Performance appraisal
Performance appraisal is a systematic process of evaluating employee job performance and productivity against established standards, typically involving documentation, feedback, and decisions about compensation, development, or employment status (Murphy K.R., Cleveland J.N. 1995, p.3)[1]. The annual review meeting. The employee sits across from the manager, nervous. The manager opens a file, reads last year's goals, and rates performance on a 1-to-5 scale. Awkward conversation follows. Both leave relieved it's over—until next year. This ritual, practiced in some form by most organizations, is performance appraisal.
The practice has existed for over a century but remains controversial. Surveys show 46% of employees consider performance evaluations a waste of time when disconnected from ongoing feedback. Yet organizations need some way to differentiate performance, justify compensation decisions, identify development needs, and document issues. The challenge is doing it well—fairly, accurately, and in ways that actually improve performance rather than just measuring it.
Appraisal methods
Organizations choose among various approaches:
Rating scales
Graphic rating scales. The most common method: rate employees on traits or behaviors using a numerical scale (typically 1-5)[2].
BARS. Behaviorally Anchored Rating Scales provide specific behavioral examples for each rating level, improving consistency.
Comparative methods
Ranking. Order employees from best to worst performers.
Forced distribution. Assign employees to categories (top 10%, middle 70%, bottom 20%)—the controversial "rank and yank" approach[3].
Results-based
Management by objectives (MBO). Evaluate achievement of previously agreed-upon goals.
OKRs. Objectives and Key Results, popular in technology companies like Google and LinkedIn.
Multi-rater feedback
360-degree feedback. Collect ratings from multiple sources: supervisors, peers, subordinates, and sometimes customers[4].
Self-assessment. Employees evaluate their own performance, fostering self-awareness and ownership.
The appraisal process
Effective appraisals follow steps:
Goal setting. Define expectations at the start of the evaluation period—what will be measured and how[5].
Ongoing observation. Document performance throughout the period, not just what's remembered at review time.
Data gathering. Collect evidence: work products, metrics, feedback from others.
Evaluation. Assess performance against standards; prepare documentation.
Feedback meeting. Discuss evaluation with employee, allowing dialogue and response.
Development planning. Identify growth opportunities and create action plans.
Common problems
Appraisals often fail due to:
Rater errors
Halo effect. One positive trait influences ratings on all dimensions[6].
Recency bias. Recent performance weighs disproportionately; earlier performance is forgotten.
Central tendency. Reluctance to give extreme ratings—everyone rated as average.
Leniency or severity. Some raters rate everyone high; others rate everyone low.
System problems
Infrequent feedback. Annual reviews come too late to influence behavior.
Unclear criteria. Employees don't know what's expected until they're evaluated.
No consequences. Appraisals conducted but results not connected to decisions[7].
Contemporary trends
Practice is evolving:
Continuous feedback. Moving beyond annual reviews to regular check-ins—94% of employees prefer real-time feedback.
Simplified ratings. Some organizations eliminating numerical ratings entirely.
Development focus. Shifting from evaluation to coaching and development conversations[8].
Technology integration. Software platforms enabling more frequent feedback and goal tracking.
| Performance appraisal — recommended articles |
| Performance management — Human resources management — Feedback — Employee development |
References
- Murphy K.R., Cleveland J.N. (1995), Understanding Performance Appraisal, Sage.
- Aguinis H. (2019), Performance Management, 4th Edition, Chicago Business Press.
- Pulakos E.D. (2009), Performance Management, SHRM Foundation.
- Betterworks (2024), State of Performance Enablement.
Footnotes
- ↑ Murphy K.R., Cleveland J.N. (1995), Understanding Performance Appraisal, p.3
- ↑ Aguinis H. (2019), Performance Management, pp.134-148
- ↑ Pulakos E.D. (2009), Performance Management, pp.45-62
- ↑ Betterworks (2024), State of Performance Enablement
- ↑ Murphy K.R., Cleveland J.N. (1995), Understanding Performance Appraisal, pp.89-104
- ↑ Aguinis H. (2019), Performance Management, pp.178-192
- ↑ Pulakos E.D. (2009), Performance Management, pp.112-128
- ↑ Betterworks (2024), State of Performance Enablement
Author: Sławomir Wawak