Re: Cost/Benefit of Perf Appraisal LO3683

jack hirschfeld (
Sun, 12 Nov 1995 14:45:22 -0500

Replying to LO3671 --

>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.
(snipping some expalnatory stuff from Fed Nickols' post)
>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

This is one of those C/B exercises, which, like most others, satisfies
only those who count $$ as the objective/prupose of business, life and
love. Natheless, we all learn this stuff, and even within its own context,
the construct weakens when some costs and benefits are added that are
difficult to quantify:

A cost: Mutual trust, self worth of appraisee, in a hierarchical social
construct, especially, when the "appraiser" is exercising "judgment"
rather than just collating data. There's plenty of "discretionary effort"
in any employee's "output", and that effort can be eroded by an appraisal
process. But how to measure it?

A potential benefit of performance appraisal is the opportunity to
identify areas for improvement, and in particular to identify practices
which negatively impact corporate performance through amplification
(1-10-100 rule). Early detection a can prevent disastrous long-term
consequences of faulty behavior. Try putting a dollar value on that,
without a concrete case example!

Jack Hirschfeld         Don't it always seem to go that you don't know            what you've got, 'til it's gone?