The Real Costs of Performance Appraisals

Performance appraisals can be expensive, and it’s not because of thesoftware. KnowledgePoint’s Performance Impact 2.0 Hosted Edition starts at$4,500 for one year, and a site license for the Intranet Edition starts at$8,000-a paltry sum in the grand scheme of things.

    The real costs are in the time spent:

• preparing appraisals

• setting goals and objectives

• conducting reviews

• conducting higher level reviews of lower level appraisals

• designing, printing, copying, filing and distributing appraisal forms

• designing and communicating the appraisal process

• training supervisors to conduct appraisals

• dealing with post-appraisal appeals and grievances

    As a rule of thumb, Fred Nickols, senior consultant with DistanceConsultants, in Robbinsville, New Jersey, estimates performance appraisals tocost $1,500 per employee. That may be a low figure, however. Two seniorexecutives with overseas firms who responded to Nickols’ 1997 Internet surveyfor HR professionals cited actual costs of $1,945 per employee and $2,200 peremployee.

Workforce, April 2001, p. 81SubscribeNow!