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At a time when many corporations are engaged in unrelenting searches for ways to improve operations and reduce costs, there is one aspect of organizational life that has largely escaped scrutiny: Performance Appraisal. Perhaps this is because performance appraisals have become an unquestioned fact of life in most large organizations. As with most unquestioned facts, a critical examination can prove beneficial. In this article, the author points out that the hard costs of operating formal performance appraisal systems are measured in billions of dollars annually and that the soft costs might be even higher. The primary offsets to these costs are the purported benefits of performance appraisal systems. Upon inspection, these appear to range from non-existent to minimal.
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