Is it a tool for assessing the past or a dynamic tool to shape the future?

Let’s look at what most accept as the three purposes of an appraisal system:

(a)    Measures past performance with a twofold aim:
(1) Reward the employee appropriately with pay and
(2) Decide on the employee’s prospects for promotion.

(b)   Sets desirable goals for the employee to work on

(c)    Defines the employee’s training/coaching needs

A question often asked: Do we have to wait another year to pass to set the employee’s goals or assess his training needs?

No, we can and must do it all the year through, but at the time of the appraisal when we meet with the employee, we have a good opportunity to document them as the results of a mutual discussion and understanding and set them in stone for the parties to see.

A Performance Appraisal system consumes a lot of management time and energy and has considerable costs. Therefore, such a system must be made to work and earn its bread.

Does it work?

A great number of organizations are unhappy with their appraisal system. Almost none, however, wants to abandon it altogether. All who complain, want to improve it. Most don’t know how.

From our study of some organizations, we found the following as the main problems:

Problem No 1: Implementation. The managers that participate in the system as appraisers don’t know enough and are not trained enough. Often they do a very poor job, and their behavior undermines the system without any real consequences to them.

Problem No 2: Documentation. Though the measuring component (a) above, is in many cases extensively documented in the system’s reports, the other two parts (b) goals and (c) training needs are not given prominent role or [...]