In larger companies, managers don’t have to just review their direct reports and assign a performance review rating. They also need to assign a performance review ranking. The ranking is just as critical as the rating. And the calibration session is where the ranking is done.
Calibration sessions are the hidden part of the performance review process. It is a session, held by managers only with, perhaps, some human resources representation that determines rankings across different teams in the same working area. The rankings can make a big difference in your ratings — and pay.
First, some terms
Rating and ranking may confuse some, so let’s get to a common definition for each. A common definition, in this article, of course, is my definition….
Your performance review rating is the number assigned to your work based on the criteria for the numbers. If you have ratings between one and five and five is “walks on water outstanding,” then the “successful” rating is a “3″ and the “why are you still here” rating of “1″ is the lowest.
Ratings directly tie to your pay if your pay and bonus is combined with your performance review. Your pay and bonus is tied to a budget and management will come out with some guidelines for the manager. For example, in a good year, a “3-Successful” rating will mean a 2.5-3.25% pay raise and up to 110% of the eligible bonus.
A “5-Outstanding” rating, on the other hand, might mean a 4.5-5.5% increase in pay and between 125 -140% of the eligible bonus.
In a bad year (except for Senior Executives of big companies where bad years don’t matter for pay…), a “3-Successful” rating might only mean a 1-2% increase in pay and up to 105% of the eligible bonus.
Your ranking is your place among all the employees that are ranked in a larger group. For example, if there are ten people in your group that do a similar job to another group that also has ten people, each person will be ranked from one to twenty with one the “best” employee and twenty the “worst” employee in the group.
Calibration is the name of the session that determines the ranking of the teams the different managers manage.
What happens in the calibration sessions is the managers discuss the proposed rankings of their people on their team and then compare the performance to people on the other teams. Then, over the discussions of the performance, they assign a ranking number for each person and then submit it to their common manager.
The practical implications of Ranking
You will recall that there is a budget for salary increases and bonuses associated with the performance reviews. What can happen because of the calibration sessions and the rankings is that your performance rating can drop.
Let’s say you are in an all-outstanding team where everyone is worth the “5-Outstanding” rating. Once you get to calibration, it will be very difficult for those ratings to hold up under the scrutiny of performance and where other managers want their people in the rankings. If an entire manager’s team walks into those sessions with Outstanding, there is a 99.9% probability that they won’t walk out with all Outstanding ratings — reducing pay and bonuses.
The good side to calibration sessions is that it puts performance under scrutiny so you don’t have ten Outstanding ratings for ten people on the team when it is just a manager not managing right. The bad side to calibration sessions is that “successful” and higher performing teams can get hit with ratings below “successful” because of the politics of the management team and the real need to hit budget numbers.
If your performance is on the bubble between one rating and another — and two different bonuses and pay raises — how well your manager can defend your performance and rating will be the deciding factor in the calibration sessions.
Does your manager know your accomplishments and how important they are to the business before walking into a calibration session?