Performance appraisals – a double-edged sword

Performance appraisals can actually be counter-productive for employees who are in the greatest need of training and further development. This fact is highlighted by Professor Bård Kuvaas from the BI Norwegian School of Management, based on a new research study.

There is almost not a single organisation, public or private, which does not conduct performance appraisals in one form or another. Performance appraisals are one of the most widely used tools within HR (Human Resources). But is the performance appraisal pure hype, or does it really contribute to a better work performance, increased company loyalty and more committed employees?

Bård Kuvaas, who is professor of organisational psychology at the BI Norwegian School of Management, has carried out an extensive study involving almost 600 employees working in some 60 savings banks in order to record employees’ experiences of the appraisal interview.

Professor Kuvaas has been concerned, in particular, about recording what effects a successful performance appraisal has on work performance, company loyalty and turnover intention. The results have been published in the reputable scientific journal, International Journal of Human Resource Management.

“The study shows that there is roughly an equal probability of performance appraisals making things get worse as there is of them making a positive contribution,” points out Bård Kuvaas.

A successful performance appraisal only has a positive effect on work performance in the case of employees who already have a high intrinsic job motivation. They are among the group of employees who already provide the best work performance and take personal responsibility for their own development and doing their job.

In the case of employees with low intrinsic motivation, performance appraisals can be counter-productive. “There is a negative link between satisfaction with the performance appraisal and work performance for those with low intrinsic motivation. But these are the same people who are most in need of this type of HR tool,” insists the BI researcher.

Bård Kuvaas also points out that a successful performance appraisal can have a positive effect on the employee’s company loyalty, while also reducing the employee’s turnover intention. But this only applies to half of the employees who regard the performance appraisal as a positive experience.

Professor Kuvaas offers the following advice to companies using different HR tools:
“Performance appraisals and other tools which involve feedback and target management should be adapted to the employee’s individual needs and characteristics. Otherwise, there is a risk of harming the good employees without being able to help the less good.”