If annual appraisals are so unpopular, why do over half of companies continue to do them? Well, formal performance reviews have their uses. They provide a systematic way to measure and track employee performance against objectives and KPIs, to improve results. The data can be used to reveal company-wide trends. Fans of the annual appraisal say it’s a tool for year-on-year performance comparisons that feed into business decisions. And of course, all that data fits nicely into a spreadsheet!
The problem is, however nice the data looks, it is often wrong! Research shows annual appraisals fail to accurately measure performance or improve results. For example, at least 30% of performance reviews lead to decreased employee performance! So, where did it all go wrong? Let’s find out.
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