Performance ratings can make year-end conversations and annual performance reviews clearer and fairer, but only when they’re backed by the right evidence and a consistent approach. Here’s how to make better-informed performance ratings, calibration and pay decisions.
Key takeaways
It’s that time of year. Performance reviews are in progress, ratings will soon be in and pay reviews are on the horizon. Across our HR community, we see an uptick in the number of questions we get about rating people fairly, keeping ratings consistent and how best to help managers handle pay conversations.
These conversations can feel difficult. Managers worry about awkward moments, HR worries about fairness and employees worry about what it all means for their future. But, with the right process in place, they become straightforward.
When you have solid evidence behind every rating, a robust calibration process and a consistent approach across the organisation, conversations about pay, promotion and careers become far easier for everyone.
Here’s some best practice advice from Talos360’s Customer Success Team for HR teams using a performance management solution.
Most of our customers use ratings. They give you a consistent way to assess performance and potential, and they can feed into decisions on promotion and pay, providing evidence for fair decision-making.
Ratings should draw on all the data that matters to your organisation. That could be progress against objectives, competencies and behaviours, 360-degree feedback, or a combination. It could be based on manager assessment alone, or include self-assessment too.
Our best practice tips for ratings:
Even with a strong rating framework, people rate their team members differently. One manager might rate every team member highly whereas another rarely gives anything above a 3. Calibration brings those differences into line, so the same standard applies across the whole organisation.
We’d recommend hold back from sharing any ratings until they’ve been calibrated. Gather all ratings first, then bring together a calibration committee, perhaps HR and department heads, to review the spread for consistency and fairness.
How to run a robust calibration process:
Should you talk about pay in the performance review? It depends. In most cases, we recommend holding separate conversations. Keep the annual review focused on objectives, behaviours, competencies, development and future ambitions. If you bring pay into that conversation, then people can tend to tune out of everything else. However, where pay is closely and overtly tied to performance, such as with performance-related pay, the two conversations naturally come together.
Instead of pay, could you bring in more insightful talent questions that are asked of managers after the review? These can feed into promotion, talent and potentially pay decisions:
Regular check-ins throughout the year give you a strong base of evidence: feedback, achievement of objectives, development of competencies and behaviours which are the basis for a robust overall rating. With all of that to hand, pay decisions become fair, consistent and easier to make.
The right approach to ratings, calibration and pay reviews depends on your culture, your reward philosophy and where you are on your performance management journey. Talos360’s customer success team works our customers to design a process that fits around your business, with the right level of maturity, complexity and visibility for your people.
Talos360’s Richard Brereton tells his customers: “Get the foundations right, and year-end conversations about ratings, pay, promotion and careers become simple.”
Keep performance management fair and transparent with Talos Perform. Book a demo today, or contact us to find out more.
“With nearly a decade of experience in the people software space, Tim is the resident host of Talos360’s thought leadership webinars, workshops, and roundtables. Helping organisations improve and streamline their internal recruitment and people processes through Talos360’s applicant tracking system, performance management software and best practice techniques, Tim is the go-to voice on all things HR.”
