The pros and cons of a performance review rating scale for your business

By now, we have all noticed the overwhelming trend of ditching performance rating scales and instead centering performance appraisals and performance management on quality conversations and continuous feedback. 

Organizations like Adobe®, Deloitte®, Microsoft®, Accenture®, and even GE® are all examples of organizations that have committed to ending the use of a single number to define performance. 

This makes complete sense, and all sounds amazing… in theory.  

However, we are seeing that getting rid of performance review rating scales entirely isn’t working and wouldn’t work for many organizations. In fact, for many high-profile organizations that threw their rating scales in the garbage, the switch took place alongside a series of newly implemented programs and procedures to engage their workforce and develop performance. So, an organization just looking to erase ratings and replace them with comment boxes shouldn’t be shocked to discover it doesn’t actually improve things a great deal. 

Is there an ideal rating system that can fairly and accurately measure employee performance? A system that does not harm employee engagement but still provides the metrics that organizations need to track performance and plan for the future? With the right approach, yes. 

In this blog, we’ll explore the pros and cons of performance review rating scales, analyze their real-world impact, and offers practical strategies to optimize them. Whether you’re an HR professional seeking data-driven insights or a manager aiming to boost team engagement, you’ll gain actionable takeaways to refine your performance management approach and prepare for its future.

 

What Are Performance Review Rating Scales?

Performance review rating scales are tools that evaluate employee performance by assigning numerical or categorical scores to aspects like goals, competencies, and behaviors.  

These scales provide HR teams and managers with quantifiable data to measure performance ratings, guide feedback, and support decisions like promotions or pay adjustments.  

Curious how technology can streamline this process? Check out emPerform’s performance review service page for tools tailored to modern performance management. 

 

Types of Rating Scales

There are various types of rating scales used in employee performance reviews, each suited to different needs: 

  • 5-Point Performance Rating Scale: The most common type of rating scale, spanning “Unsatisfactory” to “Outstanding.” It’s simple but may lack nuance—ideal for broad evaluations. 
  • 3-Point Scale: Basic (e.g., “Below,” “Meets,” “Exceeds Expectations”), perfect for smaller teams or simpler roles. 
  • 10-Point Scale: More detailed, suited for complex assessments, though it risks over-analysis. 
  • Behavioral Anchored Rating Scales (BARS): Ties ratings to specific behaviors (e.g., “Consistently Observed” to “Seldom Observed”), reducing subjectivity—great for soft skills. 
  • Status Scales: For goals, use terms like “Achieved,” “In Progress,” or “Deferred” instead of subjective quality labels, aligning with concrete outcomes. 

 

The Pros of Performance Rating Scales

For all of their faults, ratings can deliver some value. Here are the top benefits provided: 

  • Quantifiable View of Performance: Ratings deliver measurable data, allowing managers and HR teams to track trends, identify skill gaps, and plan for improvements.
  • Clear Feedback for Employees: A clear rating scale helps employees understand their performance and focus development efforts.
  • Decision-Making Support: Performance ratings provide managers with consistent metrics to justify promotions, bonuses, or support plans. 
  • Standardization: When applied fairly, scales ensure objectivity across teams, a key concern for HR professionals aiming for equity. 

Ratings offer a structured way to monitor talent, your organization’s most significant investment, without losing visibility into performance trends.

 

The Cons of Performance Rating Scales

Despite their benefits, performance review rating scales have downsides HR teams must address to ensure they are being used effectively:

  • Subjectivity: Bias can skew performance ratings, with managers sometimes tending to be more “nice” than “accurate”. 
  • Engagement Drop: A case study from Eli Lilly, shared in an HR.com webinar that we hosted alongside Edie Goldberg, showed ratings tanked engagement. After annual ratings, 80% of employees saw a significant drop—lasting up to three months—especially those rated 4 or below on a 5-point performance rating scale. Even “5s” dipped briefly. 
  • Oversimplification: A single number can’t capture an employee’s full contribution, frustrating both managers and staff. 
  • Shock Factor: When ratings are the only feedback given annually, employees feel blindsided, as Eli Lilly noted, linking disengagement to infrequency more than the ratings themselves. 

So, how do we take this knowledge and apply it to build better performance rating systems?

 

The Reality of Performance Review Rating Scales

The truth? Performance review rating scales aren’t inherently flawed—it’s how they’re used that matters.  

For HR teams, a hybrid approach often works best: blending performance ratings with continuous feedback, status updates, and development focus. It’s not about erasing ratings but retooling them to fit your culture and goals, ensuring managers have the right tools and knowledge to apply them effectively. 

 

How to Get Performance Ratings Right for Your Business

To improve how your performance review rating scales work, try adopting these strategies: 

  • Redefine Ratings: Tailor your ratings to specific criteria—use status scales (e.g., “Achieved,” “Not Met”) for goals and behavior-based scales (e.g., “Observed,” “Seldom Observed”) for competencies. 
  • Train Managers: Equip leaders to apply performance ratings consistently and combat bias, ensuring fairness. 
  • Remove the Shock: Replace once-a-year employee performance reviews with quarterly check-ins, performance logs, and ongoing feedback to keep employees engaged and informed. 
  • Hide Numbers: Display text ratings (e.g., “Observed”) without visible numbers to shift focus from scores to development—keep numeric scales on the backend for reporting. 
  • Focus on the Future: Frame reviews as forward-looking discussions, not past recaps, to boost value for employees and managers. 

Tools like emPerform can streamline this process, offering flexibility for text-based ratings and hidden “ghost ratings” for reporting.  

 

Goal Status Scale: 

Goal Achieved (3):  All milestones and success measures have been achieved 
Active Goal (1):  The goal is still in progress, some milestones may have been achieved 
Goal Not Met (0):  Timeframe for Goal has been met; however, some or all milestones and success measures have not been met 
Goal Deferred (-):  For timing or business reasons, this goal has been deferred 

Development Item Status Scale: 

  • 100% Complete 
  • 75% to 99% Complete 
  • 50% to 74% Complete 
  • Less than 50% Completed 
  • Not Started 

For areas of an evaluation that have to do with soft skills and require a little more subjectivity, we suggest using a behavior-based scale where employees are evaluated on the frequency of said behaviors being observed.

 

Observation Frequency Scale: 

Consistently Observed  This competency/skill is observed on a constant basis; everyone in contact with this person would observe excellence in this area 
Observed  This competency/skill is observed, please continue to focus on it so that it is observed constantly without exception 
Observed Sometimes  The competency/skill is observed on an infrequent basis, there is a clear development opportunity here 
Seldom Observed  Needs Immediate Improvement 

For more insights, download emPerform’s Rating Scale Guidebook—a must-have resource for HR teams refining their approach.

 

The Future of Performance Management

Performance management is evolving, and HR leaders must adapt. Expect a rise in continuous feedback, real-time analytics, and personalized development plans, driven by AI and technology. Yet, performance review rating scales won’t vanish entirely—organizations will refine them for balance, not abandon them. The human touch—empathy, communication, leadership—will remain vital. HR teams should stay agile, blending rating scales with modern tools to meet workforce and business demands. 

Want a deeper dive? Read: The Future of Performance Management

 

Conclusion

Overall, an organization can dampen the negative impact of ratings while still experiencing their benefits, but at the end of the day, your organization’s culture and needs should shape how evaluation criteria are defined and measured.

By addressing their pitfalls, customizing their use, and pairing them with ongoing feedback, HR teams and managers can turn performance ratings into a driver of engagement and growth. The goal isn’t just to measure performance—it’s to elevate it.

 Happy rating!