The criteria is usually tied to strategic objectives which are tied to a strategic plan which is usually reviewed every five years. Called Key Performance Indicators, these objectives also usually have some sort of measurement - say "Achieves budget targets +- 5 per cent". At the PMR meeting the manager and the managed discuss whether the target has been achieve. A mark is awarded for each achieved target, and a percentage calculated. So an employee could achieve 100 per cent all set targets but their financial one. If the financial one is worth five per cent of their overall mark, then their overall mark becomes 95 per cent.
The process also allows managers and employers to tell each other what they think of their respective work performances. A manager, might for example, express concern over an employees recent lack of punctuality and propose as a KPO - Key Performance Objective - that punctuality be part of the overall performance assessment for the next period.
As complex as this is, it usually doesn't stop there. Both manager and employee are expected to sign the resulting document, which is then passed to the personnel department - these days often called Human Resources - where the relative performances of each employee are indexed against each other and collated. Through this, so the theory goes, employees who are exceptional or unexceptional can be identified, as well as managers who are or are not managing well. These documents often form the basis on which performance pay is allocated, or by which sackings or promotions are justified.
It is remarkable that of the 50 or so performance management reviews I have have endured over those 20 years, not one has achieved its aims of fairly reviewing manager or employee performance, the basis on which that performance is measured, or the measurement itself.
I should state here that these are not the words of someone bitter at not having his talents recognised. I have always done extremely well at those meetings. I ensure I get a 100 per cent ranking when the PMR has a monetary or promotional reward. Indeed, as a manager, I've had to inflict the same process on staff literally hundreds of times. The experience has left me with the firm conviction that for management or strategic purposes, these exercises are a complete waste of time.
There are many reasons for this point of view. The most compelling is that the success of the whole process being predicated upon the manager and employee being scientifically detached and rational in their approach. This is simply not human behaviour. People don't like criticisms levelled against them, no matter in what context, and people usually strive to do well. Moreover, many of the goals against which one is measured may be, scientifically speaking, impossible to measure. A goal of "Must demonstrate being a capable team player" has no measure except for the purely subjective. In other words, the entire exercise is merely an exchange of points of view wrapped up in a pseudo-detached framework.
Actually, it's not even an exchange of views. Any employee who uses such an occasion to criticise their boss's performance, or the performance of company management in general, can be pretty much guaranteed to at best earn the undying hatred of their internal communications department (who have worked so hard trying to make employees believe management and the company have purpose and direction they start to believe their own guff) or at worst a first place position on top of the list of who's to go at the next downsizing.
A second reason why the whole process is a complete nonsense is that it assumes companies and managers have such a coherent and well defined purpose and direction, and that the business world is so immutable, that major tasks can be set out 12 months in advance. Say your are an employee and you manager gives you KPOs of managing five important projects for the coming year. Fair enough. But say that during the year you are charged with managing an additional 12 projects. OK, nothing untoward in that. But when it comes to your PMR, you are either judged purely on the five original projects, which is unfair, because you did 17 of them, or you are judged on the 17 projects, which is unfair, because you and your manager signed an agreement saying you would be judged only on five. Of course, theoretically speaking, such unfairness could lead to a result in your favour. More likely though, is it will lead to a result in your bosses favour. In the above scenario, your manager can mark you as a failure (you didn't handle the 17 projects at all well) or a success (you handled the five projects well, and the other 12 don't count) or any shade of gray in-between, purely on whim.
But most damning of all, is the assumption in this process that the process is needed in the first place. It assumes that managers and employees are so bad at communicating that a manager cannot even describe an employees tasks for the next time period without resorting to a formulaic process. It assumes that the process can lead to behavioural and performance changes for the better (without any valid reasons for making the claim) and it assumes that the process somehow enhances the ability of managers to manage their employees, even to the point of making incompetent managers and employees competent. If only educators knew of this marvellous process.
Most people recognise the above. Surveys of this process often reveal that employees think their annual performance reviews are a waste of time, saying their boss isn't honest and doesn't take notice of what is discussed.
For example, research into British workers found a quarter of respondents thought managers simply regarded the reviews as a "tick-box" exercise, while one in five accused their bosses of not even thinking about the appraisal until they were in the room.
Almost half (44 per cent) did not think their boss was honest during the process, 29 per cent thought they were pointless, and a fifth felt they had had an unfair appraisal, according to a YouGov poll of 3000 workers.
Only a fifth believed their manager would always act on what came up during the review and 20 per cent said their boss never bothered to follow up any concerns raised.
Yet despite the generally dim view of the process, companies perpetuate it year after year. Why? Is it simply because people are afraid to speak up? Most companies tend to give the message to staff that they encourage free and lively debate on such issues, so long as no-one puts forward free and lively debate. I have seen people labelled as "black hatters" (You would have to, like many companies, completely misinterpret a thesis from Edward de Bono to fully appreciate the dire significance of the term) just because they dared question managerial style or direction. The reason is more likely the complete intellectual slothfulness of most Australian 'Human Resource' managers. Their heads filled with the drivel that makes up the HR arsenal of most companies these days, they have neither the intellectual capacity of the initiative to ask themselves does this policy actually benefit anyone in the company.
Australia, from an historic perspective has always been a country that reveres rules and regulations. It's almost as if the convict past has inculcated the entire population with an institutional mentality.