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I have the strong suspicion that workplace performance appraisals and the act of setting employee goals do little to improve the employee performance and often serve to hurt the employee morale, which can have a negative effect on performance. My intuition on this practice is shared, below are some notable claims:

Do there exist any studies or peer reviewed journal articles that can back up these claims or potentially disprove them as crackpot ideas?

If there exists legitimate proof of these claims then is there any notable provable reasons that companies ignore such studies and continue a practice that is possibly running counter to their stated intentions, perhaps a deeper reason for performance appraisals?

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    Interesting, and 10 mins googling reminds me wny I got out of academia - the articles are seemingly desgined to be obtuse. Btw, how could an employer not set goals ? Even a lack of goals, is still a goal - don't achieve anything. – NimChimpsky Apr 2 '13 at 12:56
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    A meta review of 27 different studies, via wiki, tamu.edu/faculty/payne/PA/Cawley%20et%20al.%201998.pdf – NimChimpsky Apr 2 '13 at 13:02
  • @NimChimpsky Nice... maybe write an answer then? Just reference everything you say, this site is tough as nails on referencing every single statement and opinion. – maple_shaft Apr 2 '13 at 13:08
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    @NimChimpsky - Some places set unrealistic goals. One place I recently worked expected to triple income despite the fact that they had 133% managagement turn over in the prior year. (Yes every manager that was there at the start of the year left and one that they brought in had already left). If your managers(they had a few good ones) are bolting how can you expect to triple revenue with out offering anything new. – Chad Apr 2 '13 at 16:26
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    any time you try to put a number on performance people will try to game the system – ratchet freak Apr 2 '13 at 18:31
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Current understanding for appraisals

  1. Appraisals which are not linked to monetary outcomes such as bonuses, promotions, or pay rises seem to have detrimental effects for some types of employees.

    Hence, it seems to be really important that appraisals are linked to any kind of monetary outcomes such as bonuses, promotions, or pay rises. Performance appraisals related to monetary outcomes also lead to a stronger feeling of job related recognition from superiors, which seems also to be an interesting finding for firms with respect to the implementation of PA systems. On the other hand, appraisals with no clear link to monetary outcomes even seem to have detrimental effects for some types of employees. Source: HOW MUCH DO HIGH-PERFORMANCE WORK PRACTICES MATTER? A META-ANALYSIS OF THEIR EFFECTS ON ORGANIZATIONAL PERFORMANCE

  2. Rater-ratee relationship quality is more strongly related to appraisal reactions than appraisal participation or the ratee's actual performance ratings.

    This study reviews and meta-analyzes the literature on the social context of performance appraisal. Results indicate that aspects of rater-ratee relationship quality (i.e., supervisor satisfaction, supervisor support, supervisor trust) are strongly related to ratee reactions to performance appraisals. Rater-ratee relationship quality is more strongly related to appraisal reactions than appraisal participation or performance ratings. Integrating social exchange theory with procedural justice theory, this article tested whether or not the relationship quality–appraisal reactions relationship was due to relationships between relationship quality and instrumental resources for the ratee (i.e., appraisal participation and rating favorability). Source: The social context of performance appraisal and appraisal reactions: A meta-analysis

  3. Employee motivation is enhanced by appraisal processes which create the perception of justice and trust between employees and supervisors.

    In conclusion, the fairness of a performance appraisal system has been recognized as an important effect on the success of any organization because perceived fairness was connected to the acceptance of this system and eventually, the performance of employees and organization. Employees create conclusions about a system’s (e.g. appraisal system) fairness based on the system's results, outcomes and procedures and how supervisors treat employees when applying those procedures. Source: A Review on Performance Appraisal System: An Ineffective and Destructive Practice?

    Also the current trend is that the traditional appraisal/performance management systems providing employee ratings are on the decline and systems which measure outcomes are thought to be the future.

    By early 2015, around 30 large companies, representing over 1.5 million employees, were following a similar path. No longer defining performance by a single number, these companies were emphasizing ongoing, quality conversations between managers and their teams. Source: Why More and More Companies Are Ditching Performance Ratings

    Adobe is not alone in its endeavours to ditch the traditional performance appraisal. Others are joining its ranks in either pilot or rollout stages, with Accenture, Cargill, ConAgra, Gap, Intel, Juniper Networks, Medtronic, Microsoft, and Sears among them. Source: Fixing Performance Appraisal Is About More than Ditching Annual Reviews

TL;DR:

  1. Feedback without goal setting has little to no effect on behavior. To improve the employee's behavior with feedback, specific high outcome goals must be set for employees with the required knowledge and skill and specific high-learning goals for those lacking the required skill and knowledge. Goal commitment tends to relate to the employee's performance.

    Feedback in the absence of goal setting has little or no effect on behavior (Locke & Latham, 2002), because feedback is only information; its effect on action depends on how it is appraised by the recipient, and what decisions are made with respect to it. For feedback to improve behavior, specific high goals must be set (Latham, Locke, & Fassina, 2002), because goal setting affects choice, effort, and persistence. A meta-analysis revealed a strong relationship between goal commitment and a person’s performance (Klein, Wesson, Hollenbeck, & Alge, 1999). Source: ADVANCES IN THE SCIENCE OF PERFORMANCE APPRAISAL: IMPLICATIONS FOR PRACTICE

  2. Year-round coaching of an employee tends to influence the desire of continuous improvement in the employee's behavior.

    Performance management, defined as year-round coaching of an employee, is more likely to inculcate a desire for continuous improvement, and to bring about and sustain a significant increase in an employee’s behavior than an annual or even a quarterly appraisal. Source: ADVANCES IN THE SCIENCE OF PERFORMANCE APPRAISAL: IMPLICATIONS FOR PRACTICE

  • FYI: You need to add 1-2 more spaces before ">" to make the blockquotes align correctly with the bulleted lists in Markdown. – user5341 Jul 5 '16 at 13:28
  • @user5341-done! – pericles316 Jul 5 '16 at 14:19
  • before, not after :) FTFY - please see the edit diff. – user5341 Jul 5 '16 at 14:46

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