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Advantages and disadvantages of performance appraisal

Advantages and disadvantages of performance appraisal 

This is an in-depth analysis of the advantages and disadvantages of performance appraisal. Performance appraisal is a process aimed at evaluating employee performance. Some analysts argue that it has several advantages such as giving managers a chance to communicate with employees about their work, increase productivity, and create a positive work environment. However, they have also identified some challenges associated with it.


What is performance appraisal (review)?

 According to CIPD (2022) performance appraisal forms part of a holistic approach to managing performance. It is also called performance review, performance evaluation, or employee appraisal. It is a periodic and systematic process whereby the job performance of an employee is documented and evaluated.


Performance appraisal is a formal and systematic process by means of which the relevant strengths and weaknesses of the employees are identified, measured, recorded, and developed (Slabbert and Swanepoel, n.d.).


Advantages of performance appraisal (review)

There are many advantages of performance appraisal. For example, it provides employees with a chance to communicate openly with their manager. This can be a positive thing as the employees can understand where they stand and what needs to be done. Additionally, performance appraisal allows managers to understand how well their employees are doing, which helps them provide constructive feedback on their progress and make changes where necessary.


Performance appraisal helps organisations identify the training needs of employees (Indeed, 2021). Based on the needs, training programmes can be developed to help employees improve their skills and abilities.


One of the key advantages of performance appraisal is increased productivity. Performance appraisal can help motivate employees to reach their full potential. When they know what is expected of them and how well they are performing on the set goals, they will be more motivated to meet those expectations or even go beyond.


Performance appraisal can create a positive work environment by giving employees an opportunity to express themselves and voice their concerns if any. It can also show them that their manager cares about them and is willing to provide them with constructive feedback that can help them develop continually (Indeed, 2021).


Disadvantages of performance appraisal (review)

According to Andrews University (n.d.) there are several disadvantages of performance appraisal i.e. appraiser discomfort, lack of objectivity, halo/horn error, leniency/strictness, recent behavior bias, personal bias, manipulation of the evaluation, and employee anxiety.


Performance appraisal may create the impression of a negative work environment and cause some employees feel that they are being scrutinised. It can also lead to increased stress, decreased motivation, and lack of productivity if it is not done properly.


One of the biggest disadvantages of performance appraisal is biasness. Managers may be very biased towards some employees and review them accordingly. Similarly, halo and horn errors may also occur when managers generalise one positive/negative performance feature or incident to make the assessment without looking into various aspects of the employees. For example, just because a person cannot communicate well, does not mean that he/she is a very bad worker.


Some managers are too lenient, while others are too strict. Performance appraisal may also sometimes lead to an unpleasant experience for them as well particularly when the employee is not performing well. In addition, it is an extra work for them. Because of these, a balanced appraisal may not take place sometimes.


Sanner and Evans (2021) state that performance reviews are not always fair as they are administered by a human who may have unconscious or even conscious biases while assessing others. Likewise, many human traits cannot be measured objectively.


Performance appraisal methods (examples)

When considering the process, it is important to consider what type of performance appraisal a company will want to implement. There are a variety of options that can be chosen from including self-appraisal, upward appraisal, customer appraisal, and 360 review. 360 review is very useful as it gathers feedback on an individual from several sources, typically including colleagues, and customers. However, it can also be a very time-consuming process.


How to avoid pitfalls in performance appraisal (review)

Performance appraisal can be a monotonous process. To make sure it is a positive and successful process, businesses should avoid some common pitfalls. For instance, employees sometimes may feel that feedback is not constructive. They may also feel that they are being judged rather than being appreciated.


Therefore, the appraisers need to ensure that appraisal takes place in an objective and timely manner. When giving out feedback to employees, they need to focus on their individual goals instead of group goals. This allows the employees to know exactly what will be expected of them every week, month etc.


It is important that the appraisers not only provide clear instructions on how to complete the performance appraisal, but also brief the appraisees on what will happen after the process concludes. In some cases, this may be necessary so that employees know they are being evaluated and not just told what is going on in general terms.


Hope you have liked ‘Advantages and disadvantages of performance appraisal’. You may also like Performance appraisal – objectives and process. If you have liked it, please share it with others to support our academic work. Other relevant articles for you are:

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Last update: 25 March 2022


Andrews University (n.d) Performance Appraisals (Online), available from (accessed on 01 July 2012).

CIPD (2022) Performance reviews, available at: (accessed 24 March 2022)

Indeed (2021) 12 Benefits of Performance Appraisals, available at: (accessed 24 March 2022)

Sanner, B., and Evans, K. (2021) Do the Words “Performance Review” Scare You?, available at: (accessed 25 March 2022)

Author: Joe David

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.

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