"My organization evaluates employees on a series of 7-point scales.

This past year I gave ratings to my employees that I thought accurately reflected their performance. I gave a couple of employees an average score of 7.0, but I rated most of my employees as performing at a 5 or 6 level. Now the HR department says there's only enough bonus money to reward employees who got a perfect 7.0! How can I keep my employees from being screwed in the reward process?"

This problem occurs when the same performance appraisal system is used for both administrative and developmental purposes. In the long run, your organization's performance appraisal system will lose its feedback potential, as more and more managers inflate their employees' ratings to justify bonuses. One possibility is to use your organization's performance appraisal system as an administrative tool—remembering that the appropriate anchor on "7" is "deserves bonus." Then you can create a "shadow" performance appraisal form that further differentiates those "7's" into subgroups—based on specific behavioral criteria that you can use to structure the feedback you provide in the performance appraisal interview.