During the performance evaluation process in an organization, managers rate employees from their own points of view. Normalize rating is a tool that balances the variability and differentiation in the assessment pattern. It is a common procedure in SMEs and large organizations. The whole objective of normalization of scores is to introduce greater objectivity in the employee performance review process of an organization.
The normalization process comprises of the following steps:
Statistical mean of the rating pattern of all reviewers at the same level in an organization, across various departments, is computed. Let this mean be ‘M’.
Statistical Mean for each of the appraisers at the same level (ie, for all the ten managers in the example given above) is computed. Each manager would have appraised 40 to 50 employees over time. This mean is ‘Mi’ (i = 1 to 10).
A correction factor (CF) for each of these managers is then computed CF = Mi/M. Its value, for example, will be 1.0 if the rating pattern of a manager is the same as the statistical managerial mean.
The performance score of each employee is then divided by the CF for his/her manager to compute the normalized value, which is then utilized for management decisions.