case study

1. WHY MORE AND MORE COMPANIES
ARE DITCHING PERFORMANCE
RATINGS ?
PRESENTED BY –
KAVYA 13/IBT/028
NAVEEN BHATI 14/IMB/016
NEHA YADAV 16/PMB/014
TARIF HASAN 16/PMB/023
ANJALI SINGH 16/PMB/002

2. INTRODUCTION
• What is performance rating?
Performance rating is the step in the work measurement
in which the analyst observes the
worker's performance and records a value representing
that performance relative to the analyst's concept of
standard performance.
• Why it is important for companies?
This method is used to ensure whether the employees
are performing to our expectations calls , according to
conduct annual reviews of their work product, efficiency
and attitude over the course of their employment.
• Beneficial for employer to bring out the best from
employees by judging their performance.

3. THE QUESTION
• According to an article in the Harvard Business Review, by
September 2015, 51 large firms had transformed their
performance appraisal systems and moved away from
traditional rating systems.
• Furthermore, research firm Bersin by Deloitte reported that
around 70% of companies are reconsidering their
performance management strategy.
• Performance appraisals are focused on activity, rather than
outcome, disregarding a crucial element that employees
consider an essential performance criterion.
• Other reasons for pushing aside the traditional performance
appraisal system include expense, time consumed and
ineffectiveness. Even large companies that previously
embraced and encouraged annual performance appraisals are
increasingly abandoning them.

5. THE CHANGING NATURE OF WORK
• Numerical performance management systems don’t take
into account how work gets done today.
• Who sets 12-month goals anymore? Some workers need
goal cycles of one month, or even one week.
• Work is also happening in teams more than ever, and
many people are involved in multiple teams that often
are spread around the world.
• Few managers accurately know their team members’
performance when that employee is involved in many
other teams, often doing work the manager doesn’t see
or even understand.
• Standard performance reviews, delivered once a year,
are just not relevant to the ways we work anymore.

6. THE NEED FOR BETTER
COLLABORATION
• Studying companies that have made the change, we
are seeing a clear trend: conventional ratings
systems inhibit collaboration, making a
business less customer-focused and agile.
• Top ratings lead to high status, promotions, and
raises—yet it’s not like at school, where everyone can
get an A if they work hard enough.
• With a forced curve, a manager with a hardworking
team of 10 people may only be allowed to give one or
two of them the top rating.
• As a result, people directly compete with each other
for rewards, hurting collaboration.

7. THE NEED TO ATTRACT AND KEEP
TALENT
• Companies also remove ratings to get managers to
talk to employees about their development more
than once or twice a year.
• Millennials in particular crave learning and career
growth. Of the 30 companies were studied, one
preliminary finding that jumped out was that after a
company removed ratings, managers talked to their
teams significantly more often about performance
(three or four times a year instead of only once).
• More frequent communication helps with employee
engagement, development, and fairer pay, as
managers better understand how their people are
doing.

8. THE NEED TO DEVELOP PEOPLE
FASTER
• By removing ratings, early indications of research are that the
companies appear to be developing people faster across the
board. It’s happening because of more frequent dialogues,
which also tend to be more honest and open when neither
party has to worry about justifying a rating at the end of the
year.
• When Deloitte analyzed their process, they found employees
and managers spent around two million hours a year
on performance reviews.
• The problem was that much of this time was spent talking
about the ratings themselves.
• Companies that remove ratings are seeing the conversations
shift from justifying past performance to thinking about
growth and development. The result is better employee
development, which seems to be a win for everyone.

9. THE PROBLEM WITH PERFORMANCE
REVIEWS
The Wall Street Journal, Samuel Culbert, a
professor of management at UCLA, had a lot to
say about the problems with performance
reviews. Some of his points were:
• Participants in a performance review have different
purposes.
• Performance doesn’t equal pay.
• There’s no such thing as an impartial review.
• Performance reviews undermine the relationship
between bosses and their employees.
• Negative Feedback

10. IMPACT OF REMOVING PERFORMANCE
RATINGS ON EMPLOYEE
PERFORMANCE
Managers Expect Removing Ratings to
Improve Employee Performance:
• Improve manager conversations.
• Give managers more time for informal feedback.
• Help managers differentiate pay more accurately.
• Improve employee engagement and help learn on
the job.

11. WHY REMOVING RATINGS RARELY
WORKS?
• Manager conversation quality declines by 14%.
• Managers have more time, but time spent on
informal conversations decreases by 10 hours.
• Top performers’ satisfaction with pay
differentiation decreases by 8%.
• Employee engagement drops by 6%.

12. CONCLUSION
• Performance appraisal was
removed by many companies as it
was done annually therefore, new
evaluation system come into
existence.
• Participants in a performance
review have different purposes.
•Performance doesn’t pay equally.
• Performance reviews underline
the relationship between bosses
and their employees.

13. THANKYOU