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We have recently come-up with a structure to grade the overall performance of our employees. The structure involves the employees having a grade in certain qualities which are grouped into our company values. We believe the objective of a performance review should be that both the employee and his/her team leader mutually agree on a performance grade and come up with actions steps until the next review which ensures the employee is able to move towards the ideal grade.

Since the review involves both people mutually agreeing on the grade, we are unsure of how to approach and structure the conversation of the performance review. Do we allow one of the 2 to first evaluate and present what he/she feels and then the other brings in his/her opinions leading to a discussion which hopefully ends in an agreement or is there a better way to structure this?

To give you more context of our value/quality/action structure and grades, you can find more information on our Performance Review Grades.

  • Are you authorised to share company documents? – Gregory Currie Apr 3 at 9:05
  • Yes I am. I am the owner of the company – Michael Victor Apr 3 at 9:09
  • Yes, the grades affect raises and promotions. They are reviewed every 2 months. Raises and promotions are evaluated ideally every 6 months. – Michael Victor Apr 3 at 10:46
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The real answer is, there is no answer.

Every company struggles with fair ways to grade employees, and the process behind it. There are numerous schools of though, and have been many many attempts over the years by many organisations to find an ideal process.

As you were coming up with a grading system, you should have considered how the system should work. Often how you come up with a grade is even more important than the grade itself. I would probably suggest that the interactions between employees and their leaders should have been at the forefront of the design, and not shoe-horned in after the fact.

As such, there is no formulaic "right" way of doing it.

Just as an aside, if you have a grading process that requires that all parties agree on a grade, you're bound to run into problems.

  • +1 - I said to Sourav neither answer is correct nor wrong. But this is the correct point of view to go from – Twyxz Apr 3 at 11:10
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    Also, if both parties need to agree on a grade, one grade will not be comparable to the grade of a coworker: An employee suffering from Impostor Syndrome will agree to a much lower grade than another one under the Dunning-Kruger-Effect, even if the former is way better. – orithena Apr 3 at 11:45
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If this is policy, then ignore my answer. But if you have a say in this process do not do it. Full stop. These sorts of reviews are not ideal for team cohesion. When you measure something you inherently assign a value to the team member which in turn can alienate and distance them from other team members.

Peopleware talks about this. In the context of building effective teams, these sorts of evaluations do more to divide rather than unite. Just your current problem here:

Do we allow one of the 2 to first evaluate and present what he/she feels and then the other brings in his/her opinions leading to a discussion which hopefully ends in an agreement or is there a better way to structure this?

This just opens the door to divisiveness. To alienation and maybe resentment. More than that there's an implied idea about the culture: You're measuring, which means you're comparing, which means everyone is competing with each other.

Then there's the added assumption of the review not exactly encapsulating everything that makes a team effective. In Peopleware they give the example of an employee where, while she wasn't remarkable by any metric management measured, she always seemed to be present on successful teams. What the authors discovered is you have people who are "catalysts" who help facilitate and make the team more efficient. So from management's perspective, she was "not great" but in actuality she was one of the key reasons those projects succeeded.

When team members are forced to compete against one another and it's overt like this, it will lead to long term issues. I would suggest approaching this differently.

Make is less about grades and more about support and goals of that person. It'll go a long way for team cohesion.

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The team leader should always start by giving their opinion and performance grade. They must then elaborate on this to the employee who can then be given a chance to express their opinions on whether the prospective grade is fair or not.

Many employees will struggle to grade their own performance. Team leaders should be able to point out positives and negatives in which the employee may realise that this is correct or may disagree and can then work with the leader to mutually agree on a grade.

  • Which is exactly the opposite practiced in many organizations. The first step is self-appraisal, the second step is appraiser comments and the third step is the discussion. – Sourav Ghosh Apr 3 at 7:49
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I have to disagree with Twxys's answer here.

The review system should be categorized in three steps:

  1. The employee fills a self-appraisal form. This includes the

    • Achievements
    • Comments
    • Grades
  2. The appraiser puts the comments against the achievements and revise the grades (as applicable)

  3. Then, there should be a 1:1 meeting, discussing about

    • Appraiser comments
    • Grade revision reasons and justifications
    • Strong and weak points
    • Future road-map.

This way, there are couple of benefits:

  • Employee is empowered to showcase the achievements (and shortfalls, if any). They can decide on the accomplishment level and the amount of time spent achieving that mark. This way, they also get to know whether they are working on something they like or not.

    This is also a lesson in self-awareness, which is one of the required qualities in the professional industry.

  • The appraiser never gets to "influence" (direct or indirect ways) the work items and priorities during the performance review times. Also, the appraiser need not keep track of all the items, since the usual mapping is one to many for appraiser to appraisee, it makes the job a little easier.

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Is your primary intention employee Development or Assessment? Since it is a grading system I'm suspecting assessment but that might not be what you're shooting for. Which ever one it is understand that not only are the purposes of those interactions different but so is the psychology.

Using the Growth vs Fixed mindset paradigm by Carol Dweck, we have found Assessment based systems teeter towards Fixed mindset discussions. At the extremes employees either get validation for being a high performer or critique the means of how the assessment was made. i.e. I either passed the test or I was a victim of a bad grading system. Oh and by the way where is my promotion and comp increase?

Development based systems, those that cater towards psychological safety and the intrinsic motivations of the employee, seed Growth mindset discussions. These systems thrive in transparent organizations. i.e. Employees that understand your business model and the financial health of your organization are more likely to develop in ways that add value to the business.

If you go with an Assessment based system consider making the assessment about the conversation not the person. "What kind of conversation did we just have?", "How have our conversations progressed?", "How can we improve our conversations?". You are implying that this is a point-in-time conversation, not a Scarlett Letter.

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"Since the review involves both people mutually agreeing on the grade"

While well intentioned, I think this is part of your problem. Employees should have no decision making power in their own evaluation. While allowing for self appraisal provides an opportunity for the employee to have some input, the manager(s) decision needs to be final.

There are two specific issues which can create problems if the employee gets a vote:

  1. Some employees may be better than others at convincing you to accept their evaluation. That doesn't make them better at their job, just better at selling themselves.
  2. Disgruntled or under-performing employees are not likely to agree to an evaluation reflecting that situation in their grade.

Evaluation and compensation should be based on an objective review of performance based on criteria that all participants understand. If you haven't handled these two issues, you won't have that.

  • Companies are hierarchies. Top/bottom. – paulj Apr 3 at 17:11

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