Performance Appraisal - To do or Not To Do

Performance appraisals can actually be counter-productive for employees who are in the greatest need of training and further development. This fact is highlighted by Professor Bård Kuvaas from the BI Norwegian School of Management, based on a new research study. ( www.innovations-report.com)

Its that time of the year where most organizations would go through their Performance Appraisal cycles. Every employee who is concerned with his own growth gears up with all the numbers,figures and qualitative statements (and whatnot) to support his/her cause.

There is excitement in the air with employees and managers bearing the burden of expectations and aspirations. This is the what everyone had been looking forward to. Or is it really?


Joel Spolsky in his article Incentive Pay Considered Harmful, April 2000, of provides an interesting contrary view of Performance Appraisals.

"The effect of reviews on morale is lopsided: while negative reviews hurt morale a lot, positive reviews have no effect on morale or productivity. The people who get them are already working productively. For them, a positive review makes them feel like they are doing good work in order to get the positive review... as if they were Pavlovian dogs working for a treat, instead of professionals who actually care about the quality of the work that they do. "

Appraisals are very painful and an unsatisfactory exercise for many. More often the bad effects of Appraisals are neglected. This is a period where more than half the workforce tread with fear and anxiety. Clearly everyone wants to grow but not merely through these mind wrenching exercises! One has to wonder if anyone has done a study to find out the psychological impact of Performance Appraisal processes on people.

Joel Spolsky states his own personal experience furthering the thought...

"Performance reviews were stressful for a couple of reasons. Many of my friends, especially the ones whose talents were very significant but didn't show up on the traditional scales, tended to get lousy performance reviews. For example, one friend of mine was a cheerful catalyst, a bouncy cruise director who motivated everyone else when the going got tough. He was the glue that held his team together. But he tended to get negative reviews, because his manager didn't understand his contribution. Another friend was incredibly insightful strategically; his conversations with other people about how things should be done allowed everyone else to do much better work. He tended to spend more time than average trying out new technologies; in this area he was invaluable to the rest of the team. But in terms of lines of code, he wrote less than average, and his manager was too stupid to notice all his other contributions, so he always got negative reviews, too. "

Negative reviews, obviously, have a devastating effect on morale. In fact, giving somebody a review that is positive, but not as positive as that person expected, also has a negative effect on morale.

According to Professor Kuvaas in Performance Appraisals - A Double Edged Sword May 2006, says

"Performance appraisals and other tools which involve feedback and target management should be adapted to the employee’s individual needs and characteristics. Otherwise, there is a risk of harming the good employees without being able to help the less good."

Clearly the Effects of Performance Appraisal on Employee Attitudes are still not known; making this a question worthy of Debate - Do we really need Performance Appraisals?

But if there are no Appraisals, how do we measure PERFORMANCE? Do we have a less painful alternative?