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Something big is going on. More and more companies have decided to radically change their performance appraisal process.
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Scooped by Ana Cristina Pratas |
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Why do companies have annual reviews in the first place? They are an artifact from traditional top-down organizations where we had to “weed out” the bottom performers every year. By forcing managers to rate people once per year we can have annual talent reviews and decide who gets more money, who to promote, and who to let go.
Coupled with the performance rating is the “potential” rating, which tries to capture an individual’s potential to move up two levels in the organization (the traditional definition).
This approach is based on a philosophy that “ we cant totally trust managers” so we’re going to force them to fit people into these rating scales. And in many companies (around 20%) there are forced distributions, which mandate that some percent of employees are rated at the bottom and only a limited percent can be rated at the top.