A performance evaluation is designed to be an objective tool used by management and employees for employee career development, and to help the company determine staff career paths. At its core, an evaluation is a judgment made by management of the performance of the employees. This can create moral and ethical challenges.
Law vs. Ethics
Performance evaluations can become ethical and moral problems when using them to circumvent the law, according to the Markkula Center for Applied Ethics website. A company can decide to give consistently poor evaluations to a group of employees to later have a legal basis for dismissing those employees in lieu of outsourcing their jobs to cheaper international companies. The process of releasing employees based on poor evaluations is not illegal, nor is the business practice of outsourcing work for foreign countries. But using strict evaluation processes to consistently find faults with staff performance to justify removing those employees can be considered unethical.
Company policy often dictates the rewards available to employees based on favorable appraisals, and the punishments possible with poor evaluation. But the company can often find itself in a difficult position when the employee's expectations do not match the reward for a good performance evaluation, according to Nancy R. Katz, writing on the John F. Kennedy School of Government website. It is the ethical obligation of the company to reward good performance appraisals, but the company might not feel the employee is worthy of the reward and the reward may not be what the employee wanted. For example, an employee might be expecting a promotion to manager after a positive performance appraisal, and it might be part of his promised career path. But the company might feel that a raise is sufficient reward and does not feel that the employee is ready for management. It creates an ethical conflict that could cause employee turnover.
Managerial bias can be a moral dilemma for companies during performance evaluations, according to the Performance Appraisal website. If an employee consistently receives positive performance appraisals, then managerial bias can cause her supervisor to look the other way during times of poor performance. On the other hand, an employee with the reputation of receiving poor appraisal marks might never be given the chance to improve in the eyes of his supervisor. This kind of bias tends to make top performing employees complacent and can begin to have a negative effect on their productivity. In some cases, employees that are not given the chance to improve may leave the company.
Professional objective analysis should always be part of every employee performance evaluation. But, on occasion, the manager may bring personal feelings into an evaluation in an attempt to besmirch the employee's performance record, and prevent the employee from advancing in the company. The moral issue of allowing personal feelings to corrupt performance appraisals can lead to conflict between manager and employee, and possibly legal action with a basis in discrimination.