Removing Performance Ratings: What Is the Reality of Legal Risk?

Despite the benefits, many companies are reluctant to nix traditional written performance reviews and ratings because of concerns about legal risk. Three myths underlie their reluctance. First, they believe performance reviews contain information that is helpful or reliable when defending against legal claims. Second, they worry that it will expose their company to lawsuits if they are lacking documentation that could protect them from legal risk. Third, they believe that written reviews are required by law.
Drawing on neuroscience, we discuss how unconscious processes lead annual performance reviews and ratings to be biased and therefore inaccurate, and why that trend is likely to continue as long as annual performance reviews and ratings are relied upon. As a result of these inaccuracies, annual performance reviews and ratings are dramatically more helpful to employees than employers in legal cases.

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