Almost 80% of UK companies now operate a performance appraisal system, yet recent surveys suggest that many employees and managers are far from happy with the schemes used in their organisations.
Appraisals fail to motivate employees, says a survey by employee assessment consultants Saville & Holdsworth (SHL), and almost 50% of respondents to an Industrial Society survey claim that appraisals have no positive effect on the workforce.
'Some 90% of respondents to our survey cited employee motivation as one of the main objectives of an appraisal process,' explains Roy Davis, communications manager at SHL. 'Despite this, not a single survey respondent stated that appraisal was a very good way of doing this.' He argues that other, often incompatible, objectives get bundled into the appraisal process. 'Employers use the appraisal to try and satisfy too many objectives,' he says. Over half of the respondents stated that the appraisal had some impact on redundancy decisions and 50% of them reported that it had a direct impact on pay. 'It is hardly surprising that the value of the appraisal as a motivator is therefore in doubt,' Davis adds.
Tom Raftery, senior manager of Arthur Andersen's Human Capital Services, agrees: 'The objectives of an appraisal can include giving feedback and direction to employees, defining future objectives, identifying training needs and career development, fostering communication between managers and employees, and providing evidence for promotion and compensation decisions.
But no single system is ever likely to do a first-rate job on all those disparate requirements. Frankly, in most organisations, the appraisal has become too daunting and complicated - the forms can be six pages long.
Everyone becomes disheartened.'
Another big demotivator is the frequency and content of the appraisal itself. 'Appraisals tend to be very backward looking when, in fact, they are far more helpful if 80% of the time is spent looking ahead to an employee's future developmental needs rather than dwelling on past performance,' claims Tony Bolton, a business development consultant at the Industrial Society. Dialogue between staff and management should not be restricted to the formal annual appraisal but rather a regular, ongoing process.
Appraisals should simply provide an opportunity for one-to-one discussion between employee and manager on how the job is going and what developmental needs are required, insists Richard Foulger, chief environmental health officer at the London Borough of Bromley. If you mix in other elements such as discussion on pay, 'then the developmental side of the interview tends to go out of the window'. The value of an appraisal tends to wane over time, he adds. 'The process can become rather stale.'
International drinking water development charity WaterAid, which has 50 UK-based employees, has managed to avoid this problem. The key, says director Jon Lane, is to keep the appraisal focused on performance and individuals' development issues. 'Our appraisals are about confirming where people are - they are about building confidence, acknowledging contribution and helping people to progress. People feel confident about raising issues, which are dealt with, and any development needs are addressed.' WaterAid has recently introduced specific skills training for all the organisation's appraisers and guidance notes based on their experiences.
Motivation need not be the key objective of appraisals, however. BBC News aims to review performance, agree priorities and identify development needs. It is notoriously difficult to demonstrate a clear link between these activities and employee motivation, claims BBC News personnel manager Sally Norris. 'But what works well about our appraisal scheme is that it provides an opportunity for each person to have a structured conversation with their line manager at least once a year about how they are getting on in their job, what their priorities are for the coming year and their associated development needs.'.