Types of appraisal (HL only)
Types of Appraisal
This topic is assessed in IBDP Business Management at Higher Level (HL) only.
Appraisal is the formal process of reviewing an employee's performance, identifying development needs and setting objectives for the future. Well-designed appraisal systems improve performance, strengthen the relationship between managers and their teams and provide the documented basis for pay and promotion decisions. The type of appraisal chosen shapes what information is gathered, how it is used and the dynamic between manager and employee.
Three Types of Appraisal
| Type | When used | Purpose | Advantages | Limitations |
|---|---|---|---|---|
| Formative | Ongoing — during the performance period (monthly 1:1s, mid-project check-ins, coaching conversations) | Development and improvement — identifying what is working and what needs to change whilst there is still time to act | Low stakes; encourages honest conversation; enables real-time course correction; builds continuous feedback culture | Requires significant manager time; informal nature means documentation may be inconsistent; may be deprioritised under workload pressure |
| Summative | End of period — annual or bi-annual review against agreed objectives | Evaluation and decision — judging overall performance to inform pay, promotion, development planning and, where necessary, performance management | Provides clear, documented record; enables consistent comparison across the workforce; links directly to reward decisions; creates accountability for objectives | Higher stakes create anxiety; backward-looking (cannot change the period being reviewed); manager bias may influence ratings; annual frequency means problems emerge too late |
| 360-degree feedback | Periodically — typically annually or following major projects; most common for managers and senior staff | Multi-source evaluation — gathering performance feedback from the line manager, peers, subordinates and sometimes clients to provide a rounded, less biased picture | Reduces single-rater bias; provides perspectives that line manager cannot access (e.g. how the employee manages their own team); more credible to the appraisee; surfaces blind spots | Administratively complex; requires psychological safety — if culture is blame-focused, honest feedback will not be given; subordinates may fear retaliation for negative feedback on their manager; can be gamed |
Applied at Calloway & Reed
Calloway & Reed operates a three-tier appraisal system. Formative appraisal occurs through monthly 1:1 meetings between consultants and their team leader — structured around a standard agenda covering utilisation, client feedback and development priorities. Summative appraisal is conducted annually: each consultant is reviewed against their agreed SMART objectives from the MBO cycle, with ratings informing the discretionary bonus allocation. 360-degree feedback is used only for team leaders and above: each receives input from their line manager, two to three peers and the consultants they manage. This targeted use of 360-degree — focusing on those in supervisory roles where multi-directional feedback is most valuable — balances comprehensiveness with administrative practicality.
Formative appraisal is fundamentally developmental — it aims to improve future performance. Summative appraisal is fundamentally evaluative — it judges past performance. The most effective appraisal systems use both: formative processes throughout the year ensure that the summative review contains no surprises, and that the employee has had genuine opportunity to improve before being judged. A summative appraisal without preceding formative feedback is widely regarded as poor management practice — and is legally vulnerable in performance management or dismissal proceedings.