This is the second in a series of posts (first one is here) on what I call “Next Practices”. These are practices that look beyond today’s conventional HR approaches to achieve improved business outcomes.
Business Situation: In a slow growth economy, there are limited funds for merit increases and bonuses. To the extent there are funds are available, organizations want to use those funds to encourage engagement and retention of high performers (and those with high potential).
Practice: “Bottom Up” Calibration - Today many organizations use “top down” calibration to make sure that performance ratings fit a specific distribution. The idea is to promote fairness and to limit “grade inflation”. Because performance is frequently linked to pay (especially variable pay), the intent also is to make sure that there is a differential in rewards for high performers versus low performers. However, frequently the people making the final calibration decisions may be somewhat removed from actually observing each individual’s performance. In addition, the exercise can be de-motivating to strong contributors who, because of the desired distribution, just miss out from the next higher ratings category. All of these issues (and more) bring questions about the fairness of the exercise to employees.
“Bottom up” calibration approaches the issue differently. The main premise is that co-workers (or people working on the same team) know who the best performers are, so why not ask them for their opinion? Let them vote on the top performers and use voting distribution as the ratings distribution. There are opportunities for abuse if groups of employees try to game the system, however, managers can do a “sanity check” (and make sure there are consequences for collusion). By gaining the input of the employees in the ratings process, it helps overcome many of the fairness concerns. In addition, the feedback can be more meaningful to employees because it is recognition by peers.
There are good examples in sports of bottom up calibration. For example, voting for the Pro Bowl in the National Football League (NFL). Players around the league at the end of the season vote for which players they think were the best at their position during the season. The players with the highest votes from each conference are named the starters for the Pro Bowl game. Though not everyone who is voted as a starter plays for various reasons, it is an honor for the players selected. In addition, it impacts the compensation for players (many contracts have clauses that pays them a bonus for being selected to the Pro Bowl).
Do you use calibration in your organization? Have you looked at doing “bottom up” calibration? If you have, what results have you achieved?