Chapter 2: Organizations Want to Abandon Performance Appraisal: Can They? Should They?

Performance appraisal is often described as the “job managers love to hate” (Pettijohn, Parker, Pettijohn, & Kent, 2001, p. 754). Dissatisfaction with performance appraisal is widespread and well documented. Few people like giving or receiving feedback about job performance (Cleveland, Murphy, & Lim, 2007), and many of the participants in performance appraisal and performance management systems distrust the feedback they receive (Murphy & Cleveland, 1995). As a result of this dissatisfaction, several large and influential organizations (e.g., Accenture, Deloitte, Microsoft, GAP, Medtronic) have abandoned or substantially curtailed their use of formal performance appraisal systems (Culbert & Rout, 2010; Cunningham, 2015; Ollander-Krane, 2015). Deloitte, for example, has replaced traditional appraisal systems with systems that ask team leaders four simple questions about each team member (Buckingham and Goodall, 2015).

In this chapter, we argue that organizations should not, and indeed cannot, abandon the sort of formal and structured evaluations of job performance that are characteristic of traditional performance appraisals. First, we provide a brief history of performance appraisal (PA) in order to provide a context to understand current issues and potential future issues in PA. Second, we review reasons why organizations are so interested in finding an alternative to performance appraisal. Next, we show why getting rid of performance might be tempting, but is in fact a very bad idea.