Each rating option communicates a different message to your employees, and each has a different outcome.
| Five Levels |
| Advantages | | · | Provides for the finest distinctions in performance | | · | More consistent with bell-curve distribution | | · | Most managers believe they can discriminate among five levels of performance | | · | Consistent with familiar “A-F” school-grading model | | · | Most familiar rating scheme — less training required | | | Disadvantages | | · | May be harder for supervisors to communicate how to attain higher performance levels | | · | Typically only four levels are used | | · | Middle rating usually perceived negatively — as average, or mediocre, or a “C” student | | · | May encourage central tendency |
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| Four Levels |
| Advantages | | · | Does not include a middle rating which may be perceived as “average” | | · | Eliminates “central tendency” rating error | | · | May skew raters in a positive or negative direction | | · | Provides for finer distinctions than a three-level scale | | | Disadvantages | | · | May not provide a way to distinguish between those who can improve and those who should be terminated | | · | May skew raters in a positive or negative direction | | · | Typically, only three levels are used |
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| Three Levels |
| Advantages | | · | Supervisors find it easy to categorize performance into three categories | | · | Supervisors tend to be more consistent if given fewer choices — higher reliability | | · | Some jobs may be better appraised on a “pass/fail” basis | | · | Only three levels of performance can be proved empirically | | · | Middle rating implies expected performance, not average performance | | · | More consistent with TQM principles | | | Disadvantages | | · | May not provide fine enough distinctions in performance | | · | Managers frequently alter system by adding plusses and minuses | | · | Does not distinguish between those who can improve and those who should be terminated | | · | Typically only two levels are used | | · | Does not allow for identifying the truly exceptional 2-5 percent |
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Source: Grote Consulting Corporation
Adapted from The Performance Appraisal Question and Answer Book, Copyright 2002 by Dick Grote. Published by AMACOM Books, a division of American Management Association, New York, NY. Used with permission. All rights reserved. http://www.amacombooks.org.