How to Determine the Best Performance Rating Scale for Your Team

Most employee performance reviews won’t be properly calculated without performance rating scales. But employees often believe it’s inaccurate; this is because, for decades, organizations have relied on the 1-5 rating scale to evaluate employee performance during annual reviews. 

Although the system was efficient for a while, it sometimes does more harm than good; employees deserve better, and so do the organizations aiming to inspire them. 

Does this then suggest scrapping performance reviews and evaluations? Not in the least, performance management is needed for companies to keep improving in the services they offer and within the company as well. 

In this article, we will help you learn how to determine the best performance rating scale for your team, including why these ratings matter and what you should consider when choosing your ratings scale.

What is a performance rating scale?

As an HR manager, you're constantly looking for ways to assess and manage your team's performance and provide constructive feedback. A simple way to create an effective review is through a performance rating scale. So, what is it?

A performance rating scale is a system that helps in measuring and evaluating the performance of an individual. It serves as a guide for assessing employees in most cases and is a way to keep all evaluations fair and consistent. 

Typically, the scale has ranges or categories, such as defined levels whose classes are used to categorize different levels of performance from exceptional to underperforming. This framework allows evaluators to efficiently capture both performance and perspective in a way that can accurately and reliably assess performance, give meaningful feedback, and suggest areas for employee improvement and development.

Why do performance review ratings matter?

As the end-of-year review approaches, HR managers are more expectant of performance review ratings because they serve as a foundation for the next. Here’s an extensive look at why these ratings matter:

• Objective assessment: Performance review ratings help to provide a standardized and objective method to evaluate employee performance. When used in the right way, you can ensure fairness and consistency across your organization. It also helps to reduce bias and increase transparency in your HR process.
• Informed decision-making: These performance ratings supply the data you need to make critical decisions, such as employee promotions, merit increases, and terminations. It’s an opportunity to review your employees and evaluate them based on merit and performance rather than subjective judgment.
• Goal alignment: These ratings also ensure that employee goals are in proper alignment with organizational objectives.
• Motivation and engagement: With clear performance review scales, employees gain a clearer understanding of expectations, allowing for better employee engagement and motivating them to perform better.
• Feedback and development: Performance ratings provide a basis for giving and receiving constructive feedback that allows employees to reflect and understand their current performance and areas of improvement.

Read next: How Performance Reviews Drive Employee Engagement

What to consider when choosing a performance rating scale?

When choosing a performance rating scale, consider these factors to ensure it meets your organization’s needs:

1. Define your goal and objectives.

Your performance rating scale should match your company’s culture and values. For example, if your company values innovation, the ratings scale should reflect this by including criteria meant to assess creative problem-solving and initiative. 

Another good practice is to involve employees during the development of the performance rating scales. By taking into account these inputs, you can create what is considered a fair and relevant rating scale for your employees. Also, this involvement can foster acceptance and encourage buy-in, as employees are more likely to support a system that they played a part in.

2. Set and communicate your performance review ratings criteria.

Make sure your performance review ratings are clear, objective, fair, and consistent. Be sure to avoid ambiguity, and take note of unconscious biases when creating your rating scale. 

Once it’s created, clearly communicate to your employees how the rating scales work and how they will be evaluated.

3. Assess the pros and cons of different types of performance rating scales. 

With your criteria set, now’s the time to evaluate the different types of performance rating scales (more on this later). A good way to start is by picking the type of rating scale that works best for your organizational goals and needs. Additionally, it should also focus on employee development by drawing out actionable feedback for improvement, instead of just reviewing past performances.

4. Test and tweak your performance rating scales.

Before you roll out a new performance rating scale, conduct pilot tests to determine the workflow and identify potential issues. Gather feedback from employees and implement changes as needed. 

Moreover, team leads and managers must be informed and trained on how to apply the scale as intended to create an effective and meaningful performance review cycle. The alignment of team leads and managers’ interpretations of the scale can be ensured by conducting regular performance review calibration across the organization. 

In addition, consistently gather employee feedback outside of review periods and tweak your rating scales to ensure relevancy and efficiency for every cycle.

Types of Performance Rating Scale

Point performance rating scale

This rating scale gives a numerical value to various levels of performance on a scale of 3 to 5. Thanks to its simplicity, the point performance rating scale is one that many companies tend to use as a starting point. 

For example, on a 3-point scale, you might have 

• "Needs Improvement”
• "Meets Expectations” and 
• "Exceeds Expectations"

On a 5-point scale, you might have the choices between "Poor" and "Excellent." 

One of the greatest qualities of this scale is that it can be easily quantified and compared to employee performance. However, it can reduce complex performance issues to negligible forms and doesn't properly account for the differences between different levels of performance. 

Omni tip: A 3- or 4-point scale is the preferred choice due to its balance between simplicity and detail; anything above 4 points could make it difficult to interpret.

Behaviorally Anchored Rating Scale (BARS)

Specific behavioral examples are used as anchors similar to weighted rating scales for different performance levels, which are integrated with traditional scales. 

The BARS is particularly useful for industries that require specific behaviors, such as health and customer service. It provides clear standards for performance by offering detailed behavioral examples. 

For example, a customer service representative might be rated on a scale of "3," which is defined as "handles customer complaints efficiently and resolves on the first contact." 

It’s worth noting that although BARS provides clarity and specificity, it takes time and effort to build a scale that ensures the behavioral examples are accurate and relevant to reality.

Likert scale

The Likert scale is a way of measuring the degree of agreement or disagreement with a statement, usually from Strongly Disagree to Strongly Agree. It is a flexible scale that can be used to assess any performance dimension and, therefore, is a popular choice for employee surveys and feedback forms.

For example, a sentence such as "I am confident that I can do my job" is rated from 1 to 5. The Likert scale is beneficial when it comes to assessing feelings or attitude intensity; however, it can be interpreted differently by every individual and may not provide definite performance levels and insights.

Graphic rating scale

The graphic rating scale is often a line or bar chart used to assign numerical values to particular traits or behaviors. It is widely used in performance appraisals due to its simplicity and clarity. 

For example, the graphic rating scale might look something like a line from Unsatisfactory to Outstanding, with benchmarks in between to show different performance levels.

The simplicity of this scale naturally speaks to the visual nature of it; however, this might be too basic and leave little or no feedback about employee performance. Despite this, its easy approach has made it a widely used tool by organizations that just don’t have the time for complex methods and tools.

Quantitative vs. Qualitative Performance Rating Scales

With a better understanding of the types of rating scales, it’s also important to consider where they fall between a quantitative and qualitative approach. 

What are quantitative rating scales?

Numerical systems for evaluating employee performance are quantitative rating scales. By assigning numbers for different levels of performance, these scales make it easy to compare and analyze numbers. 

A simple example is the point performance rating scale, where the way that the ratings might be given ranges from 1 to 5, and each number represents a specific level of performance, e.g., Poor to Excellent. 

The greatest advantage of quantitative scales is that they are objective and easy to use. They help you compare employees without bias, track performance trends over time, and make data-driven decisions. 

However, quantitative scales can oversimplify performance by consolidating complex behaviors and achievements, overlooking the details of what one employee does compared to another.

What are qualitative rating scales?

On the other hand, qualitative rating scales include descriptive ratings of performance. Narrative feedback and detailed assessments are emphasized through these scales and sometimes through the use of open-ended questions or descriptional categories. 

For example, on a qualitative scale, you may have managers explain details of how the employee handled a problem-solving skill or a teamwork ability. 

Qualitative scales are powerful when it comes to explaining the richness and complexity of employee performance, giving a deeper, more complete picture of an individual’s strengths and weaknesses. This is especially beneficial for roles where performance ratings cannot easily be quantified or where any context of performance is critical. 

Nevertheless, qualitative scales can often be more subjective and time-consuming, as they require interpretation of given feedback as well as consistency in how the feedback was given. 

Ultimately, both quantitative and qualitative rating scales present their advantages: quantitative rating scales are objective and allow for easier and more comparative data, and qualitative rating scales are able to better capture the bigger picture of an employee’s performance. It’s always a good idea to incorporate the mix of the two as well as considering: 

• your organizational needs, 
• the nature of the roles to be evaluated, and 
• the kind of feedback you expect will help your employees learn and grow.

Create Effective Performance Rating Scales with Omni

Employee performance reviews can be daunting, but they are crucial for employee development and company success. Developing effective performance rating scales arms you and your team with the knowledge to create impactful learning opportunities that drive business outcomes. By employing a well-structured framework and effective review strategies, performance reviews can evolve into a powerful tool, empowering employees to achieve their full potential and contribute to both personal and professional growth. 

Omni’s customizable performance review feature allows managers to design performance review templates with their preferred performance rating scales to apply to various employee performance assessments, track employee submissions, and derive critical insights to drive business decisions, all in one centralized platform. Pre-set performance review templates further guide teams on how to write a performance review.

Our automated system helps managers schedule reviews, track submissions, and send reminders to ensure a complete review cycle without the administrative burden. 

Join the 83% of Omni customers who have unlocked new, actionable insights after using our performance management module, and book a demo with our team today!

Not ready to leverage automation but still want to boost your performance management processes? Download our free, comprehensive Performance Review Kit, complete with a variety of templates, guides, and best practices to get the most out of your next performance review cycle.