IB Business Management HLTopic 2 — Motivation and DemotivationPaper 1 & 2Core idea~8 min read
Ways of Appraising Employees
An appraisal is a manager formally assessing how somebody is doing at their job. Done well it tells an employee where they stand, what to work on next and what the business will do to help. Done badly it is an awkward hour once a year that everyone dreads and nobody acts on.
📚 What you need to know
An appraisal measures performance against the tasks and responsibilities in the employee’s job description.
Formative appraisal is ongoing, low stakes and aimed at improvement.
Summative appraisal happens at the end of a year or project, is high stakes, and often decides pay and promotion.
360-degree feedback gathers views from everyone around the employee: manager, colleagues, subordinates, customers and themselves.
Self-appraisal asks employees to assess their own performance, usually alongside a manager’s view.
Appraisal supports feedback, motivation and decisions on pay, but is subjective, time-consuming and can cause anxiety.
Formative and summative
The two differ in timing and in what is at stake, and that changes how honest people are willing to be.
The stakes change the conversation. Staff admit weaknesses in a low-stakes check-in; in a review that sets their pay, almost nobody volunteers what they are bad at.
Formative appraisal
Summative appraisal
Conducted continuously through the year or during training.
Conducted at the end of a year, cycle or project.
Aimed at helping the worker improve.
Aimed at measuring overall performance and results.
Low or no stakes, so staff feel safe being honest.
High stakes: pay, promotion or continued employment may depend on it.
Feedback is specific, prompt and immediately usable.
Judges outcomes, such as a salesperson’s sales or a teacher’s results.
Employees self-assess and set their own goals along the way.
Common during probation reviews and annual pay rounds.
360-degree feedback
Instead of one manager’s opinion, feedback is gathered from everyone who works with the employee. Responses are usually anonymous, collected by survey, then shared with the employee.
The direct reports box is the one that matters most for managers. Somebody can look excellent to their own boss and be difficult to work for, and only 360-degree feedback catches that.
360-degree feedback is used for performance appraisal, personal development, career planning and identifying future leaders. It gives a fuller picture than one manager can, but it must be handled carefully: badly run, it turns into a way for people to settle scores.
Self-appraisal
Employees assess their own performance, normally alongside their manager’s assessment. A typical self-appraisal covers five things.
🧩 What a self-appraisal asks for
Achievements — projects completed and goals met in the period.
Strengths — the skills that have been most valuable to the organisation.
Areas for improvement — where the employee believes they can do better.
Goals and development plans — what to aim for next and what training would help.
Self-reflection — how their work fits the organisation’s goals and values.
The value is that it builds self-awareness, opens a two-way conversation and gives the employee a chance to add context the manager did not have. The risk is that people either undersell themselves or oversell wildly, which is why it is never used alone.
Advantages of appraisal
Disadvantages
A structured chance to give constructive feedback and set expectations.
Subjective: personal bias and relationships colour the judgement.
Identifies where training, development or support is needed.
Staff may fear feedback, and high-stakes reviews cause anxiety and demotivation.
Recognises achievement, which meets esteem needs and motivates.
Time-consuming: forms and meetings pull managers and staff away from productive work.
Supports fair decisions on promotion, pay and bonuses.
May not capture the full range of an employee’s contribution.
If a case study says appraisals happen once a year and nothing changes afterwards, that is a business getting the cost of appraisal without any of the benefit. The follow-up is the point, not the meeting.
WORKED EXAMPLE
A software firm currently appraises staff once a year, in the same meeting where pay rises are decided. Developers say they never get useful feedback. Explain the problem and recommend a change. (6 marks)
The problem: one meeting doing two jobs
Feedback for improvement and decisions about pay have been combined. Because pay is at stake, staff defend themselves rather than discussing weaknesses honestly, so the developmental purpose is lost.
The recommendation: separate them
Keep the annual summative review for pay, and add short formative check-ins each quarter with no pay attached. Staff can then be honest about what they are struggling with.
Separate the improvement conversation from the pay conversationThe trade-off to mention: quarterly check-ins cost manager time. Justify it against the cost of losing a developer, which is far higher.
WORKED EXAMPLE
Explain one benefit and one risk of introducing 360-degree feedback for team leaders. (4 marks)
Benefit: a complete picture
Team leaders are judged by the people they manage as well as by their own boss, so a leader who impresses upwards but treats their team badly is identified. That protects morale and reduces turnover in those teams.
Risk: it can be abused
Anonymous feedback can become a way to settle grudges, and an unfairly negative report damages trust and demotivates the leader. It needs a clear, well-managed process to be worth doing.
Both points are specific to team leaders rather than generic. Application is what turns 2 marks into 4.
💡 Exam tip
Match the method to the purpose. Improvement means formative; pay and promotion decisions mean summative.
Link appraisal to motivation: recognition is a Herzberg motivator and meets Maslow’s esteem needs.
Always raise subjectivity. It is the standard criticism and it is a valid one.
Mention the time cost. Appraisal takes managers and staff away from doing the job.
For 360-degree feedback, say it needs a clear process or it causes resentment.
Connect appraisal to training and labour turnover — it is how a business spots both needs early.
⚠️ Common mix-up
Formative versus summative. Ongoing and low stakes, against end-of-period and high stakes.
Appraisal is not discipline. Its purpose is assessment and development, not punishment.
360-degree feedback is not just from the manager. The whole point is the other five directions.
Self-appraisal is not used alone. It sits alongside a manager’s assessment.
Assuming appraisal automatically motivates. A badly run review demotivates people badly.
Forgetting the job description. Performance is measured against it, not against a manager’s mood.
Up next: How Businesses Recruit — because the cheapest way to fix a performance problem is often to hire the right person in the first place.
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