Banished Inquisition

Is it time to do away with yearly employee reviews?
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2 min read

This story appears in the May 2001 issue of Entrepreneur. Subscribe »

No one likes performance appraisals: Employers dread them, while employees fear them. According to Tom Coens and Mary Jenkins, co-authors of Abolishing Performance Appraisals: Why They Backfire and What to Do Instead (Berrett-Koehler), appraisals are flawed and inaccurate and don't motivate employees.

"Traditional appraisals have so many negative unintended things attached to them, like stress and fear, and they often put a chill on relationships," says Jenkins. However, don't go too far: Jenkins considers basic appraisal functions like , coaching and important. But Jenkins and Coens say these functions should be "unbundled and assessed separately on a continuous, real- basis."

Jenkins and Coens suggest sacking all annual appraisals. Instead, try ongoing, two-way feedback among employers, managers and employees on how well the company is doing as well as dialogue about individual careers. The authors say compensation should be a stand-alone issue and suggest gain sharing and performance awards, where all employees share in the company's success by receiving extra income based on a ratio of their annual salaries.

Glenroy Inc. of Menomonee Falls, Wisconsin-which manufactures packaging materials for the medical, food and personal care industries-gave up annual performance appraisals years ago. "We are more involved in [constant ] instead of saving things up for a year and then springing it on them," says Jim Daugherty, Glenroy's vice president of finance and administration. After all, he says, you wouldn't do something like that in your : "You wouldn't save things up and then spring them on your family members; this works the same way."

Ellen Paris is a Washington, DC, writer and former Forbes magazine staff writer.

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