Cost/Benefit of Perf Appraisal LO3671
Sat, 11 Nov 1995 16:05:16 -0500

Constructing a cost-benefit analysis of performance appraisal
systems ought to prove interesting, informative, useful, and even
fun. If you'd like to participate, by all means join right in.

Initially, I'd like to focus on the classic performance appraisal
system, that is, one in which the appraisee reports directly to
the appraiser. Input from others, 360 degrees or otherwise,
might or not be a factor. In other words, the focus here is on a
boss's appraisal of a subordinate's performance.

At this stage, I am not trying to reach conclusions. Instead, all
I want to do is catalog what people see as the costs and the
benefits of performance appraisal systems. Neither costs nor
benefits must be expressed in financial terms; however, some
certainly can (e.g., the cost of the time to prepare one).

Here, then, are two questions to get us started, and a "starter set"
of answers:

What are the costs of a performance appraisal system?

the time and dollar costs of preparing appraisals
the time and dollar costs of goal setting sessions
the time and dollar costs of periodic review sessions
the time and dollar costs of annual review sessions

What are the benefits of a performance appraisal system?

provides a basis for distributing annual merit increases
provides the occasion for performance-related discussions
reinforces managerial authority

Please think about additional costs and benefits and, if you're willing
to share them, send them in an e-mail message to:

I will compile the responses and share them first with those who
contribute and, later, with a broader audience.

As you can see, I have cross-posted this to several lists where I know
related discussions have occurred. My apologies to those of you who
receive more than one copy of this message. Also, please feel free to
pass this along to anyone whom you think might be interested.


Fred Nickols