Improving employee productivity is a prominent goal for most managers and business leaders. After all, happy and productive employees are the backbone of any successful company.
While there are many different ways to improve employee productivity, one method that is often overlooked is employee ratings.
But what is the best way to use these ratings? How can they be used to improve workplace productivity? What are some alternatives? In this blog post, we’ll take a look at how employee ratings work and what you can do to use them effectively.
What Is Employee Rating?
Before getting into our list of tips to effectively use employee rating to improve productivity, let’s first familiarize ourselves with what exactly these ratings are.
Employee ratings are numbers or percentages that are assigned to employees by their managers; these are usually done on an annual or semi-annual basis. Ratings can be based on several factors such as employee performance, employee productivity, and customer satisfaction. They are usually measured either through surveys sent out to customers/clients or completed by a sole evaluator like an HR manager or team supervisor.
At least, that used to be the all-encompassing definition for employee ratings. These ratings have been around since the third century — and have been criticized and hated for just as long. Many studies and surveys have found that no one likes performance ratings and this attitude of fear and dread causes them to be counterproductive for the workplace. Hence why the definition we provided above is already quite outdated. Indeed, many companies and businesses have adopted new employee rating tactics and practices to make them more effective and beneficial for everyone involved.
Why is Employee Rating Important?
Although an often dreaded event at the workplace, employee ratings, when delivered effectively, increase productivity, motivate employees, and improve employee satisfaction.
Employee ratings offer employers and managers a way of measuring how an employee is performing relative to their peers at your company. By comparing these ratings across different departments within your organization, you can determine which areas need improvement, resulting in better decision-making about where resources should be spent for identifying problem areas and developing training programs. Remember though that just because someone has a low employee rating doesn’t necessarily mean they’re not doing good work — it could just mean that they are out of their comfort zone and would excel somewhere else.
Employee ratings also make available a way of rewarding top performers and improving employee satisfaction by increasing transparency within your organization about who is striving for excellence — especially if these ratings are used to determine compensation, bonuses, promotion opportunities, or other rewards for employees at different levels in the workplace hierarchy.
Finally, employee ratings can help improve productivity because they provide a pathway for management to communicate goals and expectations with employees. When everyone has the same understanding of what needs to be achieved, improvement can happen more smoothly across departments instead of having people working at cross-purposes without knowing it. This also means less rework on projects after development is done, which saves time and resources that are needed elsewhere.
5 Benefits of Using Employee Ratings
Using employee ratings to improve productivity has a range of benefits associated with it. Let’s look at the top 5 benefits in further detail to understand why it could the right system for you.
1. Make Better Hiring Decisions
If you’re looking to improve productivity in your workplace, it all starts with making better hiring decisions. Employee ratings can help you identify the top performers in your company so that you can replicate that success when making new hires.
If you are able to recognise the characteristics that make your best-performing employees the best-performing employees, you know exactly what you’re looking for when making new hires.
This means that you’re more likely to make better hiring decisions and hire more productive employees from the get-go. Not only will this save you time, but it can save you a lot of money. After all, hiring isn’t cheap!
2. Pinpoint Areas for Improvement
Another great benefit of using employee ratings is that it can help you pinpoint areas where your employees need improvement.
By tracking employee performance over time, you can identify patterns and trends that may be indicative of a need for additional training or development.
For example, if you notice that an employee’s ratings are consistently lower in the area of customer service, you can provide targeted coaching and development to help them improve in that area.
3. Increase Transparency and Communication
Employee ratings can also help to increase transparency and communication in the workplace. When employees know that their performance is being tracked and rated, they are more likely to be open and honest about their work.
This can lead to more productive conversations between employees and managers about areas of improvement.
Additionally, employee ratings can help to create a more positive and collaborative work environment by promoting healthy competition among employees.
4. Improve Retention
Another benefit of using employee ratings is that it can help to improve retention in your company.
When employees feel like their performance is being recognized and valued, they are more likely to be satisfied with their job and less likely to look for new opportunities elsewhere.
It’s also true that by providing targeted coaching and development based on employee ratings, you can help employees feel like they are constantly growing and developing in their role which can also lead to increased satisfaction and retention.
5. Make Data-Driven Decisions
Finally, one of the biggest benefits of using employee ratings is that it allows you to make data-driven decisions about your workforce.
By tracking employee performance over time, you can collect valuable data that can be used to inform a variety of decisions such as hiring, firing, promotions, etc.
Data-driven decision making is essential for any business looking to improve productivity and achieve long-term success.
5 Drawbacks of Using Employee Rating
While there are many benefits associated with using employee ratings, it’s not all sunshine and rainbows. There are also some drawbacks that you should be aware of. Let’s look at the five main drawbacks in further detail.
1. Subjective Measure
One of the biggest drawbacks of using employee ratings is that they are often based on subjective measures. This means that different managers may have different opinions on what constitutes a “good” or “bad” performance.
Additionally, employees may feel like they are being judged unfairly if their manager has different standards than other managers.
2. May Lead to Negative Competition
Another potential drawback of using employee ratings is that it may lead to negative competition among employees.
If employees feel like they are being judged against their peers, they may start to view their coworkers as rivals instead of team members. This can lead to a decrease in team morale and may even lead to sabotage.
3. May Discourage Risk-Taking
If employees feel like they are being judged too harshly, they may start to play it safe instead of taking risks.
This can stifle creativity and innovation in the workplace and may lead to a decrease in productivity.
4. May Create a “Good” vs. “Bad” Dichotomy
Employee ratings may also create a dichotomy between “good” and “bad” employees.
This can lead to feelings of exclusion among employees who are deemed “bad” and may even lead to them leaving the company altogether — which is the last thing you want in a hiring market that is getting more competitive by the day.
5. Time-Consuming to Implement
Finally, another potential drawback of using employee ratings is that they can be time-consuming to implement.
If you’re not careful, tracking employee performance and giving feedback can take up a lot of your time.
Tips to Improve Productivity With Employee Rating
Now that you know why employee rating is important, here are some tips to build on this knowledge and use this to improve workplace productivity:
Studies have shown that more than half of the time, performance ratings are affected by the rater’s personal biases and prejudices rather than the actual characteristics or traits of the subject being rated. With this in mind, your number one priority should be to make employee ratings as objective and unbiased as possible. Of course, this is easier said than done, as being completely unbiased is practically impossible.
That being said, there are still ways to minimize the personal biases of those performing employee evaluations. One way we’ve found to be effective is offering specific guidelines that have been peer-reviewed and approved to the evaluators, so they know what kind of information is necessary to make an assessment, as well as what factors don’t matter in determining the final evaluation.
Another approach that helps ensure employee ratings are objective is having multiple evaluators rather than leaving the task to just one person. Evaluators, aside from HR managers and supervisors, can be teammates, co-workers, clients, and even outside sources that have no connection to the employee being rated.
Doing this also means that you are gathering more information and documentation, which paints a much clearer picture of how an individual is actually performing, rather than simply relying on one evaluator’s word alone. Plus, this protects the employee being rated from unfair rating practices, contributing to employee satisfaction.
Make Everything Clear
When setting goals or expectations for employees during employee reviews (or at any other time really), you want to be as specific as possible about what each goal entails so that there is less room for misinterpretation later on down the line. This will prevent lengthy discussions between managers and employees after ratings are delivered when everything is clear right from the beginning.
Aside from making goals clear, make sure that the comments being given out during employee ratings are specific, relevant, and useful to the employee being evaluated. Generic comments such as “you’re doing great!” or “you need improvement” are not helpful and can be misleading depending on how they are phrased. So try to come up with something more constructive than these overused remarks.
Another way of bringing clarity to employee rating time would be having a checklist or rubric for evaluators to reference throughout their rating process — this ensures that everyone knows what information should go into an employee evaluation and nothing important is overlooked in the process.
When everything is made as crystal-clear as possible, from start to finish, there is less room for confusion, which can greatly improve workplace productivity.
Use Multiple Employee Ratings
Not everyone is the same, and employee ratings shouldn’t be either. Different departments have different types of work that need to get done — and just because someone does well in one department does not mean they will do as good of a job if moved to another area. This means that employee rating should always involve comparing employee performance within a team or group, rather than directly against others rated outside their immediate circle.
By using employee ratings from multiple sources like peers, managers, direct reports, or customers/clients, you can help identify which areas an employee needs improvement in, better enabling them to contribute overall throughout your company’s operations.
Use Appropriate Performance Review Phrases
Instead of using the standard 1–5 rating scale that all employees have come to dread and hate, use performance review phrases that are positive, relevant, and provide advice or suggestions for improvement.
For example, instead of simply rating an employee a 3, “fully competent”, or “meets expectations” in terms of timeliness, use phrases like “keeps commitments to get work done” or “places a premium on planning.”
This way, employees will have actionable ratings to inform them about their performance, rather than general comments or vague numbers that do not tell them what it is exactly they should keep doing or start working on.
Streamline the Process
Try to create rating processes that are not only effective but also efficient, so things don’t get bogged down and cause delays. Doing this allows employee ratings to be done as quickly and painlessly as possible, which is great for employee morale and company productivity.
A great way to streamline the rating process is by using employee rating software to store employee information, track employee progress over time, and automate the rating process itself. This means no more data entry or manual emailing back-and-forth after each employee is evaluated — just a few clicks of the mouse will get everything done in one go!
One important thing to keep in mind when using employee rating software is to ensure that you are picking out software that is both automated and customizable. The automation allows for a much faster process, while the customization makes it so the software can fit your company’s specific business practices accordingly.
Alternatives To Employee Rating Systems
Employee ratings are often seen as controversial because they can be subjective and difficult to accurately compare employees — as we discussed above.
There are a number of other alternative feedback systems and the like to help improve productivity.
If you feel like employee rating systems aren’t for you, let’s discuss a few alternatives that could help you out instead:
1. 360-Degree Feedback
This type of feedback provides employees with insights from their peers, subordinates, and managers.
By collecting feedback from multiple sources, employees can get a more accurate picture of their performance rather than receiving a single rating from a single manager.
This is often touted as a more reflective and balanced form of feedback than an employee rating system, and is more useful if managers have little contact with the employee. It ensures that the feedback received is not one-sided.
2. Goal Setting
This is a system in which employees and managers work together to set specific, measurable, achievable, relevant, and time-bound (SMART) goals.
These goals can be used to track employee progress and performance over time. Additionally, goal setting can help employees feel more engaged and motivated because they have a specific purpose to work towards.
3. Employee Recognition
This system focuses on recognizing and rewarding employees for their positive contributions, rather than rating or ranking them.
Recognition can be given in the form of verbal praise, written commendations, awards, or monetary bonuses.
This type of system can help improve employee morale and motivation, as well as foster a more positive work environment and increase their productivity.
This system involves regular meetings between managers and employees to discuss progress, challenges, and goals.
These check-ins provide an opportunity for two-way communication and can help build trust and rapport between managers and employees.
Additionally, check-ins can help identify problems early on so that they can be addressed before they become bigger issues.
5. Performance Reviews
This system is similar to employee ratings, but is typically done on a yearly basis. Performance reviews provide an opportunity for managers to give employees feedback on their work over the past year.
This feedback can be used to identify areas of improvement and set goals for the coming year. Additionally, performance reviews can help employees feel more engaged and motivated if they are given specific, actionable feedback.
Employee Rating In The Real World
Some of the biggest and most successful around the world use employee ratings to improve productivity. Let’s delve a little deeper into exactly what they do.
Google is one of the most well-known companies for using employee ratings to improve productivity.
The company uses a process called “Calibrations” to rate employees on a scale of 1 to 5 (5 being the highest). Google employees are rated by their managers and peers on a quarterly basis.
The ratings are meant to provide employees with feedback on their performance and identify areas of improvement.
Additionally, the ratings are used to determine bonuses and promotions. For example, an employee who consistently receives high ratings may be eligible for a raise or bonus.
Another well-known company that uses employee ratings is Amazon. Amazon’s employee rating system is similar to Google’s, in that it uses a 1–5 scale.
However, unlike Google, Amazon managers are not the only ones who rate employees. Peers and direct reports are also able to provide feedback through the rating system.
Similar to Google, Amazon’s ratings are used to determine bonuses and promotions.
Microsoft is another company that uses employee ratings to improve productivity. Microsoft’s employee rating system also uses a 1–5 scale and includes ratings from peers and direct reports.
Microsoft’s ratings are not only used to determine employee compensation, but are also used to identify areas of improvement and provide targeted coaching and development.
Employee rating may be dreaded by all, but with the right practices and considerations, it doesn’t have to be a pain in the neck or a waste of time. By doing ratings right from start to finish with adequate employee evaluation phrases and multiple sources of input, you can help improve productivity by allowing each employee to understand exactly what they need to do to contribute to your company’s operations running as smoothly as possible.
Did you know that time tracking is an essential aspect of determining employee performance? Day.io is a great time tracking software that provides you with accurate, easy-to-read data you can use to effectively conduct your next employee performance rating. Get started with us today!