Ruth, an HR manager at a Lagos-based manufacturing company, felt her chest tighten the moment appraisal season approached. Last year’s review cycle left her team drained. A few employees argued their ratings felt biased. Others complained their KPIs were unclear. Some managers submitted evaluations late because they had not documented anything during the year. The company had hoped that performance reviews would boost productivity, yet they ended up causing tension, distrust, and lengthy meetings that yielded little improvement.

On the other side of her office door, an employee named Dapo rehearsed what he would say in his appraisal meeting. He still remembered the previous year’s review, where his manager rated him low on “team collaboration,” even though no examples were given. This time, he wasn’t sure if the company would use the same appraisal method or change it again without explanation. The anxiety felt heavy.

Scenes like this are common in companies. Many organisations adopt performance appraisal methods because they’re popular, but they don’t apply them correctly or consistently. Some copy frameworks from larger firms without adapting them. Others pick tools they don’t fully understand. The result is confusion, low morale, and ratings that don’t reflect actual performance.

Here, you’ll learn seven common mistakes companies make when using performance appraisal methods and practical ways to fix them. With the right approach,  businesses can turn reviews into clear, fair, and growth-focused conversations that improve productivity and strengthen workplace relationships.

What Are Performance Appraisal Methods? 

Performance appraisal methods are structured techniques used to evaluate how employees meet responsibilities, demonstrate competencies, and contribute to business goals. These methods help HR teams assess performance objectively, support development, identify skill gaps, and guide decisions on promotions, rewards, or training.

Common performance appraisal methods include:

1. Rating Scales
Employees are rated on predefined criteria, often on a numeric or descriptive scale. Examples include teamwork, reliability, communication, or task execution  (e.g., 1–5, “Excellent–Poor”)

3. Management by Objectives (MBO)
Employees and managers agree on measurable targets. Performance is measured based on how well these objectives are achieved.

4. Behaviorally Anchored Rating Scales (BARS)
This method uses specific behavioural examples to define what excellent, average, or poor performance looks like.

5. Competency-Based Evaluations
Evaluations that focus on skills, behaviours, and capabilities linked to job success — such as leadership, adaptability, or problem-solving.

6. Self-Evaluation
Employees assess their own performance, creating room for reflection, ownership, and two-way discussion.

Choosing the right method matters because it shapes fairness, clarity, and consistency within the organisation. The wrong method can distort evaluation results, create confusion, or cause unnecessary conflict.

A well-selected method supports accuracy, aligns with company culture, and matches the nature of the role. For example, creative roles may require more qualitative assessments, while operational roles may perform better under KPI-driven methods.

When performance appraisal methods are misapplied or misaligned, challenges arise: employee dissatisfaction grows, expectations become unclear, and ratings lose credibility. These are the exact issues many organizations face today. Here are 7 performance appraisal methods companies get wrong and how to fix them, starting with the most common pitfall:

1. Using the Wrong Performance Appraisal Method 

Many organisations adopt a “one‑size‑fits-all” approach: everyone gets the same type of evaluation regardless of role or team. That leads to major misalignments.

Consider a creative team working on long-term brand campaigns. Rating them solely by numerical metrics or rigid KPIs misses vital aspects like creativity, collaboration, or strategic thinking. On the flip side, production or operations teams with routine tasks may suffer under competency-based reviews that don’t track output.

A mismatched appraisal method often results in inconsistent evaluations: some teams feel undervalued, others over-penalised. According to research featured by McKinsey, companies that build performance systems around people, aligning methods with roles and goals, are 4.2 times more likely to outperform peers, achieving on average 30% higher revenue growth and lower turnover.

How to Fix It:

• Match evaluation techniques to job functions. Use KPI-based reviews for measurable roles, qualitative methods for creative or strategic roles, and hybrid models for blended functions.
• Combine quantitative and qualitative metrics to achieve balance.
• Apply performance management software to standardise formats, track role-specific metrics, and ensure consistency across teams.
• Sometimes, the best way to ensure consistency across teams is using an appraisal software that allows you to customise cycles, standardise criteria, and track evaluations across departments. Tools like NotchHR can help you achieve this. Get started with a demo
  

For guidance on choosing suitable performance management solutions, you can explore this internal resource: 5 Best Performance Management System Tools in Nigeria.

2.  KPIs and Expectations Are Not Clearly Defined

Many employees enter performance reviews unsure of what they’ll be evaluated on. This creates anxiety and reduces effectiveness. KPIs may be set too late in the cycle, explained poorly, or changed without proper communication. Sometimes goals remain stuck in old job descriptions that no longer match current tasks.. 

When expectations are unclear, appraisal methods like MBO and competency-based reviews fall apart.  Research from Gartner and institutional studies show that unclear goals reduce motivation and engagement

How to Fix It:

• Define KPIs at the start of the performance cycle.
• Base goals on SMART principles: specific, measurable, achievable, relevant, and time-bound.
• Communicate expectations early and reinforce them consistently throughout the year.
• Align KPIs with broader company OKRs to ensure employees contribute to measurable outcomes.
  

For deeper insights on aligning KPIs and enhancing performance success, see this guide: 8 Must-Know Employee Performance Metrics for Success.

3. Bias and Subjective Judgments 

Bias remains a widespread issue in performance review practices. Because many managers lack structured tools or documentation, personal impressions often influence ratings. Bias occurs both intentionally and unintentionally.

Common biases include:

• Recency Bias: Focusing only on recent performance, ignoring earlier contributions.
• Halo/Horn Effect: Allowing one strong or weak trait to overshadow overall judgment.
• Strictness/Leniency Bias: Managers who always rate everyone too high or too low.
• Personal Favouritism: Ratings influenced by personal relationships rather than data.
  

According to a survey cited by SHRM, nearly 40% of annual appraisals suffer from recency or central-tendency biases. Such bias undermines trust, damages morale, and can lead to turnover

How to Fix It:

• Train managers on structured evaluation practices.
• Use 360-degree feedback to gather broader insights.
• Adopt digital performance review tools to create standardised rating structures.
• A performance management tool can centralise KPI tracking, provide reminders, and make progress visible to both managers and employees. NotchHR is one solution that facilitates this process. Book a demo.
  

To compare review-focused approaches, explore this resource: Performance Reviews vs Management: What Really Works?.

4. Treating Performance Reviews as a Once-a-Year Exercise 

Annual-only reviews no longer work in today’s fast-paced business environment. By the time the review arrives, issues that occurred months ago have already affected productivity.

A static, once-a-year cycle leads to:

• Delayed feedback
• Unaddressed mistakes
• Lack of learning opportunities
• Disconnected goals and outcomes
  

Global surveys paraphrased from McKinsey show that frequent check-ins contribute to stronger performance and improved engagement.

How to Fix It:

• Adopt quarterly check-ins for progress updates.
• Schedule monthly one-on-one conversations for coaching.
• Use continuous performance management tools that allow real-time feedback.
• Set short-term goals that align with long-term objectives.
• Appraisal software allows continuous performance management, enabling real-time feedback, goal adjustments, and progress dashboards. NotchHR provides these tools to help you move beyond annual-only reviews. Get started with a demo
  

For recommended strategies, check this resource: 9 Strategies for Effective Performance Management.

5. Poor Documentation and Lack of Evidence 

Many supervisors struggle with heavy workloads and rely on memory when completing evaluations. Without proper documentation, methods like BARS, KPI-based reviews, and competency assessments lose validity.

When managers don’t track performance throughout the year, reviews become subjective. Employees challenge ratings, and HR cannot defend decisions with evidence. Inconsistent documentation also affects promotion and disciplinary decisions.

Reports paraphrased from SHRM show that poor record-keeping increases disputes and reduces confidence in performance management systems.

How to Fix It:

• Track employee activities, achievements, and challenges throughout the year.
• Use HR software that stores feedback logs, notes, and supporting evidence.
• Document both strengths and weaknesses with examples.
• Encourage employees to keep personal performance journals.
• An appraisal software can ensure that every note, rating, and example is tracked, making reviews more objective. Using tools like NotchHR can help managers maintain accurate documentation effortlessly. Book a demo 

To understand how continuous performance drives success, see: 5 Ways Performance Management Drives Employee Success.

6. Excluding Employees From the Process 

Many organisations run “manager-only reviews,” where employees simply sit and listen to a rating they don’t fully understand. This creates tension and reduces employee ownership.

When employees are excluded:

• They feel judged rather than involved.
• They don’t understand how ratings are determined.
• They get defensive, making conversations unproductive.
• They don’t buy into development plans.
  

A more collaborative model encourages growth and removes the fear associated with appraisal sessions.

How to Fix It:

• Introduce self-evaluation as part of the appraisal process.
• Make appraisal conversations two-way.
• Ask employees to discuss achievements, challenges, and areas they want support.
• Build a feedback culture that encourages transparency.
• The easiest way to embed this practice is through a performance management platform that supports self-reviews and continuous feedback. NotchHR is designed to facilitate collaborative evaluations. Book a demo.

To improve engagement, see: 9 Strategies for Effective Performance Management.

7. No Follow-Up or Development Plan After Reviews

Many companies conduct performance reviews and then stop there. Employees hear their ratings, sign the form, and wait another year for updates. Without follow-up, nothing changes. This weakens the entire performance management framework.

According to paraphrased insights from Gartner and McKinsey, reviews are only meaningful when they lead to development. A strong performance management system must connect feedback to growth.

When companies fail to create post-review action plans, they miss opportunities to build capability, retain talent, and support struggling performers.

How to Fix It:

1. Create Development Plans:
   Break down next steps into clear action points. Identify training needs, skill gaps, project opportunities, and mentorship options.
2. Schedule Follow-Up Meetings:
   Reinforce learning with monthly or quarterly check-ins. Discuss progress, challenges, and improvements
3. Provide Coaching and Training:
   Link employees to relevant courses, workshops, and mentorship relationships.
4. Set Measurable Milestones:
   Ensure development goals are specific and trackable.
5. Document Progress:
   Keep records of all improvement steps to check during next cycles.
   

Good performance management doesn’t end at the review meeting. It continues through a structured cycle of evaluation, improvement, and support.

For guidance on building strong performance-driven cultures, see: 9 Strategies for Effective Performance Management.

How to Choose the Right Performance Appraisal Method 

Choosing the right method requires understanding your team, culture, and goals.  Companies often adopt methods without analysing suitability.

Consider the following framework:

1. Role Type

• Operational roles: Use KPI-driven or MBO evaluations.
• Creative roles: Choose narrative-based or competency reviews.
• Leadership roles: Combine 360-degree feedback with competency frameworks.
  

2. Team Size

• Small teams: Rating scales + one-on-one discussions.
• Medium teams: Mix of MBO, self-reviews, and competency assessments.
• Large organisations: Structured frameworks supported by performance management software.
  

3. Data Availability

Choose methods supported by evidence. If managers don’t document performance, BARS may be difficult to implement.

4. Managerial Skill Level

Not all managers are skilled at delivering feedback. Simpler methods may work better until they receive proper training.

5. Company Culture

If your culture values collaboration, a 360-degree feedback system fits well. If it emphasises accountability, KPI-driven systems may be best.

In many  SMEs, the ideal approach is a hybrid model: mixing rating scales, KPIs, continuous feedback, and competencies. This flexible method supports different roles based on needs.

For more insight on understanding effective methods and processes, review this resource: 5 Best Performance Management System Tools in Nigeria.

Tools That Improve Performance Reviews 

The right performance management software helps reduce bias, track progress, and standardise review processes.  SMEs benefit from tools that simplify KPI tracking, documentation, and continuous feedback.

NotchHR’s performance management solution provides features such as:

• Goal tracking
• Continuous feedback
• Real-time dashboards
• Documentation spaces for evidence
• Custom appraisal cycles
  

These tools support both HR managers and employees through structured, clear, and data-backed review processes. You can explore these features here: 

 Conclusion 

When applied correctly, performance appraisal methods are more than administrative tools; they become engines for clarity, fairness, engagement, and growth. But many companies miss the mark because of methodological mismatch, unclear goals, bias, weak documentation, or poor follow-up.

By choosing the right method, setting clear KPIs, collecting evidence, involving employees, and maintaining continuous feedback and development, you can transform reviews into trust-building, productivity-boosting processes.

For African-led organisations seeking effectiveness, fairness, and long-term growth, modern performance management, backed by software like NotchHR, is the smarter way forward.

Act Now: Improve your performance review process. Book a demo with NotchHR and see how structured, continuous performance management can work for your company.