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Employee Appraisals: Pros and Cons of the Critical-Incidents Approach

Critical incidents are a special category of employee behaviors that focus on two distinct areas: particularly outstanding behaviors and particularly questionable behaviors. The critical incidents method of performance appraisal is based on managers' spending time during the year observing and gathering behavioral data on their employees, while looking extra carefully for those critical incidents.

At the end of the year, the managers take out all their notes on these critical incidents and categorize them as either positive/satisfactory behaviors or negative/unsatisfactory behaviors. An employee’s rating is then heavily influenced or even determined by which pile of data is taller — the satisfactory or the unsatisfactory.

Here are the advantages of the critical incidents approach to performance appraisal:

  • It’s based on direct observations. The greatest strength of this approach is that performance evaluations are based on actual performance that is observed firsthand by the employee’s manager.

  • It’s time-tested. In this approach, managers gather data over a full year, so it’s less likely to be influenced by a mad last-minute scurry for data or the undue impact that can be associated with an employee’s most recent behaviors.

  • It provides more face time. By definition, the critical incident approach encourages managers to spend time on the floors with their employees, which allows them to provide more coaching, guidance, and feedback, while also learning more about overall developments in the department.

On the other hand, the critical incidents approach has some drawbacks:

  • It delays the giving of feedback. In order for feedback to be truly effective (whether the feedback is positive or negative), it should be linked as closely as possible to the behavior in question. With critical incidents, a greater emphasis may be placed on gathering data and tallying it than actually using it to inform, educate, and motivate employees.

    As the distance between behavior and feedback increases, the value of feedback decreases.

  • All satisfactory and unsatisfactory behaviors are not equal. Throughout the year, a person may display many excellent behaviors but only one unsatisfactory behavior. In that case, her pile of satisfactory behaviors would be much greater than her pile of unsatisfactory behaviors. But weighing the number of satisfactory behaviors against the number of unsatisfactory ones can lead to an erroneous conclusion if the one unsatisfactory behavior cost the company its best client, or its computer system, or its line of credit.

    In order to increase the accuracy and utility of the critical incident method, managers who use it should attach a numerical value to each positive and negative behavior.

  • Although managers should engage in managing by wandering around, the critical incident approach can cause managers to spend too much time on the floors. If the manager is constantly wandering around with his employees, the employees can start to feel as though the team is being micromanaged.

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