Informal and Formal Performance Management: Both Are Needed

Dissatisfaction with performance management (PM) has had a long history. Managers and employees alike have frustrations with the system, and numerous calls for the elimination of performance appraisal have been made over the years (e.g., Scholtes, 1999). The dissatisfaction and calls for elimination have created pressure for change in the practice of PM, and I applaud the focus on feedback and coaching that Pulakos, Mueller Hanson, Arad, and Moye (2015) have proposed. Providing feedback and being actively involved in the PM process would seem to be a key part of the job of managers, yet many managers are uncomfortable addressing this central task. Focusing efforts in our field on improving the skills of managers and helping managers become effective coaches can play a key role in improving PM. The need for improvement in the informal process, however, does not mean that the formal process is not needed. Pulakos et al. have suggested streamlining the formal PM system as much as possible, with particular emphasis on the possibility of eliminating performance ratings. It is argued here that the formal PM system still serves important purposes. It is also argued that a balance between the informal and formal aspects of the PM system needs to be maintained. These two issues are addressed below.