After having been hired, classified, paid, and trained, an employee will have his or her work reviewed as the organization seeks to assess the extent to which the individual’s and the collective’s needs coincide—or conflict. Employees may value the appraisal process for both intrinsic reasons (as a validation of their workplace efficacy) and extrinsic ones (recognitions and rewards).

Because many decisions can hinge on these ratings, the process of personnel evaluation is central to strategic human resource management; indeed, the success of an organization depends on the success of its workforce. Playing key functions in employee compliance, performance improvement, and system validation, appraisal reviews are mechanisms for reinforcing organizational values.

They provide data on the effectiveness of recruitment, position management, training, and compensation (where such information is most frequently used). In the absence of this feedback, executives may have difficulty understanding how well other management functions are working. Likewise, judgments about individual conduct may be needed if performance-contingent decisions in such areas are to have a rational basis.

Clearly, then, employee evaluation is central to strategic importance for the agency and a chief activity of management. It is also a complex function that includes administrative decisions (e.g., pay), developmental recommendations (e.g., training), technical issues (system design), and interpersonal skills (superior–subordinate appraisal interviews). Although a well-designed assessment process can benefit an agency, creating, implementing, and maintaining such a process is not easy.
Programs serving multiple purposes, in fact, may serve none of them in an effective manner.

A review of performance reviews reveals that they are not good at what they are meant to do: evaluate performance. Two-thirds of employees receiving the highest scores in a typical appraisal system were not actually the organization’s highest performers. People are often less certain about “where they stand“ after an assessment than they were before. The higher an individual rises in a department, the lower the likelihood that he or she will receive high-quality feedback; most employees perceive little connection between performance and pay. Although the communication of negative information is difficult, not communicating it can be much worse.
Because it is impossible to have good ideas without also having a lot of bad ones, rewarding success is not enough; failure should also be recognized, especially if it results in valuable lessons.