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HBOK 1-467

Title Performance Appraisal: Weighed and Found Wanting in the Balance
Author(s) Fred Nickols
Source Journal for Quality and Participation
Topic Performance Measurement

Engaging and Empowering the Workforce

Abstract Ten years ago the author conducted an informal survey about performance appraisals that led him to suggest that executives should abandon their company’s performance appraisal system, rather than to continually redesign it. His argument is that the traditional performance appraisal delivers little demonstrable value at considerable cost. The perceived benefits of performance appraisals must be weighed against both soft and hard costs. Soft costs are gauged on the drawdown on human and political capital. Hard costs can be measured in dollars and cents. Performance-related discussions between managers and employees do not require a formal performance appraisal system. Coaching and counseling sessions occur outside such systems, as do goal setting and feedback. Annual cost-of-living salary increases can be done on flat-rate basis, while bonuses, profit sharing, and other special increases can and should be tied to specific, visible, and highly measurable results that do not require a performance measurement system.
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