The Trouble With Performance Appraisals In The New Age

performance appraisal

Ahhh.. Good old performance appraisals. Employees and managers alike seem to dread the approaching performance appraisal deadline.

We’ve all been through it. The tension, the stress, the anxiety of waiting. But, at least it’s for a good cause, right? WRONG. With all the time and energy that we pour into our performance appraisals every year, you’d think they served an actual purpose.

The average cost of a performance appraisal per employee sits around $240. This is calculated on the hourly wage of those involved, and doesn’t include the cost to the business of this time wasted.

That expense adds up, so you’d think there should be some great purpose to this whole performance appraisal thing, but bar a legal basis for termination of contract, it has little to no value. And even that rarely holds up in court.

Let’s take a look at the reasons why performance appraisals are becoming outdated, inefficient and completely obsolete.

1 It Doesn’t Assess Performance

Given the name, you’d assume performance appraisals were directly linked to the assessment of your performance, however they rarely have anything to do with performance at all.

Most often these assessments are reviewing personal traits and characteristics. These can indirectly affect your performance, but do not directly influence the work that you’ve done. Very little attention is given to how much an individual has contributed towards projects and goals, which are the things that directly affect your business.

2 Annual Feedback Is Not Enough

In business, the projects you work on are monitored and feedback given on a regular basis. This makes sense, as your employees can never go too wrong before receiving correctional feedback.

When it comes to performance appraisals, feedback is given annually. This isn’t hugely beneficial to employees, who would like to make continuous improvement.

3 Performance Appraisals Are Rarely Data Based

Performance appraisals are rarely based on actually data and statistics from employees’ performance during the year. Often the feedback is subjective, which opens doors to bias or personal opinion that doesn’t always reflect the truth.

“Sally, how do you feel you’ve performed this year?” – Okay, so maybe this isn’t the exact question being posed, but leaving questions open to opinion can make the assessment completely inaccurate and completely worthless.

4 No Accountability

Think back to your school days. Do you remember having to complete tasks that weren’t for marks? I do, I wrote complete and utter rubbish.

Much like the school days, managers are completing employee performance appraisals in a ‘it’s not for marks’ fashion. There is no accountability, no second opinion, and usually not a care in the world.

The fact that performance appraisals are a very secretive matter, means the door is left wide open to favouritism and bias, which should never be welcome in the office.

Should Performance Appraisals Become Null And Void?

That’s a very good question. After explaining how useless they truly are, it’s hard to believe that there is any use for them whatsoever, but alas there is.

In certain environments, employee assessment of this kind can be useful, and help people work together to get along as a team. In these circumstances, performance appraisals and feedback should be managed in an informal manner on a regular basis.

Ways To Make The Performance Appraisals Process More Beneficial

Regular check-ins

Instead of only making use of the once-a-year appraisal, do regular check-ins with your employees a few times a year, so that they can be improving continuously.  

Use Self-Appraisal

Ask your employees to regularly take part in self-appraisals, to evaluate themselves. This encourages them to work at their best at all times.

If you are required to take part in performance appraisals, the guidelines above will help you to get the most benefits out of the process.

But for the most part, there are better ways to give feedback to your employees, and every company should be using a suitable method to do so. This one-size-fits-all method is outdated and better left in the 20th century.

Performance Reviews: Re-thinking How We Evaluate Employees


Today’s challenge: Have a discussion with each of your employees and ask them how they feel about annual performance reviews. Just by reading that sentence, you’re probably shifting uncomfortably in your seat, because you already know the answer.

Annual performance reviews are stressful for all parties involved. Managers end up spending days gathering information, while employees waste time agonizing over how the review will play out. In addition, studies have proven that traditional annual reviews are ineffective and have negative impacts on motivation and productivity.

So, what now?

At Valoro, we have reconsidered the way we evaluate performance, and as a result have kicked annual performance reviews to the curb. We are going to encourage you to do the same.

We are approaching a new year, and with that we need new traditions. So, it’s time to say: Ciao, APR! (side note: it sounds better in an Italian accent)

Here are our ways to start you re-thinking the way you evaluate performance in your business.

1 Quick Check-ins On The Regular

Ever read the One Minute Manager? Do yourself a favour!

We all know that nothing good comes from employees when they are micro-managed. But, this doesn’t mean you need to go on a complete authority hiatus. In fact, employees need to know what they’re doing right, and where they’re messing up.  

This all comes down to quick check-ins that address performance, goals and culture issues, before they become bigger problems. An added bonus of regular, quick check-ins is that they create a work environment that includes transparency and honesty.

Hold quick meetings with each of your employees, and ensure they fully understand their role in the company before setting targets. Set times either weekly or bi-weekly to have a quick catch-up with them, and address any problems they may have in reaching their target. It’s as simple as that.

2 Separate Compensation Reviews

One of the main reasons companies hold annual reviews is to quantify how performance translates to future remuneration and promotion.

The problem with coupling performance and promotion decisions, however, is that it can cause employees to feel like they are in an adversarial conversation, rather than a collaborative one. This experience can feel like the company is not truly supporting growth, and is finding ways to nitpick to avoid granting a salary increase.

Needless to say, the answer is to decouple the appraisal from the compensation review. Instead, listen to your employees and understand what their own professional goals are. Perhaps they are in a position that doesn’t highlight their strengths. Set goals tailored to their position, and rather review them on that.

3 Quarterly Performance Appraisals

We’ve spoken a lot about setting goals with each employee. But, that needs to amount to something, right?

As it is, many companies break up the year into quarters. It’s a natural time to look at company wide financials, and either re-affirm or re-assess goals. This is a great time to look back on your conversations with each employee, and see how they’ve performed relative to the goals that have been set for them.

Have discussions with them about what their future might look like within the company, and how that relates to remuneration. And when it comes to remuneration, be clear about when employees could expect that to happen.

In conclusion, quick catch-ups are the new APR. We cannot continue playing with the emotions of our employees once a year. Quick, fast bursts of feedback are far more effective, and keep your employees motivated to better themselves.

Are you bringing out the best in your employees?

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