How many points on your performance rating scale ?

How many points on your performance rating scale

In this instalment of Reader Question, I deal with a common issue when designing the performance appraisal system. I was asked recently about the number of points you should have on the rating scale for your performance management system. Which number is right ? 3 ? 4 ? 5 ? or even 6 or 7 ?

I don’t want to dive into research results, serious academics or even what the trendsetting companies are doing. My view here is pretty simple : do whatever works for your organisation.

Proponents of an even number of performance ratings (eg 4 or 6) say it forces managers to make tough decisions about where the performance of the employee really is, given that there is no “middle” or “at target” section. It is true. But this requires a high level of managerial maturity – to a point which I have not witnessed very frequently so far.

In order to be accepted by employees, it also especially requires that the managers provide on-going performance feedback to their team members, so that they know where they are standing and can make some efforts to improve if needed. (Because not performing on some objectives may have such a radical impact on your overall rating). In my experience, most managers are not delivering on this on-going feedback, especially to the people who need it the most. After all, even if you know you have to or should, who likes to have a tough or uncomfortable conversation with an employee who is not delivering what is expected of them ?

Furthermore, in our regional Gulf culture, face-saving is very important. When you have an even number of performance ratings, you have no possibility to let someone be at “meets expectations” and you have to divide the employee population in 2 buckets (the over expectations achievers and the under expectations achievers). So it is culturally very difficult to implement this kind of approach in the region. Not impossible, but tricky.

For these two reasons, I tend to like a 5-point rating scale. It reflects the fact that a majority of employees deliver roughly what is expected of them (sometimes a bit more, sometimes a bit less) and are therefore rated into the “3” category which is the at-target rating. In reality, given the struggle HR face in meeting the curve and convincing managers to really differentiate performance and rate some employees to below expectations, what happens is that in effect we end up managing the vast majority of employees on 4 scales anyway, as the bottom one is often nearly empty…

I’ll make an exception for a few companies (often multinationals) where performance feedback and a culture of performance management have been in place for many, many years. The year-end appraisal is not seen as a burden in those rare organisations, because there have been employee/manager meetings on a very regular basis throughout the year. As a result, the final rating comes as no surprise and the whole process is managed quickly and efficiently. These few companies have a deeply ingrained culture of performance management, and may find it somewhat easier to handle a 4-point rating scale… maybe…

I’d love to hear from you. Is there such a debate in your organisation every time that year-end approaches ? Do you have strong views on how many levels there should be in a performance rating scale ? Please share your views in the comments below !

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  1. Hi Sandrine, interesting question, we have been discussing about this as it has an impact on performance payouts.

    In my view a 6 point scale would be more convenient to allow managers to fairly caliberate ratings. The challenges are more around decisions when performance is assessed as being midway between the scales, particularly around on-target performance. As rightly mentioned, it then depends on the Mangers capability to manage performance.

    • Thanks Subha. Interesting view on getting 6 points. How would you manage the distribution of these ratings, because with even ratings, none of them actually represents the target performance unless you skew the curve? As far as I understand, it’s what most companies do when using an even number of ratings. And that’s why the majority of companies chose the 5 performance ratings scale because then the one in the middle (“3”) can represent the target performance and the ratings descriptions don’t have to be skewed.

  2. Dear Sandrine,

    I too agree with 5 Levels. HR needs to control the rating by Managers through regular coaching, ensuring proper measurements are set and assessed against to it…. Needs to have clear definition for each levels and ensure managers adhering to it while rating. In short HR to take ownership for the whole process of Performance Appraisal rather than just be a document holder..

  3. Ishtiak Taher says

    There are organisations that are also moving in to 3-scale performance management system. Practically, in a 5-scale scenario, the 1 & 5 ratings are rarely used. And organisations are also trying to make the process simpler for the managers. It also avoids over-rating as some managers have a tendency to rate 4 when their team members have marginally crossed 3 in one or two KPIs. In a 3-scales scenario, the gap between 2 & 3 are very clear and wide and hence the possibility of inflated rating is also less. However, some may argue that a 3-scale rating system undermines the concept of highly differentiated performance management as it has no space for distinct “Outliers”.

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