The Fate of Performance Ratings: Don’t Write the Obituary Yet

Extract

In the focal article, Pulakos, Mueller Hanson, Arad, and Moye (2015) have noted that performance management (PM) too often consists of intermittent steps (e.g., end-of-year performance review ratings and meetings) that are not connected to day-to-day work. With regard to performance ratings, Pulakos et al. (2015) have pointed out that it can be “demotivating and disengaging for employees to have their performance boiled down to a single number, with which they are then labeled, unless it is the highest rating or ranking that is available” (p. xx). The authors have also noted that managers sometimes retrofit their ratings to justify the pay increases that managers want to give employees (sometimes for reasons unrelated to the employee's level of performance). Pulakos et al. have also offered a case study of one organization, Cargill, which has abandoned ratings. Although Pulakos and colleagues have pointed out that not all organizations should eliminate ratings, the authors have argued that when there are small differences in pay increases across employees, ratings can be removed with relative ease and little consequence. Pulakos and colleagues have therefore suggested that organizations should consider the impact that ratings have on decision making (and have suggested that this impact is often smaller than one might think).