Received: 26 December 2018 Revised: 6 August 2019 Accepted: 11 August 2019

DOI: 10.1111/1748-8583.12259

PROVOCATION PAPER

Performance evaluation will not die, but it should

Kevin R. Murphy

Department of Work and Employment

Studies, University of Limerick, Ireland
Correspondence
Kevin Murphy, Department of Work and
Employment Studies, University of Limerick,
Plassey Road, Castletroy, Limerick, Ireland.
Email: kevin.r.murphy@ul.ie
Abstract
A wide range of systems for evaluating performance have
been used in organisations, ranging from traditional annual
performance appraisals to performance management
systems built around informal, real-time evaluations, and
these systems almost always fail. Rather than continuing to
make cosmetic adjustments to this system, organisations
should consider dropping the practice of regularly evaluating
the performance of each of their employees, focusing rather
on the small subset of situations in which evaluations of per-
formance and performance feedback are actually useful.
Four barriers to successful performance evaluation are
reviewed: (a) the distribution of performance, (b) the con-
tinuing failure to devise reliable and valid methods for
obtaining judgments about performance, (c) the limited
utility of performance feedback to employees, and (d) the
limited utility of performance evaluations to organisations.
In this paper, I propose ways of managing performance
without relying on regular performance evaluation,
refocusing managers' activities from performance manage-
ment to performance leadership.

KEYWORDS
HR function, human resource management, human resource
strategy, performance management, performance related pay,
supervisor

1 | INTRODUCTION

Organisations use a range of systems to evaluate, manage, reward, and direct the job performance of their
employees. These often take the form of formal performance appraisal systems, which include annual reviews of

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employee performance, formal feedback sessions or appraisal interviews, efforts to calibrate evaluations across
departments or divisions, and the use of appraisals to drive key human resource management decisions, such as
salary increases, training, or even the separation of poor performers (Murphy, Cleveland, & Hanscom, 2018, pro-
vide the most recent review of research on performance appraisal). Some appraisal systems are built to motivate
future performance, by linking evaluations of performance with valued rewards, whereas others are designed to
identify poor performers and either correct their performance or separate them from the organisation (Murphy &
Cleveland, 1995; Welch & Byrne, 2001). Other organisations employ performance management systems that are
built to align the performance goals and activities of employees, work groups, departments, and divisions with
the broad strategic goals of the organisation and support employees in executing the plans and strategies that
are used to achieve unit goals (Aguinis, 2013; Pulakos, Mueller-Hanson, Arad, & Moye, 2015; Pulakos & O'Leary,
2011). Performance management systems are sometimes built around traditional performance appraisal methods
(e.g., annual evaluations of performance, see Pulakos et al., 2015), but increasingly these systems are built around
more streamlined and informal evaluations, focusing on real-time feedback rather than annual summaries of
performance (Aguinis, 2013).
Regardless of how they are designed or configured, performance appraisal and performance management sys-
tems are almost always rated as failures by both employees and management (Adler et al., 2016; Murphy et al., 2018;
Pulakos et al., 2015). In this paper, I will argue that there is a common feature in virtually all performance appraisal
and performance management systems that contributes substantially to their failure—that is, they are built around
subjective evaluations of job performance (Murphy et al., 2018).
The central thesis of this article is that the process of performance evaluation in organisations is
fundamentally flawed, regardless of the specific form performance evaluation systems take and that radical
changes are called for in organisational systems that depend upon these evaluations. That is, I call for the
development of performance management systems in organisations in which the supervisor's judgment about the
adequacy or the level of each employee's performance is not sought or conveyed to every employee on a
regular basis.
It is useful to define precisely what I mean by “performance evaluation.” Performance evaluation is a process in
which one of more individuals in organisations (typically supervisors) observe and obtain information about the job
performance and effectiveness of individual employees. They use this information to make subjective, evaluative
judgements about the performance of individuals. The term “subjective” is used in the same sense as in Landy and
Farr (1983)—that is, an evaluation is subjective if it requires judgment and cannot be arrived at by a simple objective
count. “Subjective” does not imply that these judgments are biased or inaccurate, simply that they are not subject to
external objective verification. This lack of external verifiability, however, does leave evaluations of job performance
open to doubt and challenge. The term “evaluative” means that judgments about performance can be scaled on a
negative to positive continuum. That is, performance might be described as poor versus good or as unacceptable
versus acceptable; performance evaluations are ultimately statements about the value the evaluator places on the
employee's performance. Regardless of the specific form performance appraisal or performance management
systems take, all of these systems rely on evaluative judgments about the performance and effectiveness of
employees, and that is their Achilles heel.
This paper is divided in to two major sections. First, I document the persistent failure of performance appraisal
and performance management systems in organisations and the lack of effective responses to these failures. The sec-
ond section of this paper I take up the question of whether we should evaluate performance, and I show both why
this process is so challenging and why organisations obtain so few benefits and incur so many costs in attempting to
evaluate job performance. I offer the potentially radical suggestion that organisations should abandon the whole con-
cept of regularly evaluating the performance of each employee; I end this paper by describing potential replacements
for performance evaluation.
MURPHY 15

2 | T H E F AI LU R E O F P ER FO RM A NC E A P P R A I S A L A N D PE R F O R M A N C E
M AN AG E M E NT S Y S T E M S

The coming demise of performance appraisal in organisations has long been a staple of the business press. A number
of large organisations (e.g., Accenture, Deloitte, Microsoft, GAP, and Medtronic) have abandoned or substantially
curtailed their use of formal performance appraisal systems (Buckingham & Goodall, 2015; Capelli & Tavis, 2016;
Culbert & Rout, 2010; Cunningham, 2015), and it is easy to see why. Performance appraisals are often described as
the “job managers love to hate” (Pettijohn, Parker, Pettijohn, & Kent, 2001, p. 754) and as “one of the most persistent
problems in organizations” (Gordon & Stewart, 2009, p. 473). Supervisors and employees dread performance
appraisals (Adler et al., 2016), and the great majority of appraisal systems in organisations are viewed as ineffective
(Pulakos et al., 2015; Smith, Hornsby, & Shirmeyer, 1996).
Performance management systems do not seem to fare much better; the conclusion that performance manage-
ment is broken is shared among many researchers and practitioners (Pulakos et al., 2015; Pulakos & O'Leary, 2011).
Reviews of research on both performance appraisal and performance management noted that there is little if any
evidence that these systems have any real impact on the performance or effectiveness of employees (DeNisi &
Murphy, 2017; DeNisi & Smith, 2014; Murphy et al., 2018; Pulakos et al., 2015; Pulakos & O'Leary, 2011). More
than a century of research has been devoted to identifying and fixing the problems with performance appraisal and
performance management systems in organisations (Austin & Villanova, 1992; DeNisi & Murphy, 2017), but to date,
this research has not led to performance appraisal or performance systems that are seen by their users as
consistently accurate or useful.
Critiques of performance appraisal and performance management systems are often dominated by practical
concerns. For example, Deloitte, a global firm offering consultation, auditing and financial advisory services found
themselves devoting a great deal of time and money to performance management; Deloitte's review suggested that
they were spending two million hours per year completing forms, holding meetings, and conducting performance
reviews (Buckingham & Goodall, 2015). The large investments of time and energy these systems require are not
unique to Deloitte; many organisations devote significant resources to performance appraisal and performance man-
agement systems. Unfortunately, it is not always clear that this investment yields substantial benefits to organisa-
tions. On the contrary, the approval of and satisfaction with performance appraisal and performance management
systems is often abysmal (Holbrook, 1999; Levy & Williams, 2004; Reinke, 2003; Russell & Goode, 1988; Taylor,
Tracy, Renard, Harrison, & Carroll, 1995).
Surprisingly, widespread dissatisfaction has not led most organisations to abandon performance appraisal or per-
formance management. On the contrary, the great majority of medium to large organisations continue to have some
sort of formal programme for evaluating the performance of their employees, give them performance feedback, and
use the results of performance appraisals to inform and sometimes to drive decisions about rewards, such as salary
increases, promotions, developmental opportunities, and sanctions, such as layoffs or terminations (Lawler, Benson,
& McDermott, 2012; Mercer, 2013). For example, Mercer (2013) surveyed more than 1,000 organisations in more
than 50 countries and reported that the vast majority of organisations set individual goals (95%) and conduct formal
year-end review discussions (94%) and that most link individual ratings and compensation decisions (89%). Gorman,
Meriac, Roch, Ray, and Gamble (2017) surveyed Fortune 500 firms in the United States and reported that a substan-
tial majority of these firms use formal performance appraisals as a key part of their human resource management
strategy. The recent (2015–2016) Cranet survey of organisational policies and practices (Dewenttick & Remue,
2011) provided information from over 4,800 organisations in 24 countries throughout the world. The great majority
of firms included in this study (82%) had a formal performance appraisal system in operation, and it was common to
use the results of appraisal to make decisions about pay, development, and career moves.
Rather than abandoning formal systems for performance appraisal or performance management, many organisa-
tions make periodic attempts to improve their systems, by using improved rating procedures or incorporating a wider
16 MURPHY

array of information in evaluating employee performance. For example, Buckingham and Goodall (2015) describe the
radical approach Deloitte took to simplifying their performance rating system, narrowing down a complex perfor-
mance appraisal form to four simple items (e.g., given what I know of this person's performance, I would always want
him or her on my team).1 Other organisations go in the opposite direction, adding layers to their evaluation system in
an effort to increase its accuracy and acceptance. For example, many organisations have adopted some form of
multisource feedback (often referred to as 360-degree feedback) in which performance evaluations and feedback are
sought from peers, subordinates, customers or clients, or self-evaluations in addition to the traditional reviews con-
ducted by supervisors (Atwater, Brett, & Charles, 2007; Bracken, Rose, & Church, 2016; Bracken, Timmreck, &
Church, 2001; Taylor & Bright, 2011). Although initially developed in North American organisations, these
multisource appraisal systems have become increasingly popular across the globe (Bailey & Fletcher, 2002; Brutus et
al., 2006; McCarthy & Garavan, 2001).
Still, other organisations have moved away from traditional annual performance appraisals towards performance
management systems that involve more frequent and informal performance evaluations and feedback (Aguinis,
2009, 2013; Buckingham & Goodall, 2015; Pulakos, 2009). These systems are often attractive to employer and
employees because they seem simpler and more user-friendly (Murphy et al., 2018), but there are persistent doubts
about the effectiveness of performance management systems. There is little evidence that real-time performance
management systems provide better or more useful evaluations of performance than more traditional performance
appraisal systems, and even less evidence that they do any better than traditional performance appraisal systems in
increasing the performance and effectiveness of employees (DeNisi & Murphy, 2017; DeNisi & Smith, 2014; Murphy
et al., 2018).
In thinking about why performance appraisal and performance management systems refuse to die, three
conclusions stand out. First, many stakeholders believe that it is important and beneficial to measure
performance and to use that information to drive decisions. Second, it is widely believed that performance
feedback is valuable and that it helps to improve employee motivation and performance. Third, there does not
seem to be any clear alternative to the type of evaluation system most organizations use; virtually, every system
that has been proposed to replace traditional performance appraisal (e.g., performance management systems,
evaluation systems based on objective performance, and productivity measures) has fared as badly, if not worse.
I believe that all of these assumptions and conclusions are flawed and that the strategies organisations typically
follow in an effort to improve their performance appraisal, and performance management systems are also
flawed.
The assumption that tends to drive most efforts to improve performance appraisal and performance management
systems in organisation is that some surface feature of the system (e.g., the rating scales being used, the schedule for
providing feedback, and the way managers are trained to implement these systems) is the problem, and replacing this
feature or set of features with will lead to meaningful improvements in these systems. The persistent failure of a wide
range of approaches to improving performance appraisal and performance management systems suggests that a new
strategy is needed. Rather than continuing to rearrange the surface features of performance appraisal and perfor-
mance management systems, I propose that it is time to critically examine the concept that underlies virtually all of
these systems—that is, performance evaluation.

3 | SH OU L D WE E V AL UA TE P ER F OR MA NC E?

The belief that we should evaluate job performance is usually taken as a given, and the debate is almost always over
how to measure performance rather than about whether the entire enterprise is misdirected. A critical examination
of the belief that it is useful and beneficial to evaluate performance suggests that the problem is not that we are
doing performance evaluation badly but rather that we are doing it at all.
MURPHY 17

The belief that you should evaluate job performance is based on a series of assumptions, none of which are
well grounded. First, performance evaluation involves the assumption that there is something meaningful to
measure—that is, that people differ in meaningful ways in their effectiveness in performing their jobs. Research
on the distribution of job performance calls this assumption into question. Second, the belief that you should
evaluate performance makes sense only if it is feasible to do this. The failure of nearly a century of research on
performance evaluation to provide methods of obtaining judgments about performance that are reliable and valid
calls that belief into question.
These first two assumptions deal with the feasibility of performance evaluation. If there are not broad and mean-
ingful differences in performance, or if they cannot be reliably measured, performance evaluation may be a doomed
enterprise. However, even if it is feasible to evaluate performance, it is not clear whether these evaluations have any
real value for employees or organisations. For example, the most frequent justification for formal performance
appraisal systems in organisations is that they provide performance feedback that is useful to employees (Murphy et
al., 2018). Research on both reactions to feedback and on the effectiveness of feedback call this assumption into
question. Similarly, organisations often claim that performance evaluations are an important component of their
human resource management programmes, driving decisions such as salary increases or training. The reality is that
many organisations make little effective use of performance evaluations, either ignoring them, attempting to use
them for incompatible and conflicting purposes, or using them in a half-hearted way that undermines the value of
these evaluations.

4 | T H E DI S T R I B U T I O N OF JO B P E R F O R M A N C E C A N M A K E
P E R FO R MA N C E E V AL UA T I O N P O IN T LE S S

It has long been assumed that job performance is distributed normally and that there is meaningful variability in job
performance and effectiveness. This assumption is explicit in studies designed to estimate the economic utility of
human resource interventions (Hunter & Hunter, 1984; Hunter & Schmidt, 1982), in which a central concern is
expressing the variability in job performance in monetary terms (Bobko, Karren, & Kerkar, 1987; Bobko, Shetzer, &
Russell, 1991). These studies suggest that the variability in job performance is substantial and meaningful, typically
producing estimates of the standard deviation of job performance worth the equivalent of 40–70% of the annual
salary attached to that job. For example, in a job where the annual salary is $50,000, these methods will often lead to
the conclusion that employees near the lower end of the performance distribution (e.g., at the 15th percentile, or one
standard deviation below the mean) produce goods and services worth approximately $25,000, whereas those nearer
to the top of the distribution produce goods and services worth approximately $75,000. If you assume that perfor-
mance is normally distributed, all you need to know is the mean and standard deviation of the distribution of job per-
formance to make statements about the value of performance at any particular level and about the likely economic
impact of a wide range of interventions.
In a series of papers, Aguinis and his colleagues have strongly challenged the assumption that job performance is
normally distributed (Aguinis & Bradley, 2015; Aguinis, Ji, & Joo, 2018; Aguinis & O'Boyle, 2014; Aguinis, O'Boyle,
Gonzalez-Mulé, & Joo, 2016; Crawford, Aguinis, Lichtenstein, Davidsson, & McKelvey, 2015). They note that many
indices of performance and contribution to the organisation appear to follow a power law distribution rather than a
normal distribution. This same trend has been noted by other researchers (e.g., Clark, 2012), and it is hardly limited to
performance distributions. This power law can be used to describe phenomena ranging from distribution of wealth
and the ownership of resources, to the magnitude of earthquakes to the size of cities; it can even be used to charac-
terise the distribution of journal article citations.2 Figure 1 illustrates the type of power law distribution that has been
widely observed in studies of accomplishments and performance.
It is important to understand precisely what the power law says about job performance. This distribution does
not imply that most people are poor performers. Rather, a power distribution suggests that (a) very few people are
18 MURPHY

FIGURE 1 The power law distribution

highly effective at their jobs and (b) the great majority of the distribution is made up of people who are markedly less
effective. The bulk of the workforce is likely to represent people who are at least acceptable performers; they are
simply not star performers.3
Arguments about the exact shape of this distribution of performance are interesting in an academic sense, but
the true importance of the work of Aguinis and his colleagues becomes apparent when one focusses on the contribu-
tions different types of performers make.
The key argument Aguinis and his colleagues make is that a handful of top performers or “stars” contribute
disproportionately to the overall output of most organisations. Aguinis and Bradley (2015) describe the management
of star performers as the “secret sauce for organisational success” and recommend that organisations should devote
their attention to a handful of stars, whose contributions are critical to success. Much in the same way that there are
a small number of people who are immensely rich or a small number of research articles that attract large numbers of
citations, the data these studies review make a compelling case that a small number of people perform at a high level
of effectiveness and that differences among the rest of the employees in an organisation are comparatively small and
unimportant.
It is useful to think through the implications of the argument by Aguinis and his colleagues that in many set-
tings, there are a handful of stars who perform at a very high level and a very large number of employees whose
performance is substantially less stellar and relatively homogeneous. If this is a good representation of the distri-
bution of job performance, there is hardly any need for complex methods of performance evaluation. The stars
should be easy to spot, and virtually, everyone else will be performing at such a lower level that differentiating
among these more average performers will be virtually pointless. Consider, for example, the job of car sales. Most
salespersons sell about 10 cars a month, and eight cars a month is often described as poor performance, but a
star salesperson might sell 20 or more cars a month.4 In a power law distribution, there is little meaningful varia-
tion in the performance or contribution of most workers, at least in comparison to the differences between the
stars and the rest of the employees. This suggests that there might be no need for a complex system of perfor-
mance measurement. The differences between stars and the rest will be so large that they will be quite easy to
detect, and the differences in performance levels of the individuals who are not stars will be comparatively small
and unimportant.
The starting point for virtually any performance evaluation system is the belief that there is something worth
measuring and evaluating. If most people perform at very similar levels, and the only distinction that is worth making
is the simple and obvious distinction between stars and almost everyone else, the idea that it is worthwhile and
important to put much effort into evaluating job performance loses a good deal of its lustre.
MURPHY 19

5 | I T M A Y N O T B E P O S S I B L E T O O B T A I N RE L I A B L E A N D V A L I D
J U D G M EN T A L M E A S U R E S O F P E R F O R M AN C E

Putting aside the question of the distribution of job performance, the belief that it is useful and important to
evaluate job performance implies that it is feasible to obtain performance evaluations that provide reliable and
credible evidence about job performance. There are some jobs in which objective measures capture the many
important aspects of job performance (e.g., piece-rate production and sales), but even in these jobs, objective
measures of job performance rarely capture the full range of behaviours that are thought to represent effective
performance on the job (Landy & Farr, 1983, provide a detailed review and critique of objective measures of job
performance). As a result, the evaluation of job performance almost always depends on the subjective judgments
of supervisors, peers, or other sources that might be asked to evaluate particular employees (Murphy et al., 2018;
Murphy & Cleveland, 1995).
There is a very large literature dealing with performance ratings and other subjective measures of job perfor-
mance, and it is not possible to summarise it entirely here. Suffice it to say that important concerns have been raised
about the feasibility of measuring job performance well with judgments. First, there is considerable evidence that rat-
ings of job performance are not reliable. Viswesvaran and his colleagues (e.g., Ones, Viswesvaran, & Schmidt, 2008;
Viswesvaran, Ones, & Schmidt, 1996) have documented the pervasive levels of disagreement in job performance rat-
ings and have suggested the reliability of job performance ratings is approximately .505 Well-developed tests often
show much higher levels of precision, with reliabilities in the .85–.90 range. Measures with reliabilities lower than .70
are often described as not sufficiently reliable to be used in making important decisions (Nunnally, 1978). Interrater
reliability is poor when ratings are obtained from similar raters (e.g., managers); even lower levels of interrater reliabil-
ity are reported when ratings are obtained from different sources (e.g., peers vs. supervisors; Conway & Huffcutt,
1997; Valle & Bozeman, 2002).
The weakness of subjective evaluations as measures of performance is not limited to low interrater reliability. A
number of studies have attempted to evaluate the validity of evaluative judgments about performance by modelling
the sources of variability in ratings of performance. If performance ratings were a reasonably accurate index of job
performance, you would expect that most of the variability in ratings would be due to the performance of the people
being evaluated and that relatively little of the variance would be due to extraneous factors such as the source of rat-
ings (were ratings obtained from supervisors or peers), the timing of performance ratings, or irrelevant attributes of
the people being evaluated (e.g., gender and attractiveness). This is not what has been found. For example, Scullen,
Mount, and Goff (2000) and Greguras and Robie (1998) attempted to explain the variability in ratings obtained from
multiple raters. They found that about a third of the variance in performance evaluations is due to differences in
ratee performance (i.e., some ratees are better performers than others) and that the majority of the variability in
ratings of job performance is due to irrelevant factors such as unique rater biases. Studies by Greguras, Robie,
Schleicher, and Goff (2003), Dierdorff and Surface (2007), Hoffman, Lance, Bynum, and Gentry (2010), and Woehr,
Sheehan, and Bennett (2005) show a similar pattern, documenting the importance of factors other than the perfor-
mance in determining the evaluations different employees receive.
Murphy (2008) and DeNisi and Murphy (2017) summarised substantial bodies of research that suggest that
the types of performance measures most widely used in performance appraisal and performance management
(i.e., ratings of performance by supervisors, peers, or some other source) are at best weak indicators of individual
job performance. They are not reliable and are influenced by a host of factors that have little or nothing to do
with the performance of the person being evaluated. Despite almost a century of research on developing better
methods of evaluating performance, little progress has been made in developing methods for obtaining reliable
and valid evaluations of job performance. A wide range of interventions (e.g., rater training, improving rating
scales, and adding more levels of rating) have been tried over the last century, and none of them has led to sub-
stantial improvements in subjective ratings as measures of job performance. Arguably, it is time to admit defeat
20 MURPHY

and conclude that subjective evaluations of job performance are simply not adequate measures of peoples'
effectiveness (Adler et al., 2016).

6 | P E R F O R M A N C E FE E D B A C K I S NO T A C C E P T E D A N D IS N OT U S E F U L
TO MOST RECIPIENTS

One of the major justifications for investing in performance appraisal and performance management systems is that
they provide employees with valuable performance feedback. It is far from clear that the assumption that perfor-
mance feedback is valuable is justified. There is evidence feedback can be useful, especially when people have little
experience with their job, and the feedback contains information they might not normally have access to (Li, Harris,
Boswell, & Xie, 2011). However, the proposition that giving most employees performance feedback is valuable is not
one that receives strong support in the literature. Kluger and DeNisi (1996) conducted the most wide-ranging review
of studies of the effects of feedback. They found that feedback leads to improvements in performance in roughly a
third of the studies they reviewed. However, feedback leads to decreases in performance in a roughly equal number
of studies. The other third of the studies they reviewed suggested that feedback has little discernable effect.
Studies of performance feedback in organisations are similarly discouraging (Seifert, Yukl, & McDonald, 2003;
Smither, London, & Reilly, 2005). The most widely studied programmes are those that provide feedback from multiple
sources (e.g., peers, supervisors, subordinates, and clients), on the theory that each source might provide unique and
valuable information. Like other feedback programmes, the effects of multisource feedback on subsequent behaviour
and performance appear to be mixed, at best (Atwater et al., 2007; Atwater, Waldman, & Brett, 2002; Seifert et al.,
2003; Smither et al., 2005). Research on performance management leads to similar conclusions. A defining feature of
most performance management programmes in organisations is that they provide frequent informal feedback to
employees (Aguinis, 2009, 2013; Pulakos, 2009). There is, however, little evidence that this feedback leads to
improvements in performance (DeNisi & Smith, 2014). Indeed, the whole idea of giving frequent feedback may be
dubious. Put yourself in the place of an employee who feels like the performance feedback he or she gets is inaccu-
rate and biased (i.e., too low). Do you think a new system that features a lot more feedback will seem appealing?
Many employees actively avoid performance feedback (Moss, Valenzi, & Taggart, 2003); adding more feedback may
do little more than increase their stress.
In longitudinal studies of feedback systems, there is evidence that the largest performance improvements come
early in the process and that subsequent feedback might have less influence on the behaviour of recipients (Reilly,
Smither, & Vasilopoulos, 1996). That is, the first time you give an employee feedback, it might be useful. The fifth or
sixth time you give similar feedback is likely to feel more like nagging than a sincere attempt to help the employee.
This suggests that rather than giving everyone regular feedback, organisations would be better served by giving feed-
back only where it is useful. I will examine approaches for targeting feedback later in this paper.
Finally, it is important to note that while there are good reasons for skepticism about the general value of perfor-
mance feedback, there is considerable variability in employees' interest in and willingness to act on performance
feedback. Many employees dread receiving (and many supervisors dread giving) performance feedback (Adler et al.,
2016). However, there are some employees who actively seek feedback and who are willing to use that information
to change their behaviour. Research on feedback-seeking behaviour (e.g., Anseel, Beatty, Shen, Lievens, & Sackett,
2015; Ashford, Blatt, & VandeWalle, 2003; Ashford & Cummings, 1983) has identified a wide range of individual and
situational factors that can lead individuals to actively seek out performance feedback. Unfortunately, the people
who need and would benefit from performance feedback (e.g., poor performers) are often actively avoid feedback
(e.g., Moss et al., 2003; Moss, Sanchez, Brumbaugh, & Borkowski, 2009), and some feedback seeking is probably an
effort to get bosses to recognise good performance rather than an effort to improve future performance (Nae, Moon,
& Choi, 2015). Although there are good reasons to doubt that all employees want or benefit from performance feed-
back, there are certainly some employees who do.
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7 | C O N C ER NS OV E R FA I RN ES S AN D A C C U R A C Y U N D E R M I N E T H E
POTENTIAL VALUE OF FEEDBACK

The track record on feedback is not encouraging, but it is also not entirely negative. This suggests there might be
some situations in which feedback has the potential to lead to improvements in performance. However, research on
effects performance feedback in organisations suggests a potentially serious barrier to the effectiveness of even the
most carefully targeted feedback. There is considerable evidence that in order to work, performance feedback must
be accepted by recipients as fair and valid (Anseel & Lievens, 2009; Hedge & Teachout, 2000; Keeping & Levy, 2000;
Leung, Su, & Morris, 2001). Unfortunately, the type of evaluative judgments that underlie performance appraisal and
performance management are rarely seen as accurate or fair.
First, performance ratings, even when they are truly accurate, are often seen by recipients as unduly harsh. There
is extensive evidence (e.g., Campbell, Campbell, & Ho-Beng, 1998; Harris & Schaubroeck, 1988; Meyer, 1980; Thorn-
ton, 1980) that people view their own performance more favourably that do their supervisors, their peers, or other
external raters. Indeed, the tendency for people to view ratings they receive from others as unfairly low has been
identified by Murphy et al. (2018) as one of the principal structural sources of failure in performance appraisal sys-
tems. If people receive performance ratings that are perfectly accurate, they are likely to perceive them as being too
low and to dismiss them as inaccurate or distort the feedback they receive to make it feel more positive (Waung &
Highhouse, 1997). One result is that performance feedback, even when it is accurate, is likely to be dismissed or dis-
torted rather than accepted and acted upon.
The persistent gap between the feedback people believe they should get (i.e., that their performance is good) and
the feedback they do get (i.e., that their performance is not that good) contributes to destructive cycle of cynicism
and distrust that undermines the value of performance evaluations and performance feedback. Murphy et al. (2018)
discuss the “death spiral” of performance appraisal systems, describing ways in which disappointing experiences with
performance evaluation lead to higher levels of cynicism and disengagement, and show how these negative experi-
ences feed upon themselves. The belief that the systems used in organisations to evaluate performance are exercises
in organisational politics rather than performance measurement is particularly destructive in this regard
(Longenecker, Sims, & Gioia, 1987).
Employees who receive evaluations that are less positive than they believe they deserve will naturally ask them-
selves why they are being undervalued, and if they reach the conclusion that supervisors and managers are distorting
evaluations to help advance their own interests and the interests of their favourites, trust in performance evaluations
is likely to sink quickly (Curtis, Harvey, & Ravden, 2005; Tziner, 1999). There is evidence that political considerations
of this sort do influence performance evaluations (Tziner, 1999; Tziner, Latham, Price, & Haccoun, 1996) and that a
politicised work environment can contribute to less positive attitudes and even lower levels of performance
(Hochwarter, Witt & Kacmar, 2000). If the gap between the evaluation you receive and the evaluation you believe
you deserve is attributed to systematic biases or self-seeking behaviour on the part of evaluators, this belief can
fatally undermine your willingness to accept and act upon performance feedback.
This belief that feedback is not accurate or fair has been shown to lead to reductions in motivation and to lower
level of willingness to comply with suggestions for improvement (Kinicki, Prussia, Wu, & McKee-Ryan, 2004).
Because they are subjective judgments of value or worth, performance evaluations are more likely to breed resent-
ment than feedback that might be obtained from objective sources (e.g., sales reports). Research documenting nega-
tive reactions to feedback is so well established that a considerable amount of attention has been given to ways of
providing feedback that will dampen negative reactions. For example, rather than giving feedback about something
that has already happened, Kluger and Nir (2010) suggest using feedforward.
The feedforward interview focuses on (a) articulating what has gone well, by eliciting description of positive expe-
riences from the target; (b) understanding how the strengths of the target and the context in which the event or
experience contributed to that positive experience; and (c) helping the target to apply those strengths and/or
22 MURPHY

situational resources to increase the likelihood of success and positive experiences in the future. Feedback is often
focused on mistakes or what went wrong, and even when it focuses on what went well, there is rarely any systematic
exploration of why it went well. Building on the idea of feedforward rather than feedback, Bouskila-Yam and Kluger
(2011) proposed a fundamental reorientation of performance appraisal and feedback. Rather than attempting to mea-
sure performance levels or to give feedback about performance deficiencies, they proposed a strength-based perfor-
mance appraisal system. Borrowing key ideas from positive psychology (Seligman & Csikszentmihalyi, 2000), they
proposed that performance reviews should focus on what people do well and should work towards establishing goals
that are based on strengths rather than weaknesses.
The recent movement towards feedforward and strength-based assessments suggests that it might be possible
to reduce some of the negative reactions performance feedback so often engenders. However, the very fact that
such programmes are needed is clear testimony to one of the fundamental weaknesses of most forms of perfor-
mance evaluation. Many people do not want to receive evaluative feedback and are not likely to use that feedback
as a tool for improving their performance (Murphy et al., 2018), especially if the feedback is less positive than what
they believe they deserve.

8 | P E R FO R M A N C E EV A L U A T I O N S A R E N O T P A R T I C U L A R L Y U S E F U L T O
ORGANISATIONS

Organisations devote significant resources to obtaining performance evaluations, and it is fair to ask what they actu-
ally do with this information. Cleveland, Murphy, and Williams (1989) suggested that there were four broad purposes
for evaluating job performance: (a) to make distinctions between individuals, such as identifying the best candidates
for salary increases or promotions; (b) to make distinctions within individuals, such as identifying individual strengths
and weaknesses for the purpose of determining training and development needs and priorities; (c) to support HR sys-
tems in organisations, such as validating personnel tests, evaluating the success, or training programmes; and (d) doc-
umentation, such as providing a record to support decisions such as promotions or dismissal.
Several surveys have shown that performance evaluations are most commonly used in organisations for two
purposes—that is, to provide information that can be useful for making training and development and to serve as
input for decisions about salary, promotions, layoffs, and dismissals (Dewettinick & Remue, 2011; Mercer, 2013;
Milliman, Nason, Zhu, & De Cieri, 2002). For example, in a recent study of performance appraisal and performance
management practices in over 3,000 organisations in 24 countries, Morley, Murphy, Cleveland, Heraty, and
McCarthy (2019) reported that over 80% of these organisations claim to use the results of performance evaluations
to make decisions about employee development and over 75% reported using this same information when making
decisions about career moves (e.g., promotions and transfers). Unfortunately, it has been known for over 50 years
that these two purposes put conflicting demands on performance evaluation systems (Meyer, Kay, & French, 1965).
For the purposes of assessing training and development needs, performance ratings that highlight differences within
individuals, separating strengths and weaknesses, are most useful. However, if each performance appraisal has clear
peaks and valleys (i.e., high ratings on some aspects of performance and low ratings on others), the average rating
each individual receives will tend to be similar, making it difficult to distinguish between employees. On the other
hand, performance appraisals that are designed to make distinctions between individuals function best when there is
clear separation in terms of the average ratings people receive, and this only occurs when there are not substantial
peaks and valleys in individual rating profiles (Murphy et al., 2018; Murphy & Cleveland, 1995). Thus, a performance
appraisal system that is particularly useful for assessing training needs is likely to be nearly useless for identifying
candidates for a raise or promotion, and vice versa. Unfortunately, the majority of organisations that have formal per-
formance appraisal systems appear to use them for these two conflicting purposes, often ending up with appraisals
that are not useful for either purpose (Cleveland et al., 1989; Murphy & Cleveland, 1995).
MURPHY 23

The conflicting demands of using performance evaluations for administrative purposes (i.e., salary and promo-
tions) and developmental purposes (e.g., training and developmental assignments) are only one factor limiting the
usefulness of performance evaluations in organisations. There are also important characteristics of the evaluations
themselves that greatly limit their utility. First, it is common for the vast majority of employees in an organisation to
receive similar evaluations, with the great majority of employees rated as “above average” in most organisations
(Bretz, Milkovich & Read, 1992; Murphy & Cleveland, 1995). This creates significant range restriction in performance
evaluations. If almost everyone receives ratings of “4” or “5” on a 5-point rating scale, it will be very difficult to distin-
guish between employees who are actually performing at a high level from those who receive high ratings because
they will complain and be demotivated if they receive the ratings they deserve (Miceli, Jung, Near, & Greenberger,
1991). Second, there are persistently high levels of correlations among evaluations of different aspects of perfor-
mance (often referred to as halo; Cooper, 1981a, 1981b; Murphy, Jako, & Anhalt, 1993). This combination of range
restriction and high levels of intercorrelation in ratings of separate aspects of performance creates an almost insur-
mountable barrier effectively using performance evaluations for one of its most commonly cited uses—that is, for
training and development. The whole theory of using performance evaluations to guide the choice among training
programmes is that each person has a potentially different set of strengths and weaknesses, and the training should
be focused on building on strengths and addressing weaknesses. The sad fact is that most performance profiles are
relatively flat, with few meaningful peaks and valleys (Cooper, 1981a; Murphy & Cleveland, 1995). Thus, even if orga-
nisations offer the possibility of pursuing different courses of training and development depending on one's overall
level of performance and one's unique strengths and weaknesses, performance evaluations seldom prove useful for
distinguishing among people on either basis.
The second major purpose of performance appraisal is to make decisions about rewards, such as salary increases.
The range restriction that is typically observed in performance ratings substantially undermines the idea of using
rewards to motivate performance or using performance to make decisions about rewards. If most employees end up
receiving similar evaluations, it may not be possible to effectively link performance with rewards. In fact, it is not sim-
ply range restriction in performance evaluations that weakens links between performance and rewards. Organisations
are often unwilling to take serious steps to link their decisions with employees' performance levels. This is most
apparent in studies of merit pay.
Many organisations claim to provide some sort of performance-based pay, in which good performance is
rewarded and encouraged by higher levels of pay (Gerhart & Fang, 2015; Gerhart, Rynes, & Fulmer, 2009;
Schaubroeck, Shaw, Duffy, & Mitra, 2008). Despite the widespread acceptance of the idea that better performance
should lead to better pay, serious questions have been raised about the effectiveness of merit pay in most organisa-
tions. There is surprisingly little evidence that merit pay systems are effective (Heneman, 1992; Milkovich & Wigdor,
1991). Part of the problem is the discrepancy between what organisations are willing to commit to rewarding merit
and what it appears to take to make a real difference.
Murphy et al. (2018) note that merit-based salary increases are typically in the range of 2–3% of annual salary.
There is a good deal of evidence that pay increases are not seen by recipients as meaningful unless they are at least
7% of one's annual salary (Mitra, Gupta, & Jenkins, 1997; Mitra, Tenihälä, & Shaw, 2016). Murphy et al. (2018) sug-
gest that organisations that give merit-based pay raises in the 2–3% range are more likely to breed cynicism than to
motivate their employees. In a typical merit-based pay system, truly superior performers receive salary increases that
are virtually identical to those received by average or poor performers, and this is hardly a recipe for increasing
employee motivation and commitment.

9 | I S I T P O S S I B L E T O M A N A G E PE RF O R M A N C E W I T H O U T EV AL U A T I O N ?

The challenges of putting together performance appraisal and performance management systems are well known;
these systems are expensive, time-consuming, and stressful. Performance appraisal has survived multiple attempts to
24 MURPHY

bury this practice largely because managers, supervisors, and even employees believe, at some level, that it is useful
and important to formally evaluate employees' job performance. Performance management appears to be limping
along on the same basis; supervisors, managers, and executives continue to believe that it is useful and important to
evaluate their employees.
Suppose you accept the argument advanced in the preceding section, it is not useful, important, or even feasible
to formally evaluate the performance of most employees. Could organisations function without performance evalua-
tion? Is not evaluation central to the design of performance appraisals or performance management systems? There
are several reasons to believe that getting rid of the practice of evaluating the performance of all of your employees
on a regular basis would not substantially disrupt the way organisations manage their human resources.
First, there are many reasons to believe that organisations do function without genuine systems for evaluating
the performance of their workers. To be sure, most organisations go through the motions of conducting performance
appraisals, giving performance feedback, and incorporating performance ratings into their HR decisions. However, if
performance ratings are unreliable and do not distinguish employees in terms of either their overall performance
levels or their unique strengths and weaknesses, and if performance feedback is generally ignored or ineffective,
organisations are carrying on without functioning performance appraisal or performance management systems. If
they are not really measuring performance, and if the measures they do obtain are ignored by employees and have
only minimal effects on organisational decisions, it is hard to argue that they have genuine performance appraisal or
performance management systems, regardless of all the forms they fill out or the feedback meetings they hold.
Second, the idea that evaluating most employees is essentially pointless and sometimes positively harmful (e.g.,
negative experiences with evaluation can lead to cynicism and disengagement) does not mean that performance eval-
uation and attempts to manage performance have to be abandoned in all instances. There are many reasons to
believe that organisations and their employees would benefit if the emphasis was switched from providing evalua-
tions of all employees to providing coaching and assistance to the subset of employees who are most likely to benefit
from it. For example, there is evidence that developmental feedback can be useful when the recipient is new to the
task or is a newcomer in the organisation (Li, Harris, Boswell & Xie, 201; Nurse, 2005; Reilly et al., 1996). Rather than
serving as judges who are resented and mistrusted by many of their subordinates, supervisors and managers might
act as coaches, providing information, support, and suggestions for activities to achieve employee's goals. Feedback
that is tightly focused on those employees who need it and that is oriented towards development rather than evalua-
tion can prove valuable in organisations.
There is clear evidence that employee coaching can be effective (Carr, 2016; Gregory & Levy, 2010, 2011), but it
is also clear that there are significant challenges to effective coaching. Coaches are most likely to succeed if they are
willing to and skilled at communicating with employees about their job performance, are willing to work with
employees and to believe that employees can improve, and are willing to try a range of approaches to helping their
subordinates (Gregory & Levy, 2011; Heslin, VandeWalle, & Latham, 2006). Because the feedback coaches provide is
typically focused on learning and development rather than evaluation, rewards, and sanctions, employees may be
more receptive to this form of help and guidance than they are to traditional performance evaluations. A switch from
evaluation to coaching also helps in resolving one of the longest standing controversies in performance appraisal and
performance management.
For over 50 years, researchers have advocated separating the two functions that most performance appraisal and
performance management systems are designed to serve—that is, making decisions about rewards and sanctions
(e.g., pay raises) and making decisions about development (Cleveland et al., 1981b; Meyer et al., 1965). Murphy et al.
(2018) reviewed the most common explanations for the failure of traditional performance evaluation systems and
concluded that the use of performance evaluations to drive decisions about raises, promotions, and other valued
rewards represented the most serious barrier to the success of these systems. In traditional performance evaluation
and performance systems, supervisors and managers are strongly motivated to distort their evaluations to blur dis-
tinctions between employees and to give evaluations that will cause the fewest problems rather than giving evalua-
tions that are truly useful. The idea of replacing broadly targeted evaluation with carefully targeted coaching avoids
MURPHY 25

the trap of building performance evaluation systems that are doomed to fail because they are pursuing conflicting
objectives (Cleveland et al., 1989; Murphy & Cleveland, 1995).
The term “performance evaluation” is one that is no longer frequently used, but it is an apt term. Evaluation is all
about judgments of value, and the hard lesson of almost 100 years of research on performance appraisal and perfor-
mance management is that these judgments are difficult to make and even more difficult to use effectively.
Employees do not really want to hear whether or not you value their contributions, in part because they suspect that
will not like what they hear. Organisations pretend that these judgments of each employee's value are important, but
they end up doing very little with these judgments. With exceptions at the very high and the very low end of the
scale, performance evaluations often have little practical effect on the lives or the work of most employees. Their
links to pay are weak, and their links to training, development, and career advancement are often uncertain. Dropping
performance evaluations for most employees might seem like a bold, and even a reckless step, but it may in truth rep-
resent nothing more than a recognition of the limited roles these evaluations in fact play in the lives of organisations
or their members. One of the most persistent complaints about traditional performance appraisal systems is that they
involve collecting and recording a tremendous amount of information (see, e.g., Buckingham & Goodall, 2015), which
is promptly filed away and forgotten (Murphy et al., 2018; Murphy & Cleveland, 1995). In too many organisations,
performance evaluation is a sham and a tiresome exercise in checking the boxes. We would all be better off if organi-
sations cold redirect this effort and energy towards that limited set of employees who actually want and need feed-
back and towards that limited set of situations where this feedback can be put in the form of helpful guidance rather
than judgments that will not be accepted or acted upon.

10 | R E O R I E N T I N G P E R F O R M A N C E M A N A G E M E N T

What would a nonevaluative, coaching-oriented system of performance management look like? I believe it would
look remarkably like the type of system Aguinis (2009, 2013) advocates, with a few minor tweaks. In particular, I
believe it would be possible to create successful performance management systems by focusing on the behaviours
that have consistently been shown to be essential to successful leadership and coaching. One of the earliest substan-
tive theories of leadership (Bass & Bass, 2008; Tracy, 1987) describes leader behaviour in terms of two key
constructs—that is, consideration (exhibiting concern for the welfare of employees and work groups) and initiating
structure (i.e., defining roles, plans, and strategies for accomplishing key tasks and responsibilities). There have been
many advances in leadership theory since then (Avolio, Walumbwa, & Weber, 2009; Kozlowski, Mak, & Chao, 2016),
but the key insights of this early theory still gives managers concrete suggestions for improving performance
appraisal. Both these early theories of leadership and more contemporary thinking about coaching (e.g., Office of Per-
sonnel Management, 2019) suggest that the first task in creating a successful performance management system
emphasises initiating structure.
One of the core concepts of performance management is the idea of cascading goals (Aguinis, 2013; Pulakos,
2009; Pulakos et al., 2015). The first responsibility of a supervisor or manager should be to help translating broad
unit-level goals into plans and strategies individuals and work teams can pursue to help realise these goals. That is,
managers and supervisors should focus first and foremost on their roles as communicators and translators. The cas-
caded goals the performance management literature describe tell managers and supervisors what must be done.
Their first and most important task is to help in determining how these goals will be accomplished.
Organisations devote substantial amounts of time and resources to train managers to evaluate the perfor-
mance of their subordinates. In their review of 100 years of performance appraisal research, DeNisi and Murphy
(2017) noted that there is little convincing evidence that this training leads to better or more useful appraisals.
Rather than training managers to be better judges, I believe it is more useful to devote training resources
towards developing coaching skills. Graham, Wedman, and Garvin-Kester (1994) identify specific skills that
underlie successful coaching; two of the most critical of these skills are the ability to communicate clear
26 MURPHY

performance objectives and the ability to link individual employees' behaviour with the performance goals of the
unit. Reorienting training towards developing these skills would have the potential to contribute substantially to
the success of performance appraisal systems.
In traditional performance appraisal and in many variations of performance management, managers and
supervisors have also been responsible for enforcement—that is, monitoring employee behaviour to make sure it is
consistent with these plans and goals and correcting deviations from these plans as they occur (Murphy et al., 2018).
There is evidence (Milkovich & Wigdor, 1991) that this emphasis on using rewards and sanctions (e.g., pay increases,
promotions, and dismissal) to enforce goals and plans is both worn-headed and ineffective. Rather than acting as a
judge to evaluate deviations from plans and strategies that are imposed above and forcing employees to get back on
track, a coaching-oriented system of performance management would be built around persuasion, inspiration, and
assistance—that is, consideration. That is, the goal of the supervisor or manager should be to build commitment to
and engagement with the organisation and its broad goals and to assist and support employees who are having diffi-
culty carrying out their particular roles in the process of executing this process.
In traditional performance appraisal and performance management systems, there is a great deal of emphasis on
managing the behaviour of individual employees by paying attention to whether they are not they are doing what
their performance plans say they should be doing and using rewards and sanctions to steer their behaviour back in
the desired direction when it deviates from that plan. A reformed performance management system would focus on
why employees are deviating from plans and identifying ways to help and encourage employees in executing the
plans and strategies that have been agreed upon for accomplishing unit-level goals. Rather than rewarding adherence
to and punishing deviations from these plans, managers who are effective at demonstrating consideration will focus
on identifying the barriers employees face (e.g., lack of information or resources and lack of understanding of plans)
and removing them. To be sure, some performance deficiencies are likely to be a result of the employee's low level of
motivation and commitment to the plan, but even here, the job of supervisors and managers should be to find ways
to build motivation and commitment rather than cudgel employees into conforming with plans and strategies that
have been imposed upon them.
At the heart of this proposal to reform performance management, it a belief that forcing supervisors and man-
agers to act as judges, evaluating employee behaviour, rewarding compliance, and sanctioning deviation from exter-
nally imposed plans and strategies prevent them from functioning effectively as leaders. There are many theories and
models of effective leadership (Avolio et al., 2009; Bass & Bass, 2008), and they offer a wide range of suggestions for
ways of influencing the behaviour of individuals and teams. Very few of these suggest that the approach embodied
by traditional performance appraisal systems—that is, evaluate each person's performance on several dimensions and
provide feedback at the end of the year, with the possibility of a small raise if you are judged to be effective—is likely
to be effective. Even the best performance management systems fall short of what most leadership theories suggest,
because they depend on goals, plans, and strategies that are imposed on employees, coupled with close monitoring
of employees to detect and correct deviations from those goals, plans, and strategies. One of the consistent themes
running through a wide range of leadership theories is that leaders are most effective when they can inspire, guide,
and assist employees (Bass & Bass, 2008). A performance management system built around coaching and incorporat-
ing the two key behaviours leaders need to exhibit—that is, consideration and initiating structure—holds real promise
from organisations. Stop evaluating and start leading!

ENDNOTES

1
At the same time, they simplified their performance rating system, Deloitte added elements to their performance manage-
ment system, such as increased feedback, that may have reduced the extent to which the new system is actually simpler
than their old one.
2
http://blogs.sciencemag.org/sciencehound/2016/08/04/journal-impact-factors-fitting-citation-distribution-curves/
MURPHY 27

3
The same exact distribution form will not hold in all instances; Aguinis et al. (2016) explore aspects of jobs and organisa-
tions that may influence the exact shape of the distribution of performance, and Beck, Beatty, and Sackett (2014) note the
different types of performance measures may show very different distributions.
4
https://www.huffingtonpost.com/quora/how-much-do-car-salesmen_b_7504680.html
5
There are debates among psychometricians about how to best interpret interrater agreement measures (LeBreton, Scherer,
& James, 2014; Murphy & DeShon, 2000), but there is clear consensus that performance ratings obtained from multiple
raters show lower levels of agreement than would be expected from reliable and valid measures.

CONFLICT OF INTE REST

The author declares that there is no conflict of interest.

OR CI D

Kevin R. Murphy https://orcid.org/0000-0002-4886-9499

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How to cite this article: Murphy KR. Performance evaluation will not die, but it should. Hum Resour Manag J.
2020;30:13–331. https://doi.org/10.1111/1748-8583.12259