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WORKSPAN
IN THE COMMUNITY |

Going ‘Ratingless’ for Performance Reviews



Has anyone had any positive or negative experiences going ‘ratingless’ with their annual performance review process?  I’ve been tasked with determining if there is a better process than what we have today… Going ratingless with the annual review process sounds appealing, but being a compensation  professional, I can absolutely see challenges when trying to pay for performance. 
— Jennifer Smith


Not sure this trend has caught on.  You are aware of the pitfalls. Look at WorldatWork publications… several good articles there.
— Anonymous No. 1


Hi — great question! Latest from Deloitte/Bersin shows this is absolutely a key trend on CEOs’ agendas. More on that here:
https://www2.deloitte.com/us/en/pages/human-capital/articles/introduction-human- capital-trends.html.  

Q2 2016 WorldatWork Journal was entirely dedicated to the topic. Great research there and it indicates that total rewards pros may not be on top of all the implications.  

And there appears to be some new research coming based on what WorldatWork says on its “Upcoming Surveys” page.
— Chad Atwell, CCP, GRP


Chad, thank you so much! I really appreciate this additional research… I’m also signed up for a WorldatWork webinar the first week in November on the topic… it seems like something that will be more and more prevalent in the coming months/years. Thanks again.
— Jennifer Smith


I foresee a possible pitfall when it comes to the equal-pay laws. This assumes that your company is big on pay for performance.
— Rigoberto Pena


As was mentioned, this is a question that has come up before both here on the discussion board and in articles in Workspan; I suggest you poke around extensively.

In a previous discussion on this topic, I have made the argument (in greater detail) that, in fact, there IS going to be some sort of rating system, be it unintended. If, for example, you get a 2.5% increase and I get a 1.5% increase, there has, in effect, been ratings where you have been “rated” higher than me — this overlooks all of our philosophy of “position in range,” etc. The problem is that it is less than useful for the nonsalary uses of ratings, like training management, reductions in force, etc.
— Edward W. Smith


Here’s the latest research: worldatwork.org/resources/research-and-surveys. “Performance Management and Rewards Survey” should be top of the stack. Surprisingly or not, 69% of companies are still using formal performance ratings and over 80% indicate they don’t plan to go ratingless in the next two years.
— Chad Atwell, CCP, GRP


Sanity prevails!
— Anonymous No. 1


We went ratingless about two years ago and it has been great. We shifted from an annual performance rating system that was virtually useless and put in place a more real-time quarterly coaching process. Employees, managers and executives love it and find it more relevant and beneficial.

We initially thought it would present problems when it came time to do annual increases and a few in the department thought it was impossible to have a ratingless system, but it is working for us. If you ask any manager in your company to rank their people from top to bottom, they can easily do so, they don’t need a stale annual review to do this. Our comp process looks at each individual’s position in range but it also gives each manager discretion to reward their higher performers. We have really removed a lot of the constraints that didn’t make sense and caused our good people to leave because they would only get a 3.1% increase when the person next to them, who was an average employee, got a 2.9% increase. Our highest performers are now getting upwards of 10% to 15% increases each year, but at the same time we are not afraid to lower performers 0%.
— Anonymous No. 2


Really appreciate the help … thank you!
— Jennifer Smith