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Advantages & Disadvantages of Performance Appraisal Tools

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That annual performance evaluation -- sometimes late, but sometimes glowing -- is just one of the many tools in performance appraisal, a system that organizations use to evaluate employee job performance. Job descriptions are fundamental performance-appraisal tools. Secondary but equally important elements include discipline policies, evaluations and goal setting. Employers implement performance-appraisal systems with good intentions -- to measure job performance, set business and individual goals and dispense rewards. But nothing is perfect, and even tools that are part of well-constructed performance-appraisal systems have their advantages and disadvantages.

Job Descriptions

Even the best-written job descriptions can be flawed. Ideally, they should contain the essential functions of the job, base qualifications and expected outcomes. But some descriptions don't stay within the lines, which is good and bad. The biggest advantage of job descriptions is that they needn't itemize every single task; they're intended to be guidelines, not checklists. When a job description isn't an itemized list of duties, it gives the employer and employee much-needed flexibility to explore that employee's overall capabilities. On the other hand, one of the primary disadvantages of job descriptions is that some employees believe their responsibilities are limited to what's contained in the job description and, therefore, believe that they don't need to perform extra duties that aren't in writing.

Disciplinary Action

Progressive discipline policies are common, but that doesn't mean they're great. They're a performance-appraisal tool that provide supervisors with a consistent means to correct employee performance according to processes that generally are easy to follow. A verbal warning, two written warnings and final warning are typical steps; any occurrences beyond the final warning may justify termination, and the documentation is simple. But the mere term "disciplinary action" is akin to a parent-child relationship instead of the kind of adult-adult relationship that should exist in the work environment. In addition, any deviation from the company's proscribed disciplinary process could be indefensible if an employee claims she was wrongfully terminated, based on an advice column titled, "Progressive Discipline Disadvantages," on the U.S. Chamber of Commerce website.

Performance Evaluations

Supervisors and employees alike dread annual performance evaluations. Two distinct disadvantages are that some of them take so long to prepare that supervisors procrastinate because writing an evaluation takes time away from departmental duties. In addition, employees feel cheated -- figuratively and literally -- when they don't get one. They're anxious to know how well their supervisors rate them, and because many employers tie raises and bonuses to performance ratings, the waiting game translates into lost money, even when the salary boost is retroactive. The disadvantages of performance evaluations are the flip side of the advantages. They're lengthy enough to discuss practically every aspect of the employee's performance, and they're the source of both extrinsic and intrinsic rewards for employees, based on their job performance and skills.

Goal Setting

The performance-appraisal cycle begins with goal-setting, according to a June 2012 Oracle white paper, "Goal Setting: A Fresh Perspective." Supervisors review goal attainment during the evaluation period and establish goals and milestones for the next evaluation period. The advantage is that employees benefit from combining their professional development goals with organizational goals, as many companies assist employees through leadership training, tuition reimbursement or skills training. But the disadvantage is that all goals aren't created equal. Truly effective goals follow the SMART model that, according to George T. Doran, who coined the mnemonic and conceptualized the model, means they're "specific, measurable, attainable, relevant and timely." Unless the organization embraces the SMART goal-setting process, or if the employee doesn't know how to properly establish or implement her goals, this performance-appraisal tool can be a counterproductive time suck.


Ruth Mayhew has been writing since the mid-1980s, and she has been an HR subject matter expert since 1995. Her work appears in "The Multi-Generational Workforce in the Health Care Industry," and she has been cited in numerous publications, including journals and textbooks that focus on human resources management practices. She holds a Master of Arts in sociology from the University of Missouri-Kansas City. Ruth resides in the nation's capital, Washington, D.C.

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