The Trouble With Grading Employees

Performance ratings such as ‘meets expectations’ sap workers’ morale

Can a year’s worth of work be boiled down to a stock phrase like “meets expectations”?

As companies reinvent management by slashing layers of hierarchy or freeing workers to set their own schedules, performance ratings—which grade workers on a 1-5 scale or with labels like “on target”—stubbornly hang on. Companies like Gap Inc.,Adobe Systems Inc.and Microsoft Corp. abolished such ratings after leaders decided they deterred collaboration and stoked staffers’ anxieties. Yet other companies are having a harder time letting go.

Intel Corp. has long rated and ranked its approximately 105,000 workers on a four-level scale, from “outstanding” to “improvement required.” Devra Johnson, a human-resources director at the chip maker, observed that ratings tended to deflate morale in a good chunk of the 70% of the company’s workforce that receives a “successful” rating each year—the second-lowest label.

“We’d call them the walking wounded,” she said.

http://www.wsj.com/articles/the-trouble-with-grading-employees-1429624897