How important is my job appraisal and how does it affect my career?

When I first started working in the corporate world, I took my job appraisal very seriously. I really wanted to get a favorable review so that I could begin my climb up the corporate ladder to luxury cars, custom suits, and private jets. As time passed, I realized that the appraisal, or job review, really doesn’t matter all that much at most companies. The management team will always tell you otherwise; they will vehemently state that your performance review directly correlates to your career path. At a few select companies this might be true, but for the vast majority this is utter fallacy. I learned this during my tour in Human Resources, where two of the things I handled on a daily basis were appraisals and merit increases.

Don’t get me wrong. An appraisal is important when it comes to keeping your job. After all, lackluster performance is a sure way to get fired. And that’s really one of the primary reasons for having an appraisal on file. Let me explain, companies review your performance and keep it on file in case of a lawsuit (this isn’t the only reason, but it’s a major one). Let’s say you’re passed over for a promotion or fired from your job and you decide to pursue legal recourse. The company’s primary defense will rest around your boss’s performance appraisal. They will use it to make their case and to avoid paying any damages. They will state that they documented your underperformance and thereby had a rational and objective reason for their decision. The appraisal is for the benefit of the company, not the individual who works at that company.

Even if you’re an outstanding employee, it still doesn’t behoove your boss to give you an outstanding rating. The reason why is that most merit increases are based off your appraisal rating. The higher the rating, the more money you will receive. Well, why wouldn’t a boss want to give one of his better employees more money to make sure they stick around? The reason why is because of the budget. There’s only so much money in the till for each business/department/division. If the boss gives someone in his department a large raise, then he/she has to give another employee a smaller raise to stay within the allotted budget. This means that an average employee who does an average job would receive a below average increase because of another co-worker who received an outstanding rating and much higher increase. Your boss doesn’t want to have that conversation with the average employee. It’s easier to just give everyone an average rating and average increase.

A situation which can get you more money arises when you are below the average compensation for peers at your level/grade/band. They will give you more money to get you to the midpoint of that pay scale. It doesn’t have anything to do with your performance. Once you reach the midpoint, they start to give you less. All of this naturally begs the question, “So how does the promotion process work if it really doesn’t have much to do with appraisals?” This is a great question, and I will address it in my next article: “How do companies decide who is going to get promoted?“