KPIs & Employee Appraisals in the Modern Workplace

The appraisal system is frequently a source of frustration for all concerned, be that HR professionals, managers or employees, many of whom view it as a box ticking exercise with no meaningful or positive outcome. According to a recent report, a mere 4% of HR Managers think that performance reviews (or appraisals) are effective, however don’t be ready to scrap them just yet!

As a matter of fact, following US tech giant Microsoft’s approach to scrap performance reviews, can create a significant decline in productivity, according to research conducted by Recruitment Company Reed in the UK, just under half (46%) of 8,000 Managers and Employees surveyed stated they thought that “substantial alterations or a complete overhaul” was necessary of their current appraisal system which was called “old fashioned, unreliable and too complicated”.

However, an appraisal system or Key Performance Indicators (KPIs), with careful planning, conduct and follow-up, can lead to positive results: an employee’s performance, efficiency and motivation can increase, and their employer and team will feel the benefit in terms of improved output. Additionally, the overall results found that productivity of companies who abandoned performance appraisals dropped by almost 15%, and increased the percentage of employees leaving. The study also found that 9% fewer employees thought pay rises were fairly assigned and less than 5% of Managers felt they could effectively manage their teams without a rating system.

The research is definitely flawed- it did not ask respondents why they felt the way they did, nor did it ask companies why they stopped using appraisals, or what was being used to replace them which could have accounted for the negative findings.

Struggling with the implementation of appraisals and KPIs within your company? KPI Suite is an easy to use software system, providing functionality required to define, track and manage all of your company’s Key Performance Indicators. Read more to find out how it can help your company.

What do you think about performance appraisals? Let us know in the comments section below.