Grade creep: Is your employee performance appraisal process making the grade?

Grade creep: Is your employee performance appraisal process making the grade?

Beware the common condition that can sneak up on you silently and make a mockery of your employee performance evaluations.

I’m talking “grade creep” — the tendency for managers to provide high or above-average ratings to employees at appraisal time. Before you know it, you have the highest performing organization on the planet — on paper that is!

Okay, maybe I’m being a little melodramatic, but grade creep is a situation that doesn’t do organizations any good.

In many organizations it’s not uncommon to see the majority of employees given the same ratings, or to have managers give artificially high ones.

When either of these scenarios happens, performance ratings lose their meaning and impact for employees.
With no visible differentiation, everyone appears to be a high performer.

And where does an organization go next when it has the highest-performing workforce on the planet? Apparently, nowhere since there’s no need for improvement — at least that’s what the ratings tell us.

Dangerous logic. Why? Because the evaluation of an employee’s performance that uses less-than-accurate ratings can be detrimental to organizations:

  • With objectivity gone, there’s reduced credibility in the performance management process. Identifying high-potential employees becomes more difficult or even impossible.
  • Goal setting and employee accountability for reaching those goals fall short. Why would anyone strive to do better if they already exceed expectations?
  • Managers’ coaching opportunities can be lost and development plans can fall by the wayside because mentoring and/or development are deemed unnecessary — or it’s hard to find ideas for development so it’s easier not to address them.
  • The benefits of development are never realized (e.g., improved employee engagement resulting in improved retention, improved corporate performance and competitiveness, etc.) because it’s very difficult to measure any type of ROI or improvement.
  • Pay-for-performance initiatives fail because everyone is rated a high performer, resulting in true high performers not being recognized or rewarded appropriately. And it could wreak havoc on your budgeting activities!

Jeepers creepers — how does it happen?

Good question. It starts with the inescapable fact that we’re human beings. As such, it’s in our nature to avoid conflict — the kind of conflict that typically comes with being the bearer of bad news.

When it comes to appraising employee performance this conflict avoidance can lead to higher appraisal scores than employees actually deserve.

This bias to leniency plagues most organizations’ ratings, particularly where they are used for promotion and salary decisions, and are based on memory versus in-the-moment feedback documented throughout the year.

Grade creep can happen for several reasons, including:

  • Organizational culture (i.e. everyone is considered a high performer)
  • Manager subjectivity — especially if managers across the organization don’t share or discuss with one another how performance is rated across departments
  • Lack of proper manager training on effective and honest evaluations — they don’t feel well equipped, so it’s easier to give high ratings
  • Managers avoid confrontation — it can be difficult to discuss poor performance
  • Report card syndrome, aka “but I was always an ‘A’ student!” — the employee has an inflated view of their performance. (Frankly, nobody wants to see themselves as less than fantastic.)
  • Ratings aren’t clearly defined so it’s easy to give someone a higher score — what a 4 rating means to one manager may be the next manager’s 3 rating

Putting a stop to grade creep

It’s important to understand that any approach to eliminating “creep” will require an organizational culture shift and plenty of communication, and it doesn’t happen overnight.

Although approaches will vary depending on the organization, here are some options for making the employee performance appraisal process what it should be — fair, effective and delivering positive outcomes for your organization.

  • Use more descriptive explanations for your organization’s ratings
    Each rating is clearly defined so that it is obvious to managers that “meeting expectations” indicates that an employee is performing up to standard.
  • Add triggered approvals to your performance review process
    Add another approval step in the review process that is triggered by above-average appraisal scores (e.g. anyone getting above a certain threshold such as 3.5 out of 5 must be reviewed by a higher level manager in the organization). This approach will keep managers accountable for their ratings, as they will know they will really have to “prove” the performance of their direct reports.
  • Change the rating scale
    Move from a 5 to 4 or even 3-point rating scale, complete with more descriptive statements. This ensures that the middle is more difficult to pick, or at least not viewed as average.
  • Use multi-rater feedback
    Multi-rater or 360-degree feedback can provide a fairer representation of the employee’s performance. It helps managers and employees better understand strengths and weaknesses as perceived by peers, team leaders, mentors, subordinates, or even external stakeholders, such as customers and suppliers.
  • Introduce mandatory training
    It’s critical that managers understand the importance of, and the fundamentals for, conducting a good employee performance appraisal. This is why it’s imperative that management undergoes training on how to prepare for staff evaluations.
  • Conduct calibration meetings
    Prior to delivering your performance evaluations to employees, conduct meeting with managers to discuss ratings- this is really helpful for perspective and level-sets the scores among groups.
  • Consider the timing of your evaluation process
    When you run an evaluation process can affect its effectiveness. For example, providing a short timeframe for completion or requesting that managers complete the review process during a very busy time can have an impact. Feeling rushed through the process doesn’t exactly encourage managers to take the time to really think about evaluations properly. When rushed, they’ll naturally err in providing the higher rating because it’s easier.

If you think that your organization is showing signs of grade creep, and you’re not sure where to turn for help, you might want start by reading the Performance management center of excellence. It’s full of resources and best practices information on how to ensure your organization’s employee appraisal process is fair and effective.

Do you have other suggestions on how to combat grade creep?

Best-practice performance management processes

You may also be interested in:

Sample employee evaluation forms and performance appraisal forms

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