One of the big questions that loom in many companies is whether to keep a rating structure in place or not. The questions don’t end with whether we should remove ratings. However, if we do remove them, what does that world look like from a compensation perspective and from a talent management perspective? Another question is how do we ensure high performance and accountability continue to take centre stage? Stories and sometimes rumours abide about how different organisations chose a path with no ratings and how it worked wonderfully well or indeed went horribly wrong.
Both options can be realities for your organisation too. The switch can be the best thing you ever did but alternatively, it can be the worst. Those two very different outcomes are entirely dependent on how and when you implement it
Key questions to consider if you want to know if the journey to removing ratings is right for you:
- Do you believe your managers already have effective coaching skills?
- Are regular performance conversations currently carried out by your managers currently?
- Do you have a rich feedback culture in your organisation? Where employees feel comfortable to seek feedback and share it generously with their peers?
- Have you considered alternative compensation strategies?
- Have you considered alternative approaches to talent management?
If the answer is no to any of the above, consider taking some time to reflect, before you take that step to remove ratings. If you find yourself in a position where you are answering no to two or more of the above questions, then there are some steps you can take to prepare yourself for a world without ratings.
Steps to evolving your culture so that you can have the option to remove ratings:
Step 1 on this journey is to diagnose your culture today.
Consider the readiness in your culture of adopting such practices. Are your managers ready to have conversations without the ‘crutch’ of a rating? Or do they rely on it to give signals to their people about their current levels of performance?
Step 2 is to build a feedback culture as a priority.
Continuous feedback sounds great in theory but building that practice takes time and commitment. A strong feedback culture mitigates the risks of resistance to a no rating culture. If everyone is comfortable giving and receiving feedback on a continuous basis, it’s more likely they will be comfortable living in a world without ratings.
Step 3 is to ensure that regular one to ones’ or check-ins are meaningful.
Giving managers clear guidance and an easy experience to ensure conversations aren’t just happening but are meaningful. As well as discussing and addressing performance, challenges, blockers, and achievements regularly. This will ensure that your people won’t have the same reliance on ratings.
Step 4 is to consider the implications of your reward and talent management strategies.
There is a huge amount of consideration and work to ensuring your processes are fit for a world without ratings. If you are relying on a 5-point rating model that links directly to a compensatory increase, consider reducing reliance on this in a staged approach. Many organisations have done this by initially reducing to 3 ratings, to lessen the dependence on a rating culture. Others have softened the ratings, changing the language and making it the less prominent aspect of the performance management process. This will help people move away from the primary focus on ratings and help them understand the greater value in the conversation.
Consider making market rates a stronger focus for compensation. For example, bringing discretionary levels of budget allocation down the line to the direct manager, with plenty of guidance about what’s expected. If you’re still in a 9 box grid world for talent management, you’ll need to reconsider your model. Try starting to remove the rating focus of the talent management discussions. Consider changing the approach and the conversation, moving to more people talent days, rather than a calibration focus.
Take the time to reflect on the effects the journey may have on your organisation
There’s a lot you can do to prepare for a world without ratings. It may be helpful to consider it as a journey, rather than an event. Those who didn’t bring the same consideration to it, have left themselves with organisations not ready for the change. Many of these organisations have even reversed the decision and brought back ratings. For those who’ve been well-considered, they’ve had great success. In addition, they have seen a great reaction and a world of continuous performance conversation. This can create wider benefits, including enhanced collaboration, stronger manager and employee relationships, and greater levels of engagement.
For a hybrid environment, where these conversations may not have the ease of a face-to-face discussion, it’s a reflection point to consider whether ratings will serve us best or hinder those relationships. I suspect the answer to that will be different for every organisation. The important consideration is that you know what will fit your unique culture and its readiness to take on the approach that’s right for you.
How can Our Tandem help?
One of the Our Tandem differentiators is that the company is founded and led by HR experts. With decades of HR experience, Our Tandem not only has a first-rate performance management platform, but our expertise means we can give a unique design implementation experience, and change management assistance. To find out more how we can help you re-design your ratings structure, visit https://www.ourtandem.com/book-a-demo/ to arrange a chat.