weights for goals and competencies. However, managers had the ability to apply greater weights to individual competencies based on the employee’s role.
At ILFC, where “the whole concept of performance management and pay for performance has just come about in the past 18 months,” however, “evaluations are only based on performance against goals,” Horan wrote.
Abandon Old Models
Some sources favored new approaches as opposed to “old systems.”
“Our organization has completely moved away from traditional performance management,” wroteBrenda Rigney, CHRP, director, human resources for Earls Restaurants, in a LinkedIn message to SHRM Online. “We take an agile project management approach where feedback and recognition is frequent.”
“I woke up one morning two years ago and said performance management doesn’t work,” she wrote. “Stop trying to make it work. Start thinking of a new way to get managers and employees talking.”
Rigney said her role is to enable leaders to practice leadership effectively, rather than to “manage forms, weightings, goal calibration, compliance and policing.”
Peter Phelan, senior vice president, human resources at MediaMath, a digital media start-up, said his company believes it’s critically important to maintain an “entrepreneurial, ‘anything is possible’ start-up spirit.”
In a LinkedIn message to SHRM Online, Phelan wrote, “We don’t have any performance appraisal beyond an at-a-minimum quarterly formal presentation of progress against goals to the manager led by the employee.”
MediaMath employees are expected to live by a set of company values that reinforce the company’s entrepreneurial spirit. In addition, the company uses a goal-setting system that encourages employees to “dovetail their career goals with what the company is aiming for,” Phelan explained.
Research Says …
“There is no data to say that weightings or ratings are correlated to market performance,” wrote Amy Armitage, director of member research programs for the Institute for Corporate Productivity (i4cp), in an e-mail to SHRM Online. “In fact the data may show just the opposite—that there is little value to performance labels or numerical ratings.”
Armitage, who heads the Performance Management Exchange working group for i4cp, added that “the most impactful trend right now is towards simplicity in design, clear goals, transparency, and improved conversations with managers.”
She suggested that weightings can add complexity to performance management without necessarily adding value. Moreover, they can add “a false sense of precision to measures that are in fact more subjective.”
“In our view, very detailed practices of annual goal setting and weightings are less critical to performance improvement than the high quality conversations managers and employees should be having,” she wrote. “Also, limiting the number of goals and identifying a few critical behaviors are more effective practices than using complex weighted goals and extensively designed competency models.”
“Decades of research and practice have been devoted to understanding and improving performance management in organizations. Yet the traditional performance review process continues to be painful and ineffective for both managers and employees,” wrote Mary A. Gowan, Ph.D., chair of the SHRM Foundation Research Evidence Committee, in “Building a High-Performance Culture: A Fresh Look at Performance Management,” a research report released by the SHRM Foundation in June 2012. Gowan is a professor of management at the Martha and Spencer Love School of Business at Elon University.
Among the guidance contained in the SHRM Foundation report is a recommendation to eliminate weighting of competencies. “An overall rating based on weighted competencies tends to result in the same rank order of employees as using unweighted competencies,” the report noted. “So the added burden of weighting has no practical impact on results.”
Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.