Don’t Redesign Your Company’s Performance Appraisal System: Scrap It

By Fred Nickols

At a time when many corporations are engaged in unrelenting searches for ways to improve operations and reduce costs, there is one aspect of organizational life that has largely escaped scrutiny: Performance Appraisal. Perhaps this is because performance appraisals have become an unquestioned fact of life in most large organizations. As with most unquestioned facts, a critical examination can prove beneficial. In this article, the author points out that the hard costs of operating formal performance appraisal systems are measured in billions of dollars annually and that the soft costs might be even higher. The primary offsets to these costs are the purported benefits of performance appraisal systems. Upon inspection, these appear to range from non-existent to minimal. Here, then, is a situation rife with opportunity for organizations willing to challenge
the status quo.

This article first appeared in the May-June 1997 issue of Corporate University Review.

For a PDF copy of Fred’s article please go here: scrap_it.

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One thought on “Don’t Redesign Your Company’s Performance Appraisal System: Scrap It

  1. During this decade, there have been several articles posted about the high-cost of performance management systems (both in terms of dollars and morale). Nickol’s article captures the hazards of these systems.

    What we need now are more research on how to reform traditional annual compensation increases that do not partially rely on performance reviews.


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