Question

Performance appraisals represent a company’s way of telling employees what is expected of them in their jobs and how well they are meeting those expectations. Performance appraisals typically require supervisors to monitor employees’ performance, complete performance appraisal forms about the employees, and hold discussions with employees about their performance. Companies that use merit pay plans must assess employee job performance, which serves as a basis for awarding merit pay raises. Awarding merit pay increases on factors other than job performance, except for four exceptions (a seniority system, a merit system, quality or quantity of production, and any factor besides sex), could lead some employees to level charges of illegal pay discrimination against the employer based on the Equal Pay Act of 1963. Many companies have scrutinized the use of traditional formal performance appraisal practices in recent years. The scrutiny is based on many factors; for instance, reducing annual employee performance to a numeric rating. Some companies such as Adobe have set aside the use of traditional methods in favor of frequent informal check-ins. While there are advantages to informal performance appraisal approaches, there are also limitations. For example, how do companies use the information gleaned from check-ins to make fair and consistent pay raise decisions? We will consider this important question in Epilogue.

Question: Should companies abandon traditional performance appraisal methods in favor of frequent conversations about employee performance? Explain.

Answer 1

No. The traditional method of frequent communication must be continued. It helps keep track of employee performance. In case if they are facing any issues, they are highlighted before such that corrective or preventive actions can be taken at the earliest. Secondly, it helps in strengthening relationship between manager and employees.