There are several reasons performance appraisal doesn’t work as well as it might:
No Ownership. Too often, neither the manager nor the individual has any sense of ownership. They weren’t involved in the design or administration of the system. They frequently are not trained to use it effectively. Finally, human resources rarely asks about their reactions to and opinions of the system (and ignores any suggestions they make to improve it).
Bad News. Managers don’t like to deliver negative messages to people with whom they must work, and whom they often like on a personal basis. Employees don’t like to be told that they are not quite as good as they think they are. Negative messages generate defensive reactions and promote hostility, rather than serve as useful performance feedback.
Adverse Impact. Both managers and employees know that bad reviews adversely impact a person’s career. Managers are conscious of the permanence of the paper trail that follows formal appraisal and are often hesitant to commit negative feedback to writing.
Scarce Rewards. The organization usually offers few formal rewards for taking the process seriously and probably no informal rewards. On the other hand, there may be many informal rewards for not delivering unpopular messages. Personal Reflection. Managers hesitate to give unfavorable appraisals for fear that the appearance of unsatisfactory work by a subordinate will reflect badly on the manager’s ability to select and develop subordinates. Lack of candor in evaluation is a way of hiding one’s dirty laundry. EEO Terror. Managers fear that if they give an honest but unsatisfactory appraisal to a black or handicapped employee, they’ll be hauled off to court for discrimination.
Although it’s easy to poke fun at performance appraisal (and the way performance appraisal is carried out by many managers and many organizations makes it a worthy candidate for Dilbert lampoons), performance appraisal performs a function of enormous value to an organization and to all of its members. Performance appraisal answers the questions that everyone in an organization genuinely asks: Boss, how am I doing? Is my work satisfactory? Do I have a bright future here?