There are good ideas, bad ideas, and good intentions which don't work out in the real world. An example of the third type is the Annual Performance Review.
Most medium-to-large companies try to operate as meritocracies. That means they generally want to promote and reward the best-performing employees. The problem is how to identify the best and worst employees, and how to identify problems and areas of possible improvement. As a concept, the annual performance review serves to identify employees who should be terminated, given remedial training, considered average, rewarded for superior performance, or groomed for executive futures. In practice, it just doesn't work out well. This post examines the reasons for that disparity.
The first mistake is how companies define job performance. Reviews basically come in two flavors - the personal opinion of direct superiors, or a standard form used as a rating system, again primarily judged by the direct superiors. In both cases the judgment of managers can be far too subjective a measure, and the standardized review form is often biased by focus on certain qualities which may be easier for some employees to demonstrate than others.
To make matters worse, many managers are focused on key group performance metrics, making it difficult to track individual performance, especially since individuals are not always able to demonstrate empirical results. And if that were not enough, most HR departments seem to set deadlines for turning in evaluations which don't give managers enough time to really do much thinking on their grades, especially since managers still have to do their regular jobs and meet their deadline for work and reports.
But it gets worse. Most companies want employees to write up self-reviews, then managers need to write up their own reviews, get them approved by their superiors and HR, then meet with employees to discuss them. Again, as I said, while still doing their regular duties with no time or resources set aside for the reviews. It's not hard to see how doing the performance reviews will, in fact, hurt actual group performance/
Another problem is the scoring of reviews. Rather than just allow managers to say whether someone is dong a good job or not, most HR departments require managers to score employees on a wide range of categories, supporting with examples and comments. This just makes it harder for managers to identify and reward the truly exceptional employees, because managers have to spend same amount of time and effort on every employee, and even exceptional employees can come off as just slightly-above-average if they are graded on qualities not essential to their job along with those which do matter. The weighting of categories is another blunder. Just ask any department or group manager if they were asked about the ways their employees should be judged, about the competencies which should be used to grade how employees perform, and you'll hear that HR never asks for opinions from the people who best understand what competencies should be measured, and how they should be identified.
I'm fifty-two years old going on fifty-three, and I have never come across a performance review standard that was anything but a waste of time.