Why Performance Appraisals Matter

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They may be a pain for managers to write, but performance appraisals are not a waste of time. Find out what makes them effective and how to do them properly in a new article from Compensation & Benefits Review, published in the July/August 2012 issue by Edward E. Lawler III of the University of Southern California, George S. Benson of the University of Texas at Arlington, and Michael McDermott of McDermott Sitzman & Associates, PC:

Performance appraisals are often criticized and poorly done. However, they are not going away and should not go away. They are needed to effectively manage an organization’s talent. Our research suggests that performance management systems can be effective if they are designed and executed correctly. Performance management systems are effective when they are based on goals that are jointly set and are driven by an organization’s business strategy. The use of competency models that are based on cbrbusiness strategy is strongly associated with organizational effectiveness.
When they drive salary increases and bonuses, they are executed better. Often absent but critical to the success of performance management systems is senior management leadership and ownership; much less important is ownership by human resources. Additional keys to effectiveness are training managers to do appraisals, holding them accountable for how well they do appraisals and using measures of how results are achieved.

Click here to read “What Makes Performance Appraisals Effective?” in Compensation & Benefits Review, and get up-to-date analyses and information on salary and wage trends, labor markets, pay plans, and more by signing up for e-alerts from the journal.

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