When You Get a 2 Rating

The employee was miffed about her annual review. Her manager mentioned just a few issues, then gave her a handful of 3s and a couple of 2s in her rating. That would cost her the bonus she had been anticipating.  

Metrics may be great for assessing company performance, but a new Cornell University study suggests they're no longer optimal for evaluating workers. Instead, the study says, narrative reviews are more effective. When managers write a few sentences about workers’ performance, the researchers found, employees better understand their areas of improvement. They’re also more likely to view poorer feedback as fair. Still, many managers cling to the rating system because it’s quick and painless (for management, at least). “The downside of ratings is that there’s heaps of judgement, yet they don’t capture any nuance,” says Laura Manson-Smith, a global leader in organization strategy consulting at Korn Ferry.  

Figures vary, but roughly two-thirds of firms make annual reviews the central pillar of their employee feedback, according to the Society for Human Resource Management. The percentage has declined in recent years, but ratings continue to hold sway in a significant number of cases. Yet experts say these numerical ratings were never meant to be the focus of the feedback given to employees. Firms typically offer annual reviews, which are tied to bonuses. In theory, these are separate from the performance feedback that managers offer year-round, but in practice, the two have merged, says Manson-Smith. “Numbers don’t motivate people,” she observes. “Insights around their development do.”  

Over the last couple of years, some firms have tried to do away with ratings, under the logic that feedback is more important. The transition, however, has been rocky, and a number of organizations have reversed course. A lack of quantifiable data, they found, complicates doling out bonuses and raises. This dovetails with the researchers’ findings: When feedback was explicitly tied to their compensation, employees actually want to see the numbers. 

To be sure, as firms continue to reduce the number of managers in their ranks, many bosses have too many direct reports, which can make a ratings system appealing. But as a development tool, these numbers are often vague—a significant problem, given that employee growth is one of the biggest drivers of retention. Take, for example, a score of 3 (out of 5) for communication. What exactly does that mean? “No one wants to be average,” says Louis Montgomery Jr., a principal at the HR Center of Expertise at Korn Ferry. “Imagine saying to someone, ‘I think you are a 3.’” 

In offering only limited feedback to employees, corporate firms are unusual. Organizations in other fields, such as the arts, education or athletics, provide nearly constant feedback on a day-to-day or week-to-week basis, according to Korn Ferry research. Yet many corporate managers continue to default to quarterly, semi-annual or annual scoring, often because they find it efficient. “It’s quicker,” says HR expert Ron Porter, senior partner at Korn Ferry. “There’s frankly some laziness there.” Narratives with examples supporting the feedback can be substantially more specific and thoughtful, he says, especially if they highlight new priorities. “It’s hard—if not impossible—to do that with numbers.” 

Experts advise firms to move beyond providing feedback once annually to providing it weekly, or at least quarterly. Managers will need to allocate time for this; those who are more adept at conversation than writing can offer their feedback verbally. “Make it more of a running conversation, so it’s not a big event with big expectations,” suggests Montgomery.  

Learn more about Korn Ferry’s Talent Management capabilities. 

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