About a year before I left my organization for my MBA program, a new directive passed down from the C-Suite: performance ratings had to be toned down. It seems like nearly everyone had super star employees; but the company wasn't performing like a superstar, so there must have been some sort of disconnect.
It turns out that the problem lay in the system. Like nearly every performance rating system out there, an employee was evaluated on a 5-point scale, with 3 being "performs as expected" and 5 being "performs extremely well" and 1 being "company is better off buying energy-saving lightbulbs than paying for this person to sit on FB all day." It turns out that nearly every department was rating their employees as 5s. The next round of evaluations, after this directive (plus other incentives - I think there was a limit on how many 4s & 5s a manager could give out, and he/she had to justify it), showed just how average everyone truly was since there were a lot of 3s.
This behavior always puzzled me because 3 is pretty self-explanatory - you did what your job requires you to do. A 5 should be a very rare occurrence.
Now, in some of my classes, we have to provide feedback to our teammembers in the form of an evaluation like this. To my surprise, the first time I did this, teammembers decided to give everyone 5s, regardless of the work. Again, a 5 indicates superstar performance, while 3 says "performs as expected." Second time around, I learned, and told everyone that I use the 3 as my baseline number - i.e. you do as expected, you get a 3. Go above and beyond my expectations, and that's when we get into the higher numbers. Thankfully, other people ascribed to this schema and also rated people with 3 as the baseline.
Now I'm in a class where we're constantly evaluated by our team members. I just had to provide a feedback form where there was a scale of 1-9 indicating our impression of a teammate: 1 is very negative, 5 no impression, 9 very positive. I rated people around the 5-7 mark; I can't say I had an immensely positive impression on people in my group. I went to check my own feedback report, and my average score was 8.53! Immediately I felt bad for the people I reviewed: they would walk away with my scores with a different impression than what I had intended.
Why do people think the baseline number for an evaluation is always the highest number? Especially when, in this case, our scores are aggregated and therefore anonymized?
My theory on this stems from the American education and grading system. I was a TA for an OB class in my undergraduate degree from the U.S. I was tasked to write up a quiz, so I did - according to how my degree program in Australia would do it. The Professor thanked me for the good job and said that the A students would get this, the B students would pass, but the C students would not do so well. I needed to simplify it so that the C students would easily pass the quiz.
In a conversation with another student this year, he remarked that the Australian university grading system was more flattering than the American system. In order of increasing magnitude, we have: 3- Low Pass, 4 - Pass, 5 - Credit, 6 - Distinction, 7 - High Distinction. Most students in the bellcurve fell in the 4/5 bracket; I had only ever seen less than 10 HDs per class I've been in, which weren't small by any means. He pointed out that a 4 seems less like a failure; whereas getting a B or a C seemed like a failure in the U.S. system.
So it seems like everyone is on the A basis and then gets dropped down, rather than starting from a C basis and working their way up (which is what I'm used to). I think this mentality of assessment (since school is the first and most frequent place we've ever had this kind of feedback) is what drives people to rate other people very highly without true consideration of what that 5 really means.
(Speaking of which, Tepper's grade basis is an A-; the CMU graduate schools all use B as the level of acceptable work for a graduate student with an A as the measurement of outstanding performance above and beyond what was expected.)