Grading your teams’ performance is one of the most powerful ways to improve the strength of your company’s human capital, although it is often viewed negatively by both employees and managers alike. Many people have made arguments against grading on performance, but in most cases, their rationale is based on faulty assessments. Performance-based grading is a powerful tool if used properly and can lead to a drastic increase in your company’s overall productivity.

The Problems With Grading Based On Performance

Critics of performance-based grading voice a number of concerns with the process. A few of their strongest opposition points include:

• Performance grading is commonly autocratic – one person makes all of the decisions with little oversight.
• Too often, they are based on the assessor’s memory of performance which can be limited or jaded.
• Without significant rewards / penalties, employees will not take performance grading seriously.
• Bad reviews can lead to workplace apathy in some employees.

While these are all valid concerns, they generally have one thing in common – they result from the grading process not being completed properly. Performance-based grading can be a powerful tool if utilized properly in the workplace, but can have strong negative results if handled lackadaisically.

Incorporate Well-Defined Grades

If you’re planning to grade your employees’ performance, it’s important that your grading rubric is well-designed and specific about what constitutes each grading level. Too often, employers use an arbitrary scale such as “1-10” which lacks the definition needed to properly assign a fair score to every employee. What’s the difference between a “6” and a “7”? Many times, it is the mood of the person handling the grading. A grading system that is not well-defined can also open your company up to discrimination lawsuits if your grading rationale cannot be backed up by solid data.

Instead of “1-10” or “A-F”, many employees are switching to a smarter, simpler grading scale. By limiting your grading to a few selection options such as “does not meet expectations, meets expectations and exceeds expectations”, you will find that accurately classifying employees is much simpler. The key with this system is to define and communicate expectations upfront.

Maximize Productivity By Identifying And Following Up On Ways For Improvement

Too often, performance grading is just an annual occurrence. It’s something that both employees and managers dread, and once it occurs, it is quickly forgotten about again. When it comes to meeting with employees to discuss their ratings, take the time to identify specific areas in which they can improve their performance, and help create a detailed roadmap for them to get there. Ultimately, assessing your team’s performance should be a tool to help grow your team’s capabilities, not just to weed out the underperformers each year. Once you’re team members each know the specific improvements they can make (even the ones with outstanding reviews), meet with them briefly every month (or week) to review the progress they’ve made and ensure their performance review is more than a stored memory.

By making sure that your performance assessments are handled properly, you can strengthen the overall synergy of your team through focusing on improving individual employees’ weaknesses. If used incorrectly, performance-based grading can have a negative effect on not only your employees’ mindset, but also the future growth of your company. A well-defined grading scale and dedication from your management team is of the utmost importance when it comes to successfully implementing performance grading in the workplace. It makes sense to invest a little time and sometimes money to set up the system properly. It will pay for itself with less turnover, increased productivity and sales.

Author's Bio: 

Tracey Fieber helps business owners simplify, automate, and grow their businesses and their lives. She believes in the power of hiring the right people, and helps her clients cultivate highly effective teams that allow them to focus on the work about which they're passionate. By nurturing business owners' strengths and holding them accountable for their own success, Tracey's leadership, communication, and coaching techniques help her clients take massive leaps forward.