In her article "Performance Appraisals Don't Work -- What Does?" Susan Heathfield reveals the fundamental flaws with traditional performance appraisal systems and suggests companies move to a performance management system.
Managers, in general, despise giving performance appraisals, and who can blame them? "The traditional process of performance appraisal reflects and underpins an old-fashioned, paternalistic, top-down, autocratic mode of management that relies on organizational charts and fear of job loss to keep the troops in line." Some of the problems with the performance appraisal approach include arbitrary or contrived numeric ratings, forced employee rankings, awkward goals and objectives, more of a judgment than a process, infrequent, rely on memory, and tie the performance appraisal with the employee's raise.
Instead, Heathfield suggests adopting a performance management system that "creates a work environment or setting in which people are enabled to perform to the best of their abilities" by tying a position to the company's mission and vision as well as the employee's. This requires two-way conversations; frequent interaction; multiple avenues of feedback like manager-to-employee, peer-to-peer and employee-to-manager; and the measuring of employee achievement as they directly relate to the organizational goals. Feedback and evaluation are still central to this model, but they happen frequently, collectively and with meaningful, motivating measures of success. Heathfield also strongly urges keeping the performance discussions completely separate from discussions of raises, I assume to avoid appearing to punish employees who have not performed at their peak, demoralize employees who perform well and don't receive a substantial raise, and avoid managers feeling pressured to give a raise based solely upon this process.
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