Performance management: Could do better?

There has been a great deal written about performance management over recent years. From the headlines at least, it can sound like appraisals are history. Certainly there seem to be significant new trends in how employers manage performance, but there is also a good deal of hype. What’s more, in most discussions of 'leading practice' case studies, there is little if any decent evidence on what actually improves performance. 

This research addresses this gap by reviewing the highest quality research on two core aspect of performance management: goal setting and appraisal. We conducted ‘rapid evidence assessments’ (REAs) on these two areas, the results of which we discuss in the overview report. 

Our findings are wide-ranging, giving insights into how best to set goals, run appraisals that generate positive responses from employees and avoid bias in assessing performance. For example, we find that specific and challenging goals work well for relatively straightforward tasks, but not in ‘complex’ tasks that involve navigating interrelated steps, adapting to unfamiliar cues or acquiring new skills or knowledge. More generally, we find that feedback is crucial for goal setting to be effective. 

We also find that, while appraisal generally contributes towards performance, this is by no means always the case. Employees’ reactions to appraisals are especially influential, in particular whether they feel that appraisal judgements are fair and useful. As such, we recommend that employers check in with employees following any performance conversation.

Another critical factor in developing effective performance appraisal is to be clear on what its purpose is. We find that in developmental appraisals, ratings tend to be stricter and based on a wider range of examples of performance than in administrative appraisals used to inform pay and promotions. Because they clearly involve different cognitive processes, we recommend separating developmental performance conversations from administrative ones.