Performance appraisals, or performance reviews, as they have traditionally been approached in organizations are fundamentally flawed. The adoption of a performance management system instead will improve both employee performance and employee motivation.
Many companies and managers have already identified that good management involves focusing on the strengths of workers, applying solution focused strategies, and trusting and respecting their employees. This is often communicated to staff through flexible workplaces, affording staff with the freedoms to expand on their roles and to work independently, involving employees in decisions made within the department, and communicating respect to all workers. For this reason, performance appraisals can appear to go against these principles. The standards to which employees are assessed against are, in many cases, created outside of the department and tend to be restrictive and not reflective of the day to day tasks and other areas in which staff may have excelled. Performance appraisals can also impede on the working relationship that managers are often trying to build with their employees, dividing the relationship and communicating a ‘them and us’ approach. This is particularly the case when considering that raises are often tied in with performance reviews, creating a hierarchical structure in which employees may feel dependent on pleasing managers, rather than having a true commitment to departmental goals.
Occupational Psychology has also shown that people tend to have recency bias, meaning managers are more likely to judge employee’s performance based on recent performance, failing to account for high performance throughout the year. For employees who become wise to this, it may serve to de-motivate staff, with workers becoming reluctant to perform to their highest standard throughout their year, instead only increasing their performance near appraisal time.
The results of the appraisal meeting can also serve to deteriorate the good working relationship which managers may have strived to establish with their employees during the year. This is particularly the case if employees disagree with the outcomes of their appraisal and where there is conflict.
Fortunately, human resource departments can support managers by thinking of creative solutions to address the weaknesses associated with traditional annual performance reviews. One such strategy is using a performance, monitoring, and evaluation system which occurs throughout the year, and at regular interims. Regular performance meetings not only address the concept of recency bias, but also encourage staff to maintain consistently high standards. It also allows staff to provide feedback to managers and allows a manager to express areas of concern, while also giving staff the opportunity to make improvements ready for a re-evaluation in the near future. This can help managers to nip any problems in the bud early. Regular performance monitoring can at first appear to be time consuming, but there are many new software solutions and tracking systems which can manage the review process, including tracking dates for appraisals and streamlining administration.