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What is “The 2% Effect” with regards Performance Reviews?

I have been working with two organisation recently both experiencing the same problem.

They use Performance Appraisal Forms with the following characteristics.  They:

  • Are paper-based forms

  • Are 8 to 12 pages long

  • Are standardised for use by every supervisor and employee

  • Cover multiple issues including a review of performance and career goals

  • Use multiple rating scales for different aspects of the feedback and review process including a “poor” or “unacceptable” options.

  • At best, use a generic definition for the meaning of each rating.

  • Require multiple people to fill out and sign the form.

  • The data is used for multiple reasons including managing poor performance, pay reviews and identifying training needs.

Both organisations tell me their reviews take a lot of time and add no value.  Specifically:

  • The content of the form does not match the needs of individual conversations

  • Using different rating scales throughout the form is reported as confusing

  • Generic rating definitions are interpreted differently by different supervisors

  • HR needs months to chase up forms

  • HR then needs further time to summaries and report the results

These age-old problems have refused to go away for the past 30 years and will remain for the next 30, unless we think and act differently. We have to stop blaming managers for not filling out forms correctly or argue for more training.  We have to change our thinking and the tools supervisors need to do their job.


Consider the following:-


  1. We create rules for the small percentage of people who break the rules.

  2. That small percentage of people who break the rules, will always break the rules.

  3. You can tell me the names of those who currently break the rules.

  4. All the rules do is get in the way of the people who do not break the rules.

My colleagues and I call this “the 2% Effect” i.e. we create rules for the minority who don’t follow them and the rules only get in the way of people who don’t need them.


The approach currently used by my two clients will always fail because it creates the 2% Effect.


In response I advocate you think, design and manage the engagement and feedback with employees as follows:

  1. Establish a policy whereby the 2%-ers (who always break the rules) are excluded from the feedback and review process.  Instead apply a policy where the problems their behaviour creates is addressed first.

  2. For the workers-bees that come to work, do a good job and then go home, just have a conversation based on continuous improvement skills training. Keep your reporting simple.

  3. For the employees who are gifts to your organisation (anyone who goes the extra mile) give them additional responsibility.

You see if the goal is to have managers help employees improve start treating people differently and keep the process simple.


Don’t fall for the 2% Effect, be smarter and reap the rewards.

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Mark Shaw

HR Business and Systems Improvement

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