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Performance evaluation will not die, but it should

Kevin R. Murphy

Human Resource Management Journal - October 2019

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Overview​

A wide range of systems for evaluating performance have been used in organisations, ranging from traditional annual performance appraisals to performance management systems built around informal, real-time evaluations, and these systems almost always fail. Rather than continuing to make cosmetic adjustments to this system, organisations should consider dropping the practice of regularly evaluating the performance of each of their employees, focusing rather on the small subset of situations in which evaluations of performance and performance feedback are actually useful. Four barriers to successful performance evaluation are reviewed: (a) the distribution of performance, (b) the continuing failure to devise reliable and valid methods for obtaining judgments about performance, (c) the limited utility of performance feedback to employees, and (d) the limited utility of performance evaluations to organisations. In this paper, I propose ways of managing performance without relying on regular performance evaluation, refocusing managers' activities from performance management to performance leadership.

Key ideas​

  • Murphy argues that performance evaluation persists despite repeated failure across both traditional annual appraisals and more informal real-time evaluation systems.
  • The critique is not just that annual reviews are clumsy. The deeper claim is that routinely evaluating every employee is often the wrong default.
  • Four barriers explain why evaluation systems disappoint: performance itself is unevenly distributed, judgments about performance remain hard to make reliably and validly, feedback has limited usefulness for employees, and evaluations have limited usefulness for organizations.
  • The paper recommends narrowing formal evaluation to the situations where it is genuinely useful, instead of treating evaluation as a standing requirement for everyone.
  • The alternative direction is "performance leadership": managers should spend more energy shaping conditions, expectations, support, and accountability than maintaining a universal evaluation ritual.

Practical use​

  • Separate development conversations from administrative judgment wherever possible, so coaching is not constantly contaminated by scoring.
  • Use formal evaluation only when a real decision requires it, such as role fit, promotion, compensation, or serious performance intervention.
  • Build manager habits around clarity, coaching, removing blockers, and timely course correction instead of relying on the appraisal event to drive improvement.

Original research: Open publisher page