By Beth Armknecht Miller, a leadership advisor, coach and Vistage chair for Executive Velocity, Inc.

Have you recently delivered a performance review to an employee who was surprised at your feedback? And in turn were you surprised at their reaction? You are not alone.

A recent white paper, Mind the Gap, authored by Novations, a talent development company, reports that on average managers rate their employees’ performance and contribution by almost a half point less than the employees’ self-ratings. There are five known performance rating biases that attribute to rating discrepancies between managers and employees.

Two Self-Rater biases:

• the need for self-esteem, and
• the lack of self-awareness.

Three Manager biases:

• lack of awareness of an employee’s contributions,
• justification of their role as a manager, and
• budget justifications relating to pay increases.

So if the performance rating gap is widening, what steps can be taken to decrease the effect of these biases and narrow the performance rating gap? Increasing an employee’s self awareness and increasing a manager’s awareness of employee contributions are two biases that can be decreased.

Decreasing Bias in Performance Reviews
Let’s start with the employee. Self-awareness can be improved through an assessment tool such as Myers-Briggs Type Indicator® (MBTI) or an assessment methodology such as 360-degree feedback (also known as “multi-rater feedback”, “multisource feedback,” or “multisource assessment”). In addition, assessment tools should always be used in conjunction with coaching. It is vitally important that employees have their assessments explained to them in detail so they can relate the results back to their workplace and position within the organization. Learning from one’s assessments is critical to actually increasing self-awareness. Results of the assessments, as they relate to changes in performance, should be reviewed on an ongoing basis.

On the management side of the equation, increasing the awareness of employees’ contributions can be addressed by:

• Incorporating a team review into performance reviews.
• Jointly developing performance goals with the employee.
• Conducting performance reviews separate from salary reviews.

Team Reviews
When I ran a consulting company, we instituted a team review process. Because the consultants often worked on multiple engagements for multiple leaders, it was a necessary step to get a true sense of an employee’s contributions. While your company may not have this specific organizational dynamic, there may be other employees who interact with the employee being reviewed, whether they work on a cross-functional project or as a department team member. Therefore, as a manager it is imperative to get wide input on an employee’s performance.

Goal Collaboration
When putting together performance goals, the employee should be part of the process. Including the employee in the process provides both manager and employee the opportunity to clearly define what constitutes specific levels of contributions as well as strengthening the employee’s ownership and commitment to their performance goals.

Separate Performance and Pay
When performance and salary reviews are linked together something interesting happens. The employee forgets all the feedback about their performance and only remembers how much money she will be making in the future. So of course an employee is going to rate themselves higher in performance than their manager because their pay increase depends on it!

Many companies have moved to a process of holding performance reviews more than once a year, with the salary review completed outside of any performance review. Multiple reviews provide consistent feedback and the opportunity for the employee to make adjustments to their contributions.

In short, providing employees with assessment tools to elevate their self-awareness, incorporating team reviews and goal collaboration in the performance review process, and also separating performance reviews from salary reviews, will help narrow the performance gap ratings. Ultimately if these performance review gaps are closed or narrowed, your employees will be happier and more engaged in their work, and you as a manager will have more time to manage and lead.