Calibration: The Hottest New Trend in Performance Management
For years we have all been trying to find the best solution to getting a performance distribution that truly differentiates our best from our average or worst employees so that we can reward high performers in an effort to motivate and retain them. We tried using forced distributions; however, they were met with resistance and a few lawsuits. Most organizations have abandoned true forced distributions and have taken a softer approach—setting forth an expected distribution.
Today, more and more companies are beginning to utilize rating calibration sessions to help achieve this expected distribution and create greater differentiation across employees. The early feedback on these processes is quite favorable. Managers are having high quality discussions about the performance of their employees with other managers prior to conducting their annual performance discussions. The result is that managers have well thought-through reasons as to why they gave a particular rating to an employee, and they are in a better position to have development discussions with their employees than ever before.
Calibration sessions generally take on one of two forms: rating against a well-understood standard or relative rating. When rating against a standard, typically human resources develops a behaviorally-anchored rating scale. Then they train managers on how to apply the rating in a consistent manner by using hypothetical examples of employees in various performance situations. As a group, the managers discuss how they would rate each hypothetical employee against the standard. Although the managers do not necessarily have to come to a consensus during the training session, they do get involved in meaningful conversations regarding what should drive performance ratings. The value of this approach is that prior to the managers having to rate their own employees, they develop a common understanding of what each rating level is and how to take into account different factors, such as time in position, goals changing during the year, difficulty in reaching goals because factors outside of one’s control, etc.
The second approach to calibration requires a strong facilitator to manage the active calibration discussion. In this situation, managers of employees working in similar positions at the same level within the organization get together to discuss the performance of their staff. Each manager presents his or her ratings to the group and provides justification for the ratings. The group then publicly challenges ratings and begins to make some relative ratings of employees. While some organizations end up ranking employees against each other, others are still rating against a standard rating scale and making sure that all employees with the same rating are making the same relative contribution to the organization.
Both approaches have the benefit of creating conversations that ground managers in the rating scale definitions and produce quality conversations about people and performance. The process enables managers to have higher quality discussions with their employees about their performance. The jury is still out on whether an absolute rating process vs. a relative rating process is best for the organization.
First Published on Human Resources IQ.