Page 1 of 5 Assessment & Evaluation
Published September 2006 Increasing the Value of Performance Appraisals
Tracy Martin
In the 1700s, biographer James Boswell learned about the Giant’s Causeway and became quite excited
about the prospect of visiting this unique area of chimney rocks in Ireland. He conveyed his enthusiasm
to British storyteller Samuel Johnson, urging him to make the lengthy journey. True to
form, Johnson said, “Dear sir, while it might be worth seeing, it is not worth going to see.”
While there are many things we can do, some things are not worth doing, and we should know the
difference. First, we have to decide what things make a difference and understand what impact they
have. Once we have characterized these attributes and/or success factors, can we measure them? Are all
indicators equally important or relevant? Can we rank them? Before we can make these kinds of
decisions, we should be aware of our assumptions. Performance appraisals are supposed to:
• Provide feedback on results — what worked and what did not.
• Motivate employees to engage in the right behaviors to perform better.
• Provide development opportunities to perform better the next time.
• Distinguish the top performers from the poor ones.
• Provide the framework for termination decisions based on poor performance.
• Foster communications between the manager and employee.
• Set expectations for the job.
In reality, however, we often find the opposite. Performance appraisals often get a bad wrap because the
review cycle typically occurs only once a year and is backward-looking. They tend to focus the end
results without focusing on the means to get there and how to move forward. Another major reason that performance reviews have added little value to organizations is that managers
are not appropriately trained to assess individuals and provide proper constructive criticism.
As a result of inadequate manager training, team leaders tend to give everyone relatively similar
rankings to avoid problems and potential litigation. Another major concern with performance appraisals
stems from the inadequate link to development opportunities and motivational-reward systems.
As a result of these inconsistent and often missed opportunities, performance appraisals thwart the
intended goals of the organizations and lead employees to question management and the enterprise. http://www.talentmgt.com/includes/printcontent.php?aid=155 8/25/2010 Page 2 of 5 We should question the assumptions of performance appraisals and provide better, more authentic ways
to manage, measure and motivate employees through performance management processes that are
comprehensive in all aspects of human capital management.
Pros and Cons
Making sure employees’ work activities support corporate strategies is critical to reaching your goals. It
allows you to make appropriate compensation and promotion decisions and to encourage and develop
the talent your company needs to meet new demands and challenges.
Various techniques and formats exist to measure performance, as well as spinoffs on traditional models.
Self-Appraisals
Pros: Employees feel they have a voice in the process, and it provides the ability to report progress
toward goals.
Cons: Individuals tend to rate themselves harder, and they might feel managers do not know what they
are doing.
360-Degree Feedback
Pros: Facilitates open communication. Employees who work together are more likely to understand the
objectives of the work and any challenges it presents. It enables all individuals involved with the
employee to rate performance, and it should be used for developmental purposes, not for compensation
or promotion.
Cons: Training is required to explain how to give constructive feedback. It requires a significant amount
of trust—the organization must be mature enough to manage the process and avoid conflicts of interest
between employees.
Management by Objectives
Pros: Allows management to focus on achievable results by matching goals against an employee’s job
objectives. It includes ongoing tracking and feedback in the process of reaching goals. Expectations are
set for each job prior to performance, with regular coaching to help employees meet or exceed
expectations. The focus is on results, not the work activities.
Cons: It’s time-consuming for managers to constantly evaluate employees. It tends to underemphasize
the importance of the work environment or the context in which the goals were set.
A complete performance management program would consist of many of the above techniques in a
frequent cycle. Continually reviewing an employee's performance tends to increase accountability and
organizational commitment while providing the chance to demonstrate productive behaviors to
employees.
Increasing the Value of Performance Appraisals
Create, grow and integrate. These three words mean the difference between the success or failure of
your performance-appraisal process.
• Create: generating the line of sight between the organization’s goals and mission with the objectives
the employee is asked to deliver.
• Grow: providing the opportunity for employees to increase their skill sets and competencies. http://www.talentmgt.com/includes/printcontent.php?aid=155 8/25/2010 Page 3 of 5 • Integrate: leveraging the performance-appraisal process as part of a holistic and comprehensive
human capital management strategy.
Before implementing any evaluation method and embarking on change management for your
performance-appraisal processes, it’s imperative to consider your company’s culture and business
drivers.
Creating Line of Sight through Alignment with Corporate Goals and Objectives
Alignment ensures that the right tasks are being done with clear targets and priorities that are in
collaboration with and driven from the overall corporate goals and objectives. It is the continuous
process of securing resources. For HR professionals, that means determining how alignment can be
achieved, and how it is managed.
Coordination is also key: Increasing the value of performance reviews begins with cascading the
objectives set forth at the corporate level and translating these into distinct, measurable and meaningful
tasks and objectives for the employee. This ensures people are focused on the right activities and results
while using their core competencies.
Growing Skills and Competencies to Improve Employee Productivity
Growing employee competencies is important to help organizations achieve better results. Competency
profiling and assessment can help companies identify superior performance with the hope of being able
to identify and replicate among candidates and average and poor performers. But employee performance
will not improve if it is not part of a performance management process that is based on developing the
individual and anchored in behavioral objectives.
Managing and measuring competencies as part of an overall development plan and integrated HCM
processes is the key to success for any organization. Because many tasks are braided together as part of
projects, increasingly traditional HR functions can no longer rely on coordination and collaboration
among various HR teams. In today’s leading organizations, HR professionals have created the links
among the process of all HCM strategic initiatives with integrated and supporting technologies to drive
competitive advantage. Today’s icon is not the atom but the network.
Integrated Learning and Coaching, Rewards, Career and Succession Planning Organizations can increase the value of performance appraisals by integrating other HCM functions
such as learning, compensation, and career and succession planning into the process. By creating a
holistic approach to managing the life cycle of the employee, organizations move beyond management
by creating new leaders.
Learning and Coaching
Integration of a development plan with the performance-appraisal process helps sets guidance and
direction for employees to enhance their skills for successful completion of objectives. It sets the road
map in place for how an employee can grow and develop new competencies for greater career
expansion. Integrating an ongoing development plan provides opportunity for continuous feedback
during the performance period. The effects of an integrated learning and coaching process encourage
alignment between the goals of the organization and the tasks at hand. It enhances employees’
motivation through continuous dialogue and a path into new opportunities. At the end of the day, it http://www.talentmgt.com/includes/printcontent.php?aid=155 8/25/2010 Page 4 of 5 provides employees an increased capability meet or exceed their objectives. Ultimately, integrating
learning and coaching as part of the performance-appraisal process helps organizations become highperforming companies better able to adapt to rapid changes.
Reward Systems
Many organizations make pay decisions using the performance-appraisal process in an effort to tie
contribution to pay. Unfortunately, it’s an urban myth that pay for performance is a motivator to all
employees.
We are beginning to see HCM practices that are no longer “one size fits all.” We are finding greater complexity of the programs
and a willingness of organizations to increase the number of programs available to their workforce.
Programs have been designed for different types of industries (again, one size does not fit all) and also
accommodate different attitudes and work styles. When tailoring programs to meet specific needs,
organizations are better able to motivate and, hence, retain key and top talent.
Integration of performance appraisals with reward systems provides the link between motivation and
retention. If knowledge workers are going to have an opportunity to prove their worth, they need more
formative rather than summative assessments.
Performance appraisals are best used to inform workers, acknowledge what they do well and identify
any shaky areas where they might improve. Better still, these dialectical conversations will suggest
development strategies that enhance workers’ value to the organization and to themselves.
Career and Succession Planning
Performance appraisal systems that are integrated with career and succession planning provide managers
with a better understanding of employees’ commitment to growth and can strengthen the ability to retain
top talent. As part of the dialogue and feedback loop in performance management processes, appraisals
provide the opportunity to define where to go next in the company and what it is going to take to get
there. When performance appraisals are part of a succession-planning process, it creates the ability for
the company to identify top performers ready for the next senior position in the company, keep them
motivated by career advancement and provide them with a road map to success.
Taking the Next Step
According to the inimitable Yogi Berra, “The future ain’t what it used to be.” Metrics are good, but they
provide history rather than a crystal ball. It’s very important to understand the aspirations of employees
and ensure this resonates with the overall vision of the organization, a synergy that can be parlayed in
yet another Yogi-ism: “Don’t be where the ball isn’t.”
Performance is as much about setting goals as it is reaching them. If workers feel these goals are
obsolete, misguided or don’t reflect their own increasing talents, aspirations and interests, they are
unlikely to commit.
Increasing the value of performance appraisals (and getting the passion out of the employee) requires a
holistic approach to managing the life cycle of the employee. By truly understanding the skill sets and
competencies candidates bring when they first approach the organization through the development of
new skills in response to emerging challenges, organizations can cultivate the best environment for the http://www.talentmgt.com/includes/printcontent.php?aid=155 8/25/2010 Page 5 of 5 growth and retention of top, key talent. Tracy Martin, principal consultant for Knowledge Infusion, has more than 20 years of leadership
experience in human capital management and the human resources management systems industry. http://www.talentmgt.com/includes/printcontent.php?aid=155 8/25/2010

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