We are barraged with discussions about equality, from equal educational opportunities, to equal access to buildings and facilities for those with physical handicaps. Often these attempts at providing equality are legitimate and beneficial to all concerned; however, there is one place in the workplace where quality has no place: performance evaluations. With the economy suffering, many companies are resorting to staff reductions. Personnel expenses are massive at most companies, and trimming them seems like an easy way to conserve cash. While this may or may not be the best course of action in the long term, some companies are finding this task to be far more difficult than necessary, due to a misguided attempt at equality during the performance evaluation process.

When I asked the CIO of a major software company how he performed staff evaluations, he said something striking in its simplicity: that his guiding principle was that there can only be one person in the middle, and everyone else was either above or below that person in terms of their performance. When times are good, it is easy to skimp on the difficult task of determining where each employee ranks, and giving everyone an average or good rating is a simple way out of the often painful task of telling people where they actually stand in relationship to their peers. Everyone gets a little taste of the bonus pool, and that really nice guy who tells the great jokes in the application development department gets to hang around, even though his performance might not really be up to par. Goodwill abounds from inferior performers who get a better rating than expected, and superior performers might take the rating as a sign to stiffen their resolve and work even harder. As a leader, you might even think you are being more caring by keeping everyone at approximately the same level, yet you are actually doing your staff a great disservice.

Killing the Golden Goose

Despite every effort to keep evaluations confidential, we all know the power of water-cooler conversations and the gossip mill. Most high performers want to know where they stand and are actively comparing themselves to their peers at all times. While these types of people rarely demand public recognition, evaluations are the time they expect to be recognized for their efforts. Average ratings don’t fly with people who strive for excellence, and if you downgrade your top performers to help the group, you are likely to eventually push them out. While the economic shift has reduced the potential for workers to easily change employers, when the sorry task of letting people go comes to IT, a false leveling of evaluations becomes an Achilles’ heel.

While no one likes to tell someone their performance is inferior to one of their peers, when tasked with trimming staff, the job becomes less difficult if you understand the relative ranking of each employee. If you need to cut 5% of your staff, presumably those with the lowest performance should be the first to go. When you have taken the time to rank employees, it’s fairly easy to identify the bottom 5%, and the staff in that group likely already knows who they are. While cutting staff is never fun, the process is fairly transparent and easier on all those involved. If a false sense of fairness has pervaded past evaluations, when tasked with cutting 5% from a group with similar performance evaluations, the task becomes far more difficult.

While giving everyone that average or “good” performance rating might have made you a hit with staff in the past, when the time comes to make cuts, the muddied waters open you and your company to myriad risks, the least of which is that the termination process loses all transparency and semblance of fairness. People with the same ranking as their peers are given pink slips, causing them to justifiably question your integrity. If past evaluations led them to believe they were where they needed to be and now they are being asked to leave, you have done them far more of a disservice than being honest during the evaluation process. If documentation about their performance is laced with platitudes designed to gloss over poor performance, you also open your company to legal action. If everyone has done well, how can you justify letting one “good” performer go over another?

In good economic times and in bad, evaluating your people fairly and transparently will pay long-term dividends. While you might not be as popular with some staff and may overhear some negative remarks at the water cooler, your people are better served in the long term. High performers get the recognition they covet, and are spurned on to maintain their position at the head of the pack. Poor performers know where they stand, and if provided with constructive feedback and areas where they can improve are given a clear path to excellence. When the unfortunate task of letting people go falls on your shoulders, a comprehensive and fair ranking system makes your job easier and keeps you out of legal trouble. Clearly, there is only room for one person in the middle.