Question

What does current research identify as the pros and cons of performance appraisals in the workplace? How can organizations increase the effectiveness of performance evaluations?

Answer 1

Performance Appraisals:

A performance appraisal is an evaluation done on an employee’s job performance over a specific period of time. It is the equivalent of a report card on an employee and how their manager assessed their performance over the prior year. Not all performance appraisal processes are the same. Unfortunately, some are done so poorly that they are not only designed to fail, but also to create a negative experience for both the manager as well as the employee.

Pros and Cons of Performance Appraisals in the workplace:

There are many varying opinions on the subject of performance appraisals and why they are done. Some organizations do performance appraisals because they feel obligated to do them – because everyone else does. Other organizations do performance appraisals to make sure they have a piece of paper in the employee’s file – in case they ever need to do corrective action. But successful organizations understand the importance of incorporating performance appraisals into their performance management process and strategy. They use this tool to encourage, engage, and develop their talent pool.

Pros of Performance Appraisals :

· Documentation: A PA provides a document of employee performance over a specific period of time. It’s a piece of paper that can be placed in an employee file.

· Structure: This process creates a structure where a manager can meet and discuss performance with an employee. It forces the uncomfortable conversations that often need to happen.

· Feedback: Employees crave feedback, and this process allows a manager the opportunity to provide the employee with feedback about their performance and discuss how well the employee goals were accomplished. It also provides an opportunity to discuss employee development opportunities.

· Clarify Expectations: Employees need to understand what is expected of them and the PA process allows for a manager to clarify expectations and discuss issues with their employee.

· Annual Planning: It provides a structure for thinking through and planning the upcoming year and developing employee goals.

· Motivation: The process should motivate employees by rewarding them with a merit increase and as part of a comprehensive compensation strategy.

Cons of Performance Appraisals :

· Creates Negative Experience: If not done right, the performance appraisal can create a negative experience for both the employee as well as the manager. Proper training on process and techniques can help with this.

· Time Consuming: Performance appraisals are very time consuming and can be overwhelming to managers with many employees. I’ve known managers who were responsible for doing an annual PA on hundreds of employees.

· Natural Biases: Human assessments are subject to natural biases that result in rater errors. Managers need to understand these biases to eliminate them from the process.

· Waste of Time: The entire process can be a waste of time if not done appropriately. Think about the time investment when the end result is negative. It is time wasted on all fronts.

· Stressful Workplace: Performance appraisals can create stressful work environments for both employees and managers. Proper training can help to reduce the stress involved in the process.

Finally, performance appraisals are only as good as the performance management system it operates within. Organizations that only do performance appraisals for the sake of doing them are wasting their time. But organizations that incorporate performance appraisals into a comprehensive performance management system and use them to implement business goals have an advantage for accomplishing their goals and ultimately their strategic plan.

Increasing the effectiveness of performance appraisal process

Although approaches to the appraisal process vary among employers, there is general consensus that practices, such as the following, will increase its effectiveness:

1. Have ongoing communications with employees that focus on job performance.

This feedback enables employees to gain an understanding of what is required to align their performance with management’s expectations.

1. Document performance, including strengths and needs for improvement on a continual basis.

Documentation provides a rationale for ratings, removes guesswork from decisions and increases the overall accuracy of appraisals. It is also essential in the event that evaluations are called into question.

1. Provide timely feedback after documenting performance.

Documentation without communication leaves employees blind-sided about necessary performance changes. It also creates the potential for surprises during the formal appraisal process.

1. Ensure that there is consistency between employees’ job descriptions and performance appraisals.

Appraise employees on criteria that reflect the essential duties and responsibilities of the position.

1. Complete appraisals in accordance with accompanying instructions and organizational training.

This structured approach increases consistency among raters and helps eliminate common errors, such as overusing average performance categories, letting one positive or negative performance rating influence all ratings, basing evaluations on recent performance rather than the entire evaluation period, and allowing personal biases to impact decisions.

1. Be mindful that formal appraisals are sources of documentation that have the potential to be viewed by others on a need-to-know basis.

Evaluations are frequently used in making employment-related decisions and as evidence in legal proceedings. If they are used in a legal context, management can anticipate that they will be scrutinized, dissected and “placed under a microscope.”

1. Be objective and specific when adding comments to explain ratings.

Subjective wording and generalizations (e.g. “always,” “never”) will not promote understanding and, at times, may trigger defensive reactions.

1. Base ratings on employees’ performance and not on their legally protected status (e.g. sex, race, national origin, age 40 or over) or on stereotypes.

For example, if an employee who is 50 years old does not perform in accordance with job expectations, the appraisal should be based on the gap in performance and not on the employee’s age.

1. Focus comments on specific areas of job performance that were considered in the evaluation.

Information on other aspects of performance serves no purpose, can be a distraction, and, in the event of future litigation, will place the organization in a defensive position. For example, statements regarding an employee’s Family and Medical Leave Act absences will raise a “red flag” with opposing counsel, regardless of whether they were considered in the decision-making process. Since FMLA does not allow these absences to be used as a basis in determining attendance or other performance ratings, management will be required to explain why they were referenced.

1. Include space on the appraisal form to allow employees to comment on their ratings.

This feedback may identify a need for follow-up discussions and will serve as a source of documentation.

1. Plan for the upcoming evaluation period and future development.

Confirm timetables for follow up and completion of agreed upon activities. Opportunities for success will be enhanced if planning is incorporated as an integral part of the overall appraisal process.