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ACCA Applied Knowledge · Business and Technology · Review and appraisal of individual performance

A company links annual appraisal ratings directly to pay rises. Employees begin to hide weaknesses and avoid discussing development needs in appraisal meetings. Which limitation of appraisal does this best illustrate?

The limitation is that mixing judgement for reward with developmental discussion undermines openness. When pay depends on the rating, employees conceal weaknesses and avoid raising development needs, so the appraisal fails in its developmental purpose. Subjectivity and lack of peer input are not the issue described.

  1. AAppraisal cannot be used to identify training needs when ratings are subjective
  2. BCombining evaluation for reward with development discussion undermines opennessCorrect
  3. CAppraisal is invalid unless peers rate the employee as well

Explanation

When appraisal determines pay, staff have an incentive to present themselves favourably and conceal weaknesses, so developmental honesty is lost. The first option overgeneralises; subjectivity is a problem but is not what is described. Peer rating is not required for validity.

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