Annual Appraisals in Performance Management, a Letter to the Editor

As a frequent contributor and reader of WorldatWork and workspan magazine, I recently wrote a Letter to the Editor in response to “new” approaches in performance management that suggest to eliminate the annual performance appraisal process.
Let’s have a discussion, add your opinion in the comments. 

LETTER TO THE EDITOR: The recent discussions in the literature of a “new” approach to performance appraisal should be discomforting to those who are familiar with the research on the topic. The “new” approach, that relies on continuous measurement and feedback, rather than an annual appraisal, is really just recognition of the reality that without continuous measurement and feedback any system will fail. When the sole requirement is an annual appraisal the night before the event both the manager and the employee attempt to recreate the year (which has not been discussed on an interim basis) and they will come to the meeting… remembering two different years. Research shows that managers tend to attribute employee success to external causes (and their own brilliant management) and failures to the employee’s lack of effort or focus. Employees tend to believe the opposite. So yes, annual end of year appraisals cannot be effective on their own.

Formal appraisals are an administrative tool for tying pay to performance. If done well they also define performance standards and objectives at the start of the year and update them if things change during the year. Continuous measurement/feedback is an integral part of the performance management process and if done well it creates a “diary” that can be reviewed during the annual appraisal. Technology makes the creation of diaries a dialogue that is the real appraisal tool… the year end event is the culmination of the process. And if the appraisal also includes a resetting of performance standards and objectives for the next period, as well as development plans for improving results, then it has done its part in the performance management process.

 Organizations to not need either continuous measurement/feedback or a year end appraisal event…  THEY NEED BOTH.