Performance Ratings or Rankings: Why Are They Used?

Performance rating or ranking
Performance rating or ranking

Performance ratings or rankings are a common practice in employee performance appraisals. It involves assigning a rating or ranking to employees based on their performance evaluation. This rating or ranking helps to measure employees’ performance and allows managers to compare employees against each other. It can also be used to identify areas for improvement and reward higher performing employees.

The previous blog, a better understanding of employee performance appraisals, discussed eight key aspects to help you understand employee performance appraisals. Among them the first aspect is objective setting. This blog discussed why it is important in performance appraisals. The second aspect is performance measurement. And this blog discussed this aspect. Third aspect of employee performance is feedback and coaching that was discussed in this blog. Fourth aspect is two-way communication that is the subject of this blog. The next aspect is employees’ performance ratings or rankings.

Here are key points to understand about performance rating or ranking:

1. Evaluation criteria

2. Rating scales

3. Comparative ranking

4. Calibration meetings

5. Impact on rewards and decisions

6. Fairness and objectivity

7. Continuous improvement

Evaluation criteria

Performance ratings are based on job performance, KPIs, and competencies. Ensure transparency and fairness by communicating these criteria to employees beforehand. Provide feedback to employees about their performance on a regular basis. Provide employees with an opportunity to discuss and understand their performance ratings and how to improve their performance. Encourage employees to set goals and measure their progress.

Rating scales

Organizations typically use rating scales to assign a numerical or descriptive rating to employees. Numerical rating scales often range from 1 to 5, with 1 representing poor performance and 5 representing exceptional performance. Ratings may range from “excellent,” “satisfactory,” or “needs improvement.” The scale should match the organization’s standards and display performance levels.

Comparative ranking

In some organizations, performance appraisals involve ranking employees relative to their peers. This ranking places employees in a specific order based on their performance, often from highest to lowest. Comparative rankings can differentiate rewards, promotions, or talent development opportunities.

Calibration meetings

Organizations or departments may conduct calibration meetings to maintain equal performance ratings. Managers and leaders work together to reduce inconsistencies and bias. Calibration meetings minimize personal preferences and ensure objective evaluation.

Impact on rewards and decisions

Performance ranking impacts decisions about rewards, promotions, training, and career advancement. High-performing employees may be eligible for salary increases, bonuses, or recognition. Performance ratings can guide employee development.

Fairness and objectivity

It is crucial to ensure fairness and objectivity in performance ratings or rankings. Managers should evaluate employees based on predefined criteria and provide evidence-based feedback. Managers should minimize bias and support evaluations with documentation and performance records. Regular training and calibration sessions can ensure consistency and fairness across the organization.

Continuous improvement

Employees need to view performance ratings or rankings as an opportunity for continuous improvement. It identifies areas for development and sets improvement goals. Managers should give employees constructive feedback to help them improve their performance.


Use performance ratings with other appraisal components. Evaluations that consider multiple factors support employee growth and engagement. Performance ratings provide valuable data that can be used to accurately assess an employee’s performance. They can be used as part of a comprehensive performance appraisal system to create fair and objective evaluations that are beneficial to both employees and organizations.

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  • Ram

    Ram, the author of "Business Development: Perspectives" on Amazon Kindle, has a wealth of experience in business development across multiple industries. He has over 30 years of experience in commodities, FMCG, and software industries, and has held various leadership positions in these sectors. In the commodities and FMCG industries, Ram served as GM of Business Development for southern India, where he successfully established new businesses and expanded existing ones. In the software industry, he was Regional Director of Business Development for Asia, where he was responsible for expanding the company's presence in the region. Ram has a proven track record of turning around loss-making ventures and establishing successful businesses. Ram has also served as the Director of Industry Partnerships and IT Blog editor at a software company, showcasing his expertise in technology and industry partnerships.

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