Advantages and Disadvantages of Performance Appraisals

There seems to be an ongoing debate as to the value of doing employee performance appraisals. Anyone who has given or received a performance appraisal could argue vehemently as to the effectiveness and sensibility of doing them.

So what is a performance appraisal?

A performance appraisal is an evaluation of job performance over a period of time. It is basically an annual report card on an employee and how they performed over the prior year.

Unfortunately not all performance appraisal processes are the same and some are designed to not only fail, but to create a negative experience for both the employee and the manager.

So why do organizations do performance appraisals?

There are different schools of thought on this. Some organizations do performance appraisals because of obligation to perform the dreaded task. Some do them so they have a piece of paper in the file. But successful organizations have learned to do them strategically as part of a larger performance management process.

Advantages of doing performance appraisals:

• Performance appraisals provide a record of performance over a period of time.
• Performance appraisals provide an opportunity for a manager to meet and discuss performance with an employee.
• Performance appraisals provide the employee with feedback about their performance and how well they completed their goals.
• Performance appraisals provide an opportunity for an employee to discuss issues and to clarify expectations with their manager.
• Performance appraisals offer an opportunity to think about the upcoming year and develop employee goals.
• Performance appraisals can be motivational with the support of a good reward and compensation system.

Disadvantages of performance appraisals:

• If not done appropriately, performance appraisals can be a negative experience.
• Performance appraisals are very time consuming, especially for managers with many employees.
• Performance appraisals are based on human assessment and are subject to rater errors and biases.
• If not done right, performance appraisals can be a complete waste of time.
• Performance appraisals can be stressful for all involved.

Finally a performance appraisal is only as good as the performance management system it is part of. If an organization merely does performance appraisals for the sake of doing them, they are wasting their time. But if an organization strategically incorporates performance management into their strategic plan to implement business goals, they will provide a process to accomplish those goals while developing their employees in the process.