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Strategic issues in performance appraisal: theory and practice.

Performance appraisal systems have tremendous strategic potential for governing employee behavior and thus corporate direction through their links to selection, training and career planning, and reward systems. Authors Charles J. Fombrun, assistant professor of management at the University of Pennsylvania's Wharton School, and Robert P. Laud, senior vice-president of Drake Beam Morin, Inc., surveyed appraisal systems of Fortune 1300 corporations to find out how well companies are realizing this potential. Among their conclusions: (1) In most organizations, the typical performance appraisal system is focused on short-term goals. Strengthening the linkage between the appraisal system and the long-term implications of strategic planning could improve organizational effectiveness in the future. (2) The performance appraisal system's most prevalent use is as a feedback mechanism rather than as a management tool. Thus, the authors conclude, the role of the performance appraisal system as a strategic organizational tool is largely unappreciated by U.S. organizations.