7 biggest misconceptions about the Performance Appraisal process

7 biggest misconceptions about the Performance Appraisal process

In the past, we have written at length about performance appraisals or reviews, as they are sometimes called. This article addresses some of the most common misconceptions around the performance appraisals.

Misconceptions of the performance appraisal process:

1. Winging appraisals on the spot:

Performance appraisals cannot and should not be done on the spot. Managers need to carefully collect all the information associated with the employee’s performance. Ensure you cover all achievements and shortcomings systematically. These managers need to prepare well in advance to efficiently conduct performance appraisals.

For example, based on the role of the team member manager needs to assess competencies (refer this handy list of 500+ performance review phrases). Taking continuous feedback & routine tasks into account is equally important. They provide the much needed context.


2. Performance appraisals will fix everything that is wrong:

Some employers are under the impression that adjusting employee salaries will ensure optimum productivity in the workplace. This is only partly correct. Apart from salaries, there are other factors that ensure employees maintain and improve their performance and productivity levels. In fact monetary rewards often undermine intrinsic motivation and desire to succeed in the workplace.


There needs to be a strong feedback culture which can help employees increase their contribution. Relevant and contextual feedback (whether positive or negative) should be an integral part of performance appraisals. Employees should get to know the reasoning behind their appraisals as well as given guidance wherever applicable.


Here feedback should not be unidirectional. A 360 degree feedback culture will be more suitable in such cases. Organizations who incorporated this practice have consistently experienced higher rates of employee engagement and goal attainment as compared to those who have stuck to annual feedback.


3. Performance appraisals talk only about compensation:

Typically, the tangible outcome of performance appraisals is the salary increase that usually motivates employees, but there’s far more to it. There are other intangible aspects that also need to be considered. For example, training and development, feedback about performance, guidance and coaching for areas that need improvement, etc.


Due to the singular focus on determination of compensation, in many companies managers rarely take efforts to develop employee skills and abilities while conducting performance appraisals. They should ideally take necessary steps to encourage employees to develop their skills in areas of interest to the employee.


The purpose of performance evaluation is to provide developmental feedback that will help the employee continue to grow in their skills and ability to contribute to the organization. It is an opportunity for the company to communicate what they expect from their employees.

4. Appraisals depend entirely on completion of goals:

In many organizations, appraisals are determined solely on the basis of completion of goals. If an individual were to achieve 100% of his or her goals, then he/she would be liable to receive full increments. And if he or she fails to meet that target, the increment amount would be reduced in proportion of the failure. This is common practice across many organizations.


However, this may not be suited for every situation. For example, the above example is apt for organizations that set goals by adhering to Management By Objective (MBO) goal setting framework. According to MBO, achieving 100% target is the benchmark of goal completion. There is a significant difference between MBO and OKR (objectives and key results). In the case of Objectives and Key results, the accepted goal completion target is between 60% to 70%. Thus, despite achieving the recommended target, if the individual receives appraisal of only 60-70%, then it would definitely lead to discontent.


Performance appraisals should be designed around these conditions to ensure employees are not dissatisfied. According to the methodology used, the performance appraisal process should talk about their efforts as well as the end results of these efforts.


5. Performance appraisal process is a one way street:

Viewing performance appraisal as a one-dimensional task that needs to be conducted for an employee is definitely not the right way to go about it. Rather than for employees, it needs to be done with employees as it is an ongoing collaborative process. Traditional performance appraisals considered this as a mere administrative task. On the contrary this should be taken as an opportunity to motivate employees to perform better than their current state and provide help as they go along. It is a much better way of ensuring they actively contribute towards the achievement of organizational goals.


6. Appraisals need to be an annual activity:

Historically, it has been observed that performance appraisals are generally disliked by managers as well as employees. There is a simple reason behind this: it is simply not possible to efficiently evaluate performance of employees for the whole year in one go. Annual performance appraisals tend to focus only on the latest achievements and shortcomings of the candidate. Whatever happened at the start of the year may not necessarily be recollected by managers if the information is not documented efficiently. Thus, appraisals are often biased and subjective.


Instead, the performance appraisal process should be conducted more frequently or at timed intervals to ensure there is continuous employee development.


7.Employee Engagement and performance appraisals are not related:

The two key drivers of a good engagement are:

  • On-time contextual recognition
  • Performance development


Good performance appraisals can ensure both these key drivers are addressed meaningfully and increase employee engagement in the organization. Managers or the relevant authorities can leverage this process to clearly communicate about what the organization expects and most wants and needs from these individuals.

There are number of other misconceptions around the performance appraisal process. What others have you experienced? Let us know in the comments.