Performance Evaluations – Carrot or Stick?

Written by lewsauder

February 16, 2011

Performance Evaluations

Performance Evaluations

At some point in each year companies finish up their annual performance evaluations.  It can be a bittersweet time.  You get to receive some frank feedback from your boss, while being reminded of your flaws and areas of weakness.

Performance evaluations – the process

As a manager, I get to see this from both viewpoints.  I give evaluations to my direct reports and then sit on the receiving end for my own review with my boss. The common approach that I’ve seen at most employers is the grading scale of 1-5 on anywhere from 5-10 criteria that have varying weights of significance.  The process goes something like this:

Self-Input/Self-Evaluation: Here the employee gets the first word in and provides a description of what they accomplished in each functional area.  They usually also get the option of assessing their efforts with the grade of 1-5.  I’ve seen people give themselves 5s across the board thinking the manager will use that as a starting point, hopefully limiting the amount that the score will be reduced; or they can be as honest as possible, still usually overestimating their value.

Manager Evaluation – Many managers simply copy and paste the self-input comments from the employee into the actual review while others integrate the employee’s comments with their own.  Then they perform their own assessment determining how difficult the evaluation is going to go based on the delta between the self-assessment and their own.  Once this evaluation is complete, it can go through multiple levels of management review.  Some firms force a bell-shaped distribution of final scores so that there is a lower 10%, an upper 10% and a majority of employees at the 3 level.  I’ve heard of companies that even fire the lowest 10% every year, but that’s extreme, brutal and over-the-top competitive.

Execution of the Review – When the employee’s score has been approved by management, the manager sits down with the employee for the formal review.  Some forms have the composite score on the back page, which forces the employee to either sneak a peek during the review or to wait until they’ve walked through the whole thing.  The manager goes through each section explaining the rationale behind each assessment.

Optional: Protest/Attempted-Negotiation – There can be 1-2 iterations of the employee coming back to the manager to protest their score and/or the verbiage in the evaluation.  There is usually very little the manager can do at this point since the rating has been reviewed by multiple levels of management and normalized with the rest of the pack.  If something has been glaringly overlooked, perhaps changes can be made, but it’s rare.  The manager just has to allow the employee state their case.

Explanation of 5 point system – This is done at varying points within the process.  While most people look at it as the equivalent of the school grading system where a 5 equates to an A, a 4 is a B and so on, it’s usually approached differently for evaluations.  In most cases, a grade of 3 means that the employee met expectations – did everything that was asked of them and completed it to the manager’s satisfaction.  A 5 means that they walked on water.  This is usually reserved for employees that were given some herculean task – a high-profile, failing project and resurrected it from the ashes.  As expected, few people are even put in those situations, so 5’s are few and far between.  A 4 is somewhere between 3 and 5.  They highly exceeded expectations for the challenges they were given.  A 1 is a total slacker and a 2 is someone who either needs to get their shit together or find a less challenging line of work.

Based on these descriptions, A 3 is more equivalent to a B and a 4 is like an A.  The 5 is a high honor roll A taking AP classes.  This translation is the hardest part to communicate.  People with a composite score of 3.X still see it as a C, when in fact, it’s a B+ on a forced curve.

The effect of performance evaluations

I often wonder what the effect is of these exercises.  I’ve read studies that say it hurts morale more than it helps.  I’m sure the 4s and 5s don’t see it that way.  There are other approaches like 360-reviews and one place I worked where they just never did reviews – or raises.

See my related post: Tell Me Again About Your Great Leadership

The biggest problem is that the feedback is often only given once a year.  At one place I worked, evaluations were given quarterly and after every project.  This provided frequent feedback and few surprises at the end of the year.  Someone who got a 3 had been getting them for most of the year.  Managers in most firms consider performance evaluations as a necessary evil, not to mention unbillable time, and can’t fathom giving them more than once per year.  But frequent feedback is what is necessary to give an employee the information they need in order to know where they stand and to continuously improve.

What has been your experience?  Have you had good or bad experiences getting or giving performance evaluations?

If you would like to learn more about working in consulting, get Lew’s book Consulting 101: 101 Tips for Success in Consulting at

As always, I welcome your comments and criticisms.

Lew’s Books at Amazon:

Project Management 101
Consulting 101
The Reluctant Mentor

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