Another year has passed, and another appraisal is done and dusted, with some employees being rewarded, some counselled and some even warned.

Is it any wonder then that the performance appraisal is a subject on a lot of people’s minds? 

It is likely that none of the “rewardees” have any grouse against the system. To them, everything’s fair and square. They performed well, and they believe their performance appraisal was very accurate, and they were naturally rewarded.

But it’s a very different story from those who have not been rewarded, especially if they believe that the outcome was unfair or underserved. So it is natural that they question the appraisal system.

It is probably fair to say that every appraisal system has its flaws. What management can strive for is to develop a system that is best suited for its needs, and is least flawed as a technique.

To accomplish this, we need to clearly understand the objectives of the performance appraisal system, and what inputs are required to design the best possible system.

Why have a performance appraisal?

There are a whole range of objectives about why employers need to appraise the performance of their human assets. The answer: Because they are the company’s assets.  

Any investment on an asset needs to be evaluated. And since people are considered “assets”, they need to be evaluated for their contribution to the organisation’s goals. 

Performance appraisals also provide the input for a whole range of critical decisions for the organisation, for example, whom to motivate with rewards, which employee to be promoted to a higher level (and naturally higher rewards), which rotten apple to be separated from the organisation, and so on.

Looking within for talent

When an organisation is successful, it will grow. That gives rise to more opportunities in the company. It is wiser for employers to look within for talent to fill the new and higher positions, before they begin to look at external candidates.

Again, performance appraisals are the data source that tells management who are worthy and who are not.

But a faulty appraisal system can encourage the undeserving and kill the can-do spirit of the real human assets in the organisation. It can breed a culture of mediocrity, sustained by sycophancy, leading to the organisation’s ruin.

It is, therefore, very critical that organisations should have a very objective, reliable and credible performance appraisal system in place.


Article by Prema Jayakumar, a productivity coach with Automation Solutions, Singapore. For more information, e-mail or visit