Is measuring employee performance in an organization all pros and no cons ?

People don't like to live in a constant "test". Just remember the optimist/pessimist coin; what you think is an advantage, someone else won't.

Example: "... encourage efficiency with lucrative rewards..." can also be seen as 'discourage increased productivity because of disincentive of rising minimum levels'.

I.e., the group is able to increase productivity from 1 - 5 units an hour. They get a bonus. Now they must not only maintain 5 (otherwise they loose some tangible benefit) but are pushed to go to 10, whether 10 is attainable or not.

I don't know that I would consider measuring employee performance as negative. If someone isn't performing appropriate conversations need to be had. In order to grow someone, you have to measure performance and behaviors. None of us are perfect nor will we ever be, so if we shift the demeanor of conversations to creating areas of opportunities and building on one's strengths then it won't be viewed as negative.

Employee performance measurement is essential, but fraught with issues. The theory is sound, i.e. Christy’s point. To me the greatest issue with the Performance Review is inconsistency. If done correctly, you praise and give pointers to improve.

But I have run into so many Managers that are not willing to have the “Areas Requiring Improvement” discussion. If a Manager avoids having the serious discussion, and just provides an “Acceptable” rating, the employee will continue the incorrect behavior, as the review validates what the employee does is “Acceptable.”

Regardless of the scale and regardless of the question, during a performance review (at least initially) an employee only hears “Good” or “Bad.” When a Manager is silent on an issue, it is interpreted as “Good” by the employee, as they believe if it was “Bad” the Manager would have mentioned it.

I have inherited employees from Managers before. During the time of the first performance review with me and the individual, I have heard, “That was never told to me before.” Sometimes the outcome is positive, and other times it causes huge problems.

So yes, a poorly managed Performance Review can have negative outcomes to an organization.

One of the cons of performance review programs is that it is difficult to achieve complete uniformity and objectivity, which impacts their credibility.

If the review process does not result in actionable feedback on how to improve or real rewards for good performance it is just an HR tracker to justify terminations should they be necessary.

I've seen organizations where the managers are reluctant to give high ratings. Those are usually companies that have a ranking system / peer bench-marking.

Regis, you are so right. The problem isn't the tool it's the way the tool is used. Terminating someone should never be a shock to the person if the manager is doing their job all the way through the process; just as giving areas of opportunity in a performance review shouldn't be a shock either.