We're looking to change our performance ratings which is currently a 5-point scale labeled 1- unsatisfactory 2- needs improvement 3-meets expectations 4-exceeds expectations and 5-outstanding.  I am researching options to go to a 3 or 4-point scale with less focus on the rating NUMBER and more focus on the description. My hope is that there is less emphasis on your number and more emphasis on getting feedback from your manager.  What performance ratings are you using, and what are they labeled?

We recently moved from a 5 point scale to a 3 point scale & have seen great success: 

1: Opportunity to Improve -  Achieves some but not all performance expectations; working to make a consistent positive impact. Performance is below expectations in terms of outcomes or work products. Inconsistent results based on performance expectations/role... And in terms of behavioral competencies, this person usually demonstrates inconsistent behaviors. 

2: Key Contributor - Delivers expected results against objectives and in alignment with role; performance produces strong outcomes & work products; meets or sometimes exceeds performance expectations; takes initiative and creates value within scopes of role and at times beyond. And in terms of behavioral competencies, this person usually demonstrates effective behaviors consistent for their role. 

3: Extraordinary - Performance far exceeds performance expectations and creates tremendous value & quality results beyond scope of role. Performance produces well above expectations in terms of outcomes/work product. Easily recognized as top contributor amongst peers and viewed as mentor/trainer to others. And in terms of behavioral competencies, this person usually demonstrates high levels of our defined behaviors, and is viewed as a role model to others. 

We removed performance ratings some years ago in order to put a greater emphasis on the conversation rather than the number. At one point part of our business moved to a 4 point scale to remove the likelihood of '3' for satisfactory being the default and encourage leaders to be more thoughtful

We are currently making the shift from a 4-point scale to a 6 point scale, with one of the 6 being “Too New to Rate.” The labels are similar to your existing scale. What we’ve learned over the years is that the rating scale, whether designed with numbers or descriptors, is not what matters. What matters are the behaviors applied to assessing someone’s performance, having the right performance-improving conversations with employees, and having a mindset of using the rating system as a tool to drive performance.

Our strategic approach is an enterprise-wide mindset shift and change management effort to bring forth the behaviors needed to drive performance while using talent management tools, such as a performance rating system.

If your performance ratings are tied into compensation, then you will struggle to differentiate between your top performers and equitably distribute merit increases accordingly. Going to fewer options gives you less granularity and can compress higher performers with lower ones. We use the traditional Likert Scale with similar descriptions. This has been around forever, and everyone tries to get away from it but it has proven itself over time and in my opinion and experience is the best option. Best of luck.

To a Very Great Extent 
To a Great Extent 
To Some Extent 
To a Little Extent 
Not At All 
Does Not Apply  

 
Outstanding 
Fully Performing 
Contributing 
Marginally Performing 
Unsatisfactory 

 
Very Good 
Good 
Below Average 
Poor 
Unacceptable 

 

Excellent 
Very Good 
Good 
Below Average 
Unacceptable 

 
Significantly Exceeds Expectations 
Above Expectations 
At Expectations 
Below Expectations 

Substantially Exceeds Standard 
Exceeds Standards 
Meets Standard 
Needs Improvement 
Unacceptable 

Fully Competent 
Competent 
Requires Development 
Unsatisfactory or Below Standard 
Not Assessed 

Outstanding 
Fully Performing 
Effective 
Somewhat Effective 

Improvement Needed 

Outstanding 
Exceeds Expectations 
Meets Expectations 
Below Expectations 
Unsatisfactory 

Excellent 
Good 
Needs Improvement 

 
Exceeds Expectations 
Meets Expectations 
Below Expectations 

 

Above Standard 
Standard 
Below Standard 

**Exceptional 
Meaningful 
Limited 
 

** this last list one I am drawn to - it speaks to the overall impact a person has had on the business - I prefer it to all the rest - having employees understand they are rewarded based on their impact - this normally gets lost in our HR processes :)