Performance appraisals systems are failing both employers and staff and having little impact on business performance, according to a report by the Institute for Employment Studies.
Many systems were conceived when organisations were more hierarchical, and despite modification still drive pay and promotion decisions.
The report claims that this has questionable relevance in today's flatter organisations, where career progression is limited and rewards are more flexible.
Bespoke systems need to be designed which remain adaptable to shifts in business strategy and structure, claims IES senior research fellow and author of the report Marie Strebler.
She said, “Ideally, managers should use the appraisal to help the employee see how their contribution adds value to the business. Too often they are rushed discussions where performance ratings are handed out, where petty lapses in performance are picked upon or where performance-related pay is awarded.”
The IES advises employers to have clear aims and measurable success criteria in their performance appraisals, and involve employees in the system design and implementation.
Seventeen companies, and nearly 1,000 managers, were involved in the report.
By Mike Broad