The real costs are in the time spent:
setting goals and objectives
conducting higher level reviews of lower level appraisals
designing, printing, copying, filing and distributing appraisal forms
designing and communicating the appraisal process
training supervisors to conduct appraisals
dealing with post-appraisal appeals and grievances
As a rule of thumb, Fred Nickols, senior consultant with DistanceConsultants, in Robbinsville, New Jersey, estimates performance appraisals tocost $1,500 per employee. That may be a low figure, however. Two seniorexecutives with overseas firms who responded to Nickols' 1997 Internet surveyfor HR professionals cited actual costs of $1,945 per employee and $2,200 peremployee.
Workforce, April 2001, p. 81SubscribeNow!