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Are Performance Appraisals Obsolete?

important goal of the performance appraisal and review process, is to motivate employees. Don’t laugh. This may not be what comes to mind when most people think of their performance appraisal process, which goes to show how far afield we have drifted in this area. At its best, the performance review process encourages employees to put forth their best effort and take initiative at work to achieve both organizational and personal goals. At its worst, the exact opposite occurs, and employees are made to feel unimportant, abused and unappreciated for the job they have done. Tensions mount; feelings are bruised; goodwill is lost. Performance appraisals and reviews have become a necessary part of most work environments, and—for better or worse—a reality in most organizations. However, as many companies are learning, traditional performance appraisals fail miserably in positively influencing employee behavior in today’s organizations. Indeed, in a study conducted in 1996 for the Society for Human Resources Management, more than 90% of the respondents said the performance appraisals are ineffective. In a traditional performance review, the manager meets with an employee once a year and, in less than an hour (and with less than an hour’s preparation), attempts to get through the necessary review forms from personnel to trigger the employee’s annual raise. The review typically focuses on one or more negative aspect of the employees’ recent job performance—not the previous 12 months work—and is far from an accurate reflection of the employee’s actual job performance over the year. As a result, there is an overall dissatisfaction with this system for both the employer and the employee, reflected repeatedly in surveys and studies. Employees report feeling intimidated, defensive, shortchanged and manipulated in this process. They feel that appraisals are too infrequent and occur too long after the actions that the appraisals are evaluating to have any meaning. In the end, employees are often de-motivated by the appraisal process. For their part, many managers dread conducting appraisals. Given the choice, they would (and do) skip the process altogether. In fact, some 40% of employees report that they do not receive an annual performance review at all.