Whenever I use an app to take a taxi in Singapore I now always give the driver a 5 star rating, no matter how good or bad the experience was.

That might seem like a strange thing to do, but I have been doing it ever since I read this fascinating article by Caroline O’Donovan at BuzzFeed, which looks at the whole issue of driver ratings in the fast growing ride-hailing sector.

As a Learning and Development professional, it strikes me that the service industry, in their efforts to improve the user experience by proposing a quick and easy “ratings system” could in fact be disrupting the notion that good quality, accurate feedback is essential to understanding and improving performance.

In her example, Caroline points out that most drivers get 5 star ratings and companies like Uber and Lyft argue that this is evidence that their drivers are doing an excellent job.

Drivers may be suspended or fired if their scores
are averaging 4.5 or less

Dig deeper and there is more to this than meets the eye…if you rate a driver less than 5, they actually risk being put on a watch list and may even be suspended or fired if their scores are averaging 4.5 or less. Customers are gradually understanding that the bar is being set unrealistically high, so rather than get a driver into trouble, many choose to give a 5 star rating and just move on.

Does this mean we all need to revise our thinking that 5 stars means exceptional, 4 very good, 3 good/OK, 2 poor and 1 very poor?

But the story does not end there...

In the same way that “360 degree” evaluations are becoming part of the culture of many organisations, reciprocal feedback is becoming more common in these disruptive sectors, where the customer is no longer “king” but an equal partner.

If you have a track record of poor scoring,
a driver will probably avoid you and
go for someone who always rates highly

I hadn’t realised that drivers in some companies are now rating you as a passenger and before they agree to pick you up, they can look at your scoring history. So logically, if you have a track record of poor scoring, a driver will probably avoid you and go for someone who always rates highly! Wouldn’t you?

This is the heart the problem. There seems to be no universal agreement as to what different stars or scores mean and this lack of clarity and alignment leads to rating systems being devalued and the data becoming less relevant.

In a whole range of new and existing service markets, customers are being constantly asked to give feedback about their experience for a taxi ride, a home delivery, a meal in a restaurant, a stay at a hotel, a call to a service centre. How can they get meaningful feedback on what they are doing well and what they need to improve when this mentality is creeping in?

In a completely different sector, Netflix has recently replaced it’s 5 star rating system in favour of a thumbs up – thumbs down because people were not saying how much they enjoyed a show, but trying to assess it’s objective worth and being over critical, a trend they suggested was being influenced by the e-commerce industry. The new system has led to a 200% increase in ratings and improved personalised recommendations.

Performance Management systems are
having minimal impact on business performance

These alarming trends remind me of the challenges we see in Performance Management.

Many organisations are unhappy with their existing ranking and rating systems and a plethora of research has shown that many managers and supervisors lack the skills to assess performance accurately and have good quality conversations with their teams.

Performance Management systems are having minimal impact on business performance and a recent study by Bersin Deloitte found that 70% of organisations are considering redesigning their approach to Performance Management, with 90% of organisations feeling that their existing processes were not worth the time they spend on it.

There is no easy answer to this challenge. Managers can play a key role in transforming those conversations when their teams are completely aligned on performance goals. This means agreeing a framework where both parties are aligned on what each rating means, what the behaviours look like and how these will be observed, assessed and discussed.

Performance improvement can only emerge
with more frequent and engaging conversations

When these building blocks are in place, Performance Conversations be transformed and transformative. True performance improvement can only emerge with more frequent and engaging conversations and a commitment to meaningful dialogue.

The disruption we are seeing in the service industry is a true wake up call for managers. How can they avoid the pitfall of simply rating performance as thumbs up - thumbs down or just giving 5 stars…. and focus on embedding transforming conversations into their culture of performance management?

Don Rapley is the Managing Director of Issential Training and Coaching and co founder with Elizabeth Pickup of Transforming Conversations