Question

What are the potential problems in performance appraisal?

Answer 1

Poorly Trained Managers

Effective performance appraisal doesn't just happen and organizations shouldn't assume that managers know how to conduct them effectively, even if they have many years of experience as managers. In fact, since the process can differ from organization to organization, it is important that training is provided to introduce managers to the philosophy of performance appraisal at the organization, including a review of the forms, the rating system and how the data gathered is used. Training should take place regularly as a refresher both for new and veteran managers.

Inconsistent Ratings

Inter-rater reliability is generally very low between managers at any organization. What one manager considers to be "acceptable" performance, another may consider "not meeting expectations." This can be a challenge for any organization and is made more of a challenge in situations where the criteria used are subjective and not based on any measurable performance outcomes.
Lack of Outcome-Based Measures

Performance appraisals that ask managers to rate employees on subjective criteria such as "customer service skills" or "leadership ability" lack specific outcomes that can be tied to measurable results. The best performance appraisals provide the ability for both managers and employees to judge performance based on measurable outcomes that are objective; level of sales, safety records and evaluations from customers are all meaurable ways of providing insight into an employee's performance.

Not Used for Performance Improvement

The purpose of performance appraisal is not only to provide input to employees about how they're doing, but also to provide the organization with an indication of areas of employee strength and opportunities for improvement. Unfortunately, few companies actually aggregate and use the results of performance appraisal for performance improvement efforts. By analyzing results and taking advantage of both best practices in areas where employees are performing well and opportunities for improvement in areas where they're not, organizations can receive maximum value from their performance appraisal efforts.