People First - June 2007

Performance Appraisals:

Useful Tool or Waste of Time?

by Mark Keays

Ask employees from any company about performance appraisals and they will likely tell you that the performance appraisal is less than meaningful, often poorly prepared and in many cases poorly delivered. If done well, performance appraisals can improve productivity and help an organization focus its employees on their individual development. Additionally, they provide a solid base from which to make promotion and pay decisions. From a human resources (HR) perspective, the appraisals indicate that the employees are getting performance feedback – positive or negative – and are being made aware of the expectations placed upon them by their leaders. The HR department is often seen as the heavies when a manger or supervisor wants to terminate an employee for poor performance, and HR won’t support the termination because the employee’s performance appraisals make no mention of any performance issues. In worst-case scenarios, the employee has received a pay increase, an event that does not provide a solid legal basis to support a termination of employment.

Formal performance appraisals – at a minimum – should be done yearly. Regular informal meetings should be held with each employee to reinforce good behavior and accomplishments, and discuss any employee problems or shortcomings with recommendations for improvement. Managers and supervisors should be trained to document the performance of each of their employees over the course of the review period so that the appraisal covers an entire evaluation period. It also helps to avoid the following:

• Halo effect, where the supervisor recalls only the positive things the employee has accomplished.

• Horns effect, where only the employee’s shortcomings are recorded.

• The effect of recency, when the manager or supervisor only remembers the most recent performance of the individual, good or bad.

Many performance appraisal forms create problems because the rating scales tend to skew the appraisal. In most organizations, employees don’t consider themselves average, while untrained leaders will tend to rate people above-average because it reduces the likelihood of justifying the performance rating. In that same vein-rating someone at the extremes of the scale – either below-average or exceptional – usually requires documentation. If it doesn’t exist, the trend is to rate everyone above-average, thereby negating the value of the performance appraisal process.

Creating and maintaining a viable performance appraisal process requires the development of a meaningful performance appraisal form and the commitment and support of the entire leadership team in an organization. Managers and supervisors need to be trained to document the performance of their employees on an ongoing basis and provide feedback in an honest, timely and meaningful manner. Performance expectations and appropriate work behavior need to be clear and understood. Employees should never be surprised by their rating in a performance appraisal and should have a clear understanding of how their performance is perceived by their leader.

Mark Keays
Mark Keays is president of Desert Management Services, a Las Vegas-based management consulting firm, and a faculty member of the University of Phoenix, where he teaches in the areas of organizational change, human resources and management.