We’ve spoken to a number of HR professionals who recognise that ratings are not particularly effective and want to replace them but their hands are tied, for example because their CEO or CFO is wedded to them, or because of an edict from head office that ratings must be used. If this is the case, you can still improve the effectiveness of your performance management and improve its objectivity by:
- Using Continuous Performance Management to ensure that ratings are based on a number of performance discussions and pieces of feedback rather than on a single annual appraisal
- Decouple the rating process from your regular, developmental performance discussions
- Ask managers to answer a few preliminary questions, such as those in my example above, to frame their thinking before they give their rating
- Provide guidance or training to managers on the different types of rating bias and how to recognise them
I hope that this guide has given you some insight and ideas on how performance related pay can be managed effectively with a continuous performance management approach. The approach that you choose will need to suit the culture and goals of your particular organisation. If you are still unsure of how to proceed, my advice is to go back the first principles and think about what you really want to achieve from performance related pay and what is the simplest and easiest way of achieving it.
Good luck, and do let us know how you get on by emailing us your comments and experiences at firstname.lastname@example.org