What is Normalize Rating?
During the performance evaluation process, managers often rate employees based on their own perceptions and standards. The normalized rating is a technique that helps standardize these ratings to reduce biases and inconsistencies, ensuring a more fair and objective evaluation. This method is especially useful in organizations with multiple managers or reviewers who may have varying rating patterns.
Steps in the Normalization Process:
Calculate the Statistical Mean (M):
The first step is to compute the overall average (mean) of the ratings provided by all reviewers (managers) at the same level across different departments in the organization. This is known as the statistical mean (M).
Calculate the Mean for Each Manager (Mi):
Next, calculate the average rating (Mi) given by each individual manager. This is the mean of the ratings that each manager has assigned to their team or set of employees. For instance, if a manager rates 40–50 employees, the average of their ratings will be calculated.
Determine the Correction Factor (CF):
The correction factor for each manager is calculated by dividing their individual mean rating (Mi) by the overall statistical mean (M).
The formula is: CF = Mi/M.
For example, if a manager’s rating pattern matches the overall average (M), their CF will be 1.0. If the manager rates more strictly or leniently than the overall average, their CF will be adjusted accordingly.
Normalize the Individual Performance Scores:
The next step is to adjust the performance score of each employee by dividing their original score by their manager’s correction factor (CF). This results in a normalized score.
This normalized score helps to ensure that differences in rating tendencies among managers do not unduly influence the final performance evaluation.
Use Normalized Scores for Decision-Making:
The normalized performance scores are then used for important management decisions such as promotions, raises, or training needs, ensuring that evaluations are fair and consistent across the organization.
Example:
If Manager A's average rating is higher than the statistical mean, their employees’ ratings will be adjusted down using the CF (which will be less than 1).
Conversely, if Manager B’s ratings are below the statistical mean, their employees’ ratings will be adjusted up (CF greater than 1).
By standardizing performance ratings, the normalization process helps ensure that employees are evaluated fairly, reducing potential biases that may arise from individual managerial styles or expectations.