Picture this: You have two employees in the same role who are level-pegging in terms of performance and contributions to the team. Manager A reviews Employee A, scoring 8 out of 10. But Manager B is less generous with their approach to performance reviews and awards Employee B a score of 6 out of 10. The lower-scoring teammate naturally feels the system is rigged against them.
Unfortunately, this scenario is common across many organizations, highlighting the importance of calibration in performance evaluations to eliminate discrepancies. In this article, we’ll explore the benefits of calibrating performance standards to ensure a consistent distribution of scores. We’ll also dig into the key principles of an effective calibration process and how to implement them in your organization.
Performance review calibration definition
Performance review calibration is a way to standardize scores across all teams and employees to ensure the employee ratings are meaningful. The main goal of performance review calibration is to ensure that the same criteria and processes are used for measuring performance, regardless of who assesses each employee. It ensures that high-performing employees are rewarded accordingly and poor performers receive appropriate feedback and development opportunities.
What are the benefits of calibrating performance reviews?
Performance review calibration isn’t optional if you want to achieve the following benefits:
Identify and eliminate bias
When managers review employees, 188 implicit biases can influence their scoring, including the potential for:
- Leniency bias: the tendency to overestimate the performance of people who are similar to us
- Confirmation bias: seeking information that confirms what we already believe
- Recency bias: giving more weight to recent performance than events occurring earlier in the review cycle, even if these past incidents are relevant.
Employers can counteract biases and ensure ratings are fair by calibrating performance reviews.
Create an equitable compensation framework
If you tie compensation to performance ratings, calibration will ensure that employees are compensated equitably for their contributions. In the example above, Employee A, who scored 8 out of 10, is more likely to receive a generous pay rise than Employee B, who received an unfair score of 6 out of 10. Calibrating these inconsistencies will ensure that employees receive the salary they deserve.
Highlight who to promote
Performance reviews are a key component of succession planning and staff development, so they must be accurate and consistent. But a McKinsey study finds that most CEOs don’t believe their performance appraisals are useful in pinpointing top performers. The solution is to calibrate reviews and identify those who deserve to receive a promotion or move into a more challenging role.
Boost performance review reputation
Only 1 in 5 employees agree they feel motivated by their company’s approach to performance management. This can make performance reviews a dreaded experience for many employees, so it’s essential to ensure your review process is accurate and consistent. Calibration is vital to ensure employees trust the accuracy of their ratings and that they’re rewarded fairly for their contributions.
7 best practices for effective performance review calibration
Effective calibration requires some prep work. Follow these seven steps and best practices for success:
1. Create a calibration schedule
Consistent employee performance evaluation requires calibration at regular intervals, including:
- Before each performance review cycle
- Following managerial changes
- During mergers and acquisitions
- At least annually to ensure accurate ratings and a fair assessment
2. Define roles and responsibilities
The foundations of an equitable performance review process begin with each employee having a thorough understanding of their roles and responsibilities and how their employer plans to measure their performance. Tony Deblauwe, VP of Human Resources at Celigo explains,
“You can establish clear performance criteria and standards through job descriptions. In addition, establish key performance indicators (KPIs), goals, and objectives. When everyone aligns with expectations, this can drive more parity in review fairness.”
Regular 1:1 meetings ensure managers and their direct reports have an opportunity to continue the conversation about expectations within the role and plan Goals and Objectives to progress towards.
3. Establish performance expectations
Going beyond the intricacies of a specific role, it’s also imperative to outline exactly what employees must do to achieve a particular rating. Julian Taylor, Employment Lawyer of Julian Taylor Solicitors, advises to “Work with your HR team and senior leaders to create a shared definition of what “excellent,” “meets expectations,” and “below expectations” performance looks like for various roles and responsibilities.”
Inbar Madar, Founder and Business Consultant at MI Business Consulting, agrees, “Share those objectives and their weight with your employees so they know what they’re being measured on to set them up for success.”
Set expectations by first defining your scale. Some options include:
A three-point scale
- 1 = Does not meet expectations
- 2 = Meets expectations
- 3 = Exceeds expectations
A five-point scale
- 1= Unsatisfactory
- 2 = Needs improvement
- 3 = Meets expectations
- 4 = Above expectations
- 5 = Exemplary
A ten-point scale
- 1= Unsatisfactory
- 2 = Poor
- 3 = Needs improvement
- 4 = Satisfactory
- 5 = Meets expectations
- 6 = Above expectations
- 7 = Exceeds expectations
- 8 = Outstanding
- 9 = Exceptional
- 10 = Role Model
As you can see, a shorter scale is more straightforward but doesn’t provide room for nuance. Whereas a broader ten-point scale must have well-defined criteria so managers can easily understand the difference between someone who is “above expectations” and someone who “exceeds expectations.“
4. Define your mid-level performance distribution
Before examining your collective performance appraisal ratings, it’s useful to estimate where you expect most of your employees to fall on the scale. Doing so means that when reviewees score higher or lower than this distribution, you can quickly identify that they either need support due to low ratings or that you should earmark them for career advancement opportunities due to high ratings.
Recalibrate your expected mid-level distribution of ratings frequently. For example, if you find that more than 50% of your employees exceed expectations, it’s time to raise the bar and set more challenging goals.
5. Incorporate peer and self-reviews
Even with a well-defined scoring system, relying solely on managerial input can invite bias into the performance appraisal process. To get around this, Grace He, People and Culture Director at Team Building recommends augmenting review cycles with “processes such as peer feedback systems, where peers of the employee provide input on their performance, which gives additional objectivity to the process.”
Peer reviews are integral to 360 Degree Feedback cycles where reviewees are empowered to choose their own reviewers, including teammates, managers, or colleagues from adjacent departments.
Similarly, asking reviewees to rate themselves can open up interesting discussions between managers and their direct reports. Jeremy Ames, Senior Manager at Accenture, recalls,
“I opted to increase emphasis on self-review because there was too much subjectivity creeping into the managers’ review ratings, both to be too critical and too forgiving.
Any outlier case where the individual wasn’t objective became an interesting performance indicator to the manager (for example, an under-performer rating themselves a 5). This was a drastic but productive way to normalize the performance process.”
The result? Individual performance ratings are comprised of input from managers, peers, and self-reviews which is more likely to create a fair appraisal.
6. Create a performance review calibration committee
The best strategy is to create a committee to comb through the data during performance calibration meetings. Nadzeya Sankovich, Regional Manager at Health Reporter, told us,
“This team should create an annual plan with specific objectives regarding company goals and evaluations. Create a clear set of criteria that all reviewers need to adhere to, such as certain metrics they’ll consider while evaluating employees, rating scales and templates, format, timeline, and background research.”
As a best practice, your committee should include a cross-functional mix of stakeholders such as:
- HR personnel
- team leaders
- senior leadership.
This broad representation can offer invaluable insights into the performance calibration process and ensure the right objectives are met. To ensure accuracy, your committee should also go through a blind review process where ratings and input are anonymized. This minimizes personal biases and keeps calibration discussions consistent.
7. Choose performance review software with in-built calibration
Our Performance Review toolkit makes it easy to calibrate and adjust employee review ratings based on conversations between different managers and HR.
Create a Calibration Review cycle in Small Improvements with specific dates for manager reviews, self-assessments, and finalizing ratings. The cycle includes a questionnaire with a Pre-Calibrated Overall Rating for managers, which HR may adjust, and a Calibration tab to analyze and update ratings.
Bonus tip: The software also allows for exporting and importing ratings in bulk and provides templates for updating Calibrated Ratings.
Encourage fair and consistent feedback
Create trust in the performance review process by building a culture that values parity. Take the time to adjust ratings with an open mind, and make sure that the contributions of individual employees are recognized. This way, all employees will receive the rich feedback they need to grow and develop in their roles.
Small Improvements offers a suite of tools that foster a culture of open dialogue and transparent communication. Book a demo today to overhaul your employee performance review process.