Few management practices are more basic or prevalent than performance appraisals - the mechanism through which managers or supervisors evaluate the job performance of their employees. Yet, as common as the practice may be, many companies, both large and small, experience difficulty in structuring and managing the process.
To be sure, the problem doesn't lie in the concept itself. Everybody agrees that effective managers have to monitor the performance of direct reports, note which areas of job performance need to be improved, and then communicate assessments to them in a positive and constructive way. How else is it possible to determine how people get promoted, if they deserve salary increases, and how much they should be making?
The problem seems to be not with the concept, but with the format and mechanics. In many companies today, managers as well as employees aren't convinced of the value of appraisal systems. To many supervisors, they simply represent additional work, and some employees remain skeptical and apprehensive regarding the process. In addition, traditional approaches to performance appraisals aren't necessarily well suited to today's flatter management structures, which de-emphasize direct supervision, promote employee autonomy, and often involve collaboration with many different employees from a wide range of disciplines. In fact, many younger companies were created with the goal of intentionally not resembling older commandand- control corporations and, as a result, are reluctant to create formal employee performance evaluation procedures. Yet another problem with performance appraisals in today's workplace is that the difficulty in finding highly skilled employees, coupled with the fear of litigation, has made some managers gun-shy about being too critical of their staff members. These problems notwithstanding, performance appraisals are a vital management function, and it's up to you to help your company implement a structured and systematic program that takes into account the realities of today's workplace - and the nuances of your firm's unique culture. Merit raises should always be pegged to your performance evaluation system.