Normalizing a rating, particularly in contexts like employee performance reviews, often involves adjusting scores to account for variations or biases introduced by different raters (like managers). The goal is to create a more equitable comparison across individuals who might have been evaluated under different conditions or by raters with varying standards.
Based on the provided reference, one method for normalizing employee ratings specifically addresses potential biases from different managers. This approach focuses on adjusting individual employee scores based on the average rating provided by their manager compared to the overall average rating across the organization.
Here is the four-step process described for normalizing employee ratings:
Steps to Normalize Employee Ratings
This method aims to adjust employee ratings to mitigate the effects of managers being consistently more lenient or harsh than the overall average.
Step 1: Calculate the Aggregate Mean Rating for All Employees
First, you need to determine the average rating across all employees being evaluated in the system or group you are analyzing. This provides a baseline or benchmark for comparison.
- Sum all performance ratings given to all employees.
- Divide the sum by the total number of employees.
Formula:
$$ \text{Aggregate Mean Rating} = \frac{\sum \text{All Employee Ratings}}{\text{Total Number of Employees}} $$
Step 2: Determine the Average Evaluation Each Manager Has Provided
Next, calculate the average rating given by each manager to their respective direct reports. This helps identify which managers tend to rate higher or lower than the overall average.
- For each manager, sum the ratings given to all their direct reports.
- Divide the sum by the number of direct reports evaluated by that manager.
Formula:
$$ \text{Manager's Average Rating} = \frac{\sum \text{Ratings Given by Manager}}{\text{Number of Employees Rated by Manager}} $$
Step 3: Develop a Correction Factor for Each Manager
A correction factor is created for each manager to quantify how much their average rating deviates from the overall aggregate mean. While the reference doesn't specify the exact formula for the correction factor, a common approach based on step 4 (dividing by the factor) is to use the ratio of the manager's average rating to the aggregate mean rating.
- If a manager's average is higher than the overall average, their factor will be greater than 1.
- If a manager's average is lower than the overall average, their factor will be less than 1.
Common Approach for Correction Factor:
$$ \text{Correction Factor}_\text{Manager} = \frac{\text{Manager's Average Rating}}{\text{Aggregate Mean Rating}} $$
Step 4: To Obtain Normalize Rating of Each Employee, Divide Their Performance Score by Their Manager's Correction Factor
Finally, adjust each employee's original rating by dividing it by their manager's specific correction factor.
- Employees rated by a manager with a factor > 1 (more lenient) will see their score slightly reduced.
- Employees rated by a manager with a factor < 1 (more harsh) will see their score slightly increased.
- Employees rated by a manager with a factor = 1 (average aligns with aggregate) will have their score unchanged.
Formula:
$$ \text{Normalized Rating}\text{Employee} = \frac{\text{Original Performance Score}\text{Employee}}{\text{Correction Factor}_\text{Manager of Employee}} $$
Example of Rating Normalization
Let's consider a simplified example:
Assume the Aggregate Mean Rating across all employees is 3.5.
| Manager | Original Employee Rating | Manager's Average Rating | Correction Factor (Manager Avg / Aggregate Avg) | Normalized Rating (Original Rating / Correction Factor) |
|---|---|---|---|---|
| A | 3.8 | 4.0 | 4.0 / 3.5 ≈ 1.14 | 3.8 / 1.14 ≈ 3.33 |
| A | 4.2 | 4.0 | 1.14 | 4.2 / 1.14 ≈ 3.68 |
| B | 3.2 | 3.0 | 3.0 / 3.5 ≈ 0.86 | 3.2 / 0.86 ≈ 3.72 |
| B | 2.8 | 3.0 | 0.86 | 2.8 / 0.86 ≈ 3.26 |
In this example, employees rated by Manager A (who rates higher on average) have their scores slightly reduced, while employees rated by Manager B (who rates lower on average) have their scores slightly increased, bringing them closer to a comparable scale relative to the overall organizational average.
Why Normalize Ratings?
Normalization in performance management helps to:
- Increase Fairness: Reduces the impact of individual manager bias (leniency or strictness) on employee scores.
- Improve Comparability: Makes it easier to compare employees rated by different managers.
- Support Calibration: Aids in the process of calibrating performance reviews to ensure consistent standards.
While this method is specifically tailored to address manager bias in employee ratings, the general principle of normalization in data involves scaling values to fit within a specific range or to adjust them relative to a mean or standard deviation, making them more comparable. The exact technique depends on the data and the goal of the normalization.
