ABSTRACT
This chapter highlights the perceptual biases that both appraisers and those being appraised bring to the process. It argues that the influence of agency theory on management practice undermines the positive intentions that generally underline appraisal systems. The author discusses five key problems with appraisal interviews that can be at least partly explained by the influence of agency theory. The first three problems include reliance on short-term measures to assess individual employee performance, developmental feedback undermined by relating appraisal to pay and a close scrutiny of performance, and prioritisation of individual rather than team performance. The last two problems are difficulty of accurately and objectively measuring performance and self-efficacy biases cause employees to have a more favourable view of performance than their managers do. A predominantly economic perspective informs project scrutiny, born of the fear of deviance, which is in turn facilitated by traditional appraisals.
