Seven biggest problems with performance
appraisals: and seven development
approaches to rectify them
Paul J. Davis
Paul J. Davis is Assistant
Professor of Management
at the Kazakhstan Institute
of Management,
Economics and Strategic
Research (KIMEP) at
Almaty, Republic of
Kazakhstan.
An extended version of this
paper was presented at the
Trends in Contemporary
Management Research and
Thought Conference, Amrita
University, Ettimadai, India,
March 2011.
DOI 10.1108/14777281211189119
The performance appraisal
Appraising employee performance demands a considerable investment of the business’
time, energy and money. In many instances pay increases, bonuses and promotions hinge
on the outcome of a performance review. Because of this, organizations should ensure their
appraisal systems and processes are beyond reproach. However, a great deal of research
strongly indicates that this is not the case.
The benefits of quality appraisal processes have been known for many years. Boice and
Kleiner (1997), for example, argue that effective appraisals play an integral role in building a
motivated and committed workforce. Conversely, poorly developed and administered
appraisals result in diminished levels of employee satisfaction (Ducharme et al., 2005),
demoralization and poor teamwork (Harrington, 1998).
Appraising employee performance is important. Most private sector organizations
remunerate on pay-for-performance, so differentiating good and poor performers is
necessary to pay employees fairly according to policy. It is not the concept but the
management of performance appraisals that is the problem and current approaches to
managing performance appraisals are largely lacking in integrity and validity (Cook, 1995).
Seven appraisal problems
This paper condenses the findings of a literature review on performance appraisals of over
300 articles published between 1980 and 2010. The review discovered seven common and
persistent failures of performance appraisals that undermine their value and reliability. The
seven problems are:
1. Direct bias.
2. Indirect bias.
3. Competency.
4. Devolution.
5. Authoritarianism.
6. Informal, incidental and ongoing appraising.
7. Information collection.
Direct bias
All people have biases. Research shows that biases often influence the supposedly
objective ratings a manager gives an employee during an appraisal. Biases can be about
favored or disliked employees or influenced by how a manager feels about the employee’s
VOL. 26 NO. 1 2012, pp. 11-14, Q Emerald Group Publishing Limited, ISSN 1477-7282 j DEVELOPMENT AND LEARNING IN ORGANIZATIONS j PAGE 11
 political, religious, social, family or cultural views. Numerous studies have shown managers
give better ratings to those employees most like themselves.

Indirect bias
Organizations use corporate values, symbols, rules, dress codes, rewards, ceremonies and
many other things to communicate what kind of people they most prize. Organizations also
have their own social, cultural and political environments in which employees can assimilate
or revolt. Evidence shows that these factors influence how managers perceive performance;
they often judge performance against environmental compliance irrespective of actual
performance.

Competency
Only some organizations train managers on how to conduct a performance appraisal. Very
few organizations train non-managers on participating actively in their appraisal meetings.
This leads to inconsistencies across the organization on how managers conduct appraisals
and judge performance and therefore the process lacks validity and integrity.

Devolution
Appraisal processes are often designed by HR and then rolled out to line managers for
implementation. Line managers have said they have no say in the development of appraisals
and how they are implemented. They claim a lack of support from HR when they have
difficulties. This causes confusion, resentment and a lack of ‘‘buy-in’’ from line managers.

Authoritarianism
Appraisal meetings are often manager-centric. The manager dominates the meeting. There
is a power imbalance whereby the employee must justify themselves and the manager sits in
judgment. Many employees feel threatened, worried and defensive at a time when they
should feel empowered and confident. Often, instead of having an open and supportive
discussion, the employee says little. This atmosphere adversely affects the outcomes of
appraisals.

Informal, incidental and ongoing appraising

Many organizations view performance review and assessment as an event; something done
at a certain time each year. Managers are not formally trained or supported to give ongoing,
informal or incidental performance feedback. Often performance problems go unaddressed
because of this and small problems escalate and linger which damages teamwork and
morale.

Information collection
There is evidence that the 360 degree tool used to build a picture of an individual’s
performance is misused and exploited. It adds a more subjectivity to a process and allows
for poor quality information to be provided behind the veil of anonymity. Some managers
take advantage of this and are selective with what information they choose to build a picture
of an employee’s performance.

Development solutions
It is not novel to propose development and training as a way to improve performance
appraisal outcomes. The value of training to performance appraisal processes has been
highlighted in the literature (May and Gueldenzoph, 2006; Coutts and Schneider, 2004).
However, its full potential seems not to have been appreciated. It is mostly consigned to a
perfunctory role; used in a very functional way to train on appraisal procedures or
form-filling. This under-utilizes the possibilities offered through development and fails to
address the real problems. Training can be an effective and inexpensive solution to the
problems inherent in performance appraisal systems that have been highlighted. For
example:

j j
PAGE 12 DEVELOPMENT AND LEARNING IN ORGANIZATIONS VOL. 26 NO. 1 2012
 B Managers should be made aware of the biases that can come into play during appraisals.
Training could raise their consciousness about how bias can influence the outcomes of
performance evaluations. A two hour session could be used to highlight biases that
people have about others through completing a self-assessment. Based on the
self-assessment results a facilitated discussion could explore ways to help managers
check their biases during an evaluation.
B Small groups can look at different environmental factors that impact on appraisals and
devise strategies to counter these. The facilitator can lead a full group discussion and
share good ideas. The objective is to acknowledge environmental factors, accept their
inevitability and provide strategies to minimize their impact.
B All employees should be trained on how to participate in a performance evaluation
session before they are required to do so. Training should focus on topics including open
communication; listening skills; collaboration; reaching agreement; negotiation skills;
establishing mutual trust and devising a joint action plan. All parties should understand
their role and responsibilities for making the appraisal session productive. Instead of
focusing on procedures the attention should be on relationship building.
B Line managers need support to ensure there is consistency across the organization on
how to conduct appraisals. Line managers should be brought together to suggest ways
to improve processes and bring to the attention of HR their needs and challenges.
Informal learning, such as a collegial network, could be established to encourage line
managers to learn best practice from one another. More experienced line managers
could mentor new line managers the first time they conduct appraisals.
B Managers should receive training on strategies to maximize the involvement of the
employee during evaluation. Managers could learn what it means to be a facilitator in the
process; how to ask different types of questions; how to give negative feedback
constructively and how to encourage the employee to provide the solutions to poor
performance.
B Coaching could be provided to managers on ways to give incidental, ongoing and
informal performance feedback to team members. Role playing or discussion of
scenarios could be used to practice skills and generate original ideas. Managers
especially would benefit from coaching on how to give unwelcome and difficult incidental
feedback where a formal performance review is still some way off. Skills such as active
listening; empathy and positive reinforcement should be focused on.
B Training should be provided to all employees on how to provide and collect anonymous
feedback that is balanced, relevant and constructive. Managers should be given training
on how to ask meaningful questions; how to decipher what is pertinent to an appraisal and
how to positively convey this feedback to employees especially when it could spark
confrontation or distress.

Summary
Performance appraisals are important to employees and organizations; a lot is invested in
Keywords: the process. However, the quality and integrity of appraisals are compromised by persisting
Performance appraisal, problems. These problems can be addressed effectively and inexpensively through training
Performance evaluation, and development. By focusing on developing skills through learning, organizations can
Performance review, improve employee commitment to the appraisal process and the value of appraisal
Training outcomes to the organization.

References
Boice, D. and Kleiner, B. (1997), ‘‘Designing effective performance appraisal systems’’, Work Study,
Vol. 46 No. 6, pp. 197-201.

Cook, M. (1995), ‘‘Performance appraisal and true performance’’, Journal of Managerial Psychology,
Vol. 10 No. 7, pp. 3-7.

j j
VOL. 26 NO. 1 2012 DEVELOPMENT AND LEARNING IN ORGANIZATIONS PAGE 13
 Coutts, L. and Schneider, F. (2004), ‘‘Police officer performance appraisal systems: how good are
they?’’, Policing: An International Journal of Police Strategies and Management, Vol. 27 No. 1, pp. 67-81.
Ducharme, M., Singh, P. and Podolsky, M. (2005), ‘‘Exploring the links between performance appraisals
and pay satisfaction’’, Compensation and Benefits Review, Vol. 37 No. 5, pp. 46-52.
Harrington, H. (1998), ‘‘Performance improvement: was W. Edwards Deming wrong?’’, The TQM
Magazine, Vol. 10 No. 4, pp. 230-7.
May, G. and Gueldenzoph, L. (2006), ‘‘The effect of social style on peer evaluation ratings in project
teams’’, Journal of Business Communication, Vol. 43 No. 1, pp. 4-20.

Further reading
Poon, J. (2004), ‘‘Effects of performance appraisal politics on job satisfaction and turnover intention’’,
Personnel Review, Vol. 33 No. 3, pp. 322-34.

About the author

Paul J. Davis is Assistant Professor of Management at the Kazakhstan Institute of
Management, Economics and Strategic Research (KIMEP) at Almaty, Republic of
Kazakhstan. Among other courses, he teaches Change Management at the
undergraduate and graduate levels and Organizational Development on the University’s
Executive MBA program. Paul J. Davis can be contacted at: pdavis@kimep.kz

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints

j j
PAGE 14 DEVELOPMENT AND LEARNING IN ORGANIZATIONS VOL. 26 NO. 1 2012