Washington, DC- March 14, 2005 - Only 13 percent of employees and managers and 6 percent of CEOs think their organization's performance appraisal is useful. And 88 percent say their current performance appraisal negatively impacts their opinion of HR.



These results are from a new study by People IQ, a leader in performance management, that surveyed 48,012 employees, managers and CEOs across 126 organizations. The survey, called the Culture Scorecard, asked 85 structured and open-ended questions on a series of workforce issues, including performance appraisals.



"Performance appraisals are the elephant in the room for HR," explains Mark Murphy, CEO of People IQ. "As they're currently designed, nobody thinks they add much value, but we're afraid to admit it. If your customers don't like your product and your boss doesn't like your product, this does not bode well for your long-term career success. As soon as we admit that HR leaders have not been well-served by many of the people and firms who design performance appraisals, and we take steps to correct this, HR's reputation and credibility will increase exponentially."



The study identified three primary drivers of the dissatisfaction with performance appraisals:



Undifferentiated Scores

96 percent of employees, mangers and CEOs agree that performance appraisals should differentiate high and low performers. But only 18 percent agree that their current system actually does differentiate high and low performers.



Too Cumbersome

Only 16 percent of managers believe that their current performance appraisal process is easy and efficient to use.



Too Much Boilerplate

Only 14 percent of employees believe that their performance appraisal provides relevant and meaningful feedback. 95 percent of employees believe that appraisal comments should reference and cite specific events from throughout the year. However, only 13 percent of employees believe that their manager has an effective method for tracking and recording those specific events. Of the employees who provided additional comments, 42 percent noted that the comments on their appraisals sounded too generic.



When more employees believe their performance appraisals are easy and efficient, provide relevant feedback and differentiate high and low performers, the more likely they are to have positive opinions of both the appraisals and HR leaders, notes Murphy.



"Too often the performance appraisal is a perfunctory and thoroughly-disliked exercise," he says. "We spend too much time designing complicated paper or electronic forms, and too little time ensuring that appraisal scores honestly reflect actual performance and that the written feedback is unique and meaningful for each employee. If we're not going to provide honest or meaningful feedback, why even conduct a performance appraisal?"



He adds that "this study warns HR of the challenges associated with performance appraisals, but it also provides the solution. If we create performance appraisals that differentiate high and low performers, are easier to complete, and place greater emphasis on giving employees unique and meaningful feedback, HR's credibility and reputation will immediately skyrocket. HR leaders are too important and critical to their organizations to have their have their reputations damaged by performance appraisals."