Relative vs. Absolute Evaluation
Relative vs. Absolute Evaluation
What are relative and absolute evaluation?
- Quota-based allocation vs. meeting a standard
- Keep developmental feedback separate from reward allocation
- If goals are vague, no method is fair
The moment you choose a method, the kind of evidence evaluators collect all year changes. Under relative evaluation, team leaders build up evidence for comparing members side by side; under absolute evaluation, they keep records showing whether each person cleared the bar. What gets said in review meetings changes too. In the first case, the issue is 'Why am I rated below Manager Kim?'; in the second, it is 'What is your basis for saying the standard was met?' Choosing a system changes the subject of conflict, not the total amount of it.
Forced distributions at Korean companies are usually five-tier structures such as S 10, A 20, B 50, C 15, D 5. Here, the smaller the sample, the greater the distortion. On a team of 7, the bottom 5% is 0.35 of a person, and a single rounding rule leaves one specific person with a D. So in practice, companies group the distribution at the division level, 50 to 100 or more people, rather than by team, and department heads meet to align the cutoffs. Organizations that choose absolute evaluation use a dual structure: ratings reflect goal attainment, while bonuses are distributed within a fixed budget.
Goal-management tools often get tangled up in the method debate. In a system that encourages stretch goals, converting attainment rates directly into ratings means whoever set a low goal wins. Keep the evaluation axis separate from the goal-setting axis. And even if ratings are absolute, promotion is still a competition for a fixed number of slots. Unless you set separate criteria in advance for choosing whom to promote from a large group with the same rating, absolute ratings end up being used as an after-the-fact excuse for passing people over.
The most common misconception is that switching to absolute evaluation will make complaints disappear. In the first year after the switch, more than 80% of employees get an A or above while the budget stays the same, so payouts diverge even among people with the same A. HR then re-ranks everyone internally for reward purposes, separate from the official ratings, and employees ask, 'My rating is good, so why is my payout lower than last year?' The moment public ratings and actual rewards diverge, trust in the system collapses. Changing the distribution or the pay-link ratio may count as a change to the rules of employment or compensation regulations, so you should first check whether it works to employees’ disadvantage.
Kyungtae KimHR expert · Organizational culture and HR strategy consultant
Hwi KimCEO of HRDIST & talent development systems consultant| Category | Strengths | Disadvantages |
|---|---|---|
| Relative Evaluation | Easy reward allocation; curbs leniency | Hurts collaboration; low ratings even when the whole team performs well |
| Absolute evaluation | Easier to accept; well suited to development | Leniency weakens differentiation and makes reward allocation harder |
Forced-distribution ranking spread widely along with performance-based HR. As critics pointed to damaged collaboration and lower motivation, companies have moved toward reforms that pair absolute ratings with continuous feedback.
Company A, a Korean B2B software firm, has 320 employees and annual revenue of about KRW 48 billion (≈ US$35,912,000). It has run team-level forced distribution (S10·A20·B50·C15·D5) for three years, but last year 9 of its top-rated 20% left voluntarily. It plans to overhaul its evaluation system between September and the following February. (Hypothetical example)
- The HR head sorted the past two years’ 47 objections by type and found that 31 were of the form 'We beat the team goal by 120%, so why a C?' That table went onto the first page of the CEO report as it was.
- Before touching the system, we reviewed the goals: 62% of the 250 registered goals were variations of 'actively support quality improvement,' and the head of development said, 'No matter who evaluates this, it comes down to gut feeling.'
- We decided to judge evaluations on goal attainment while distributing bonuses within a fixed budget, scrapped forced distribution for teams of 7 to 12, and managed the distribution at the division level for 60 or more people.
- In December, eight division heads held three two-hour calibration meetings to align the evidence behind each other’s A ratings, narrowing the gap in A-rating share across divisions from 41 to 12 percentage points.
- We wrote a 10-business-day appeal window after results are communicated, plus a three-member review committee that excludes the employee’s own executive, into the compensation rules. We explained the changes to the labor-management council twice before putting them into effect.
- The following year, appeals fell from 47 to 14, the fairness score rose from 3.1 to 3.8 on a 5-point scale, and voluntary exits among the top 20% of performers dropped from 9 to 3.