Performance appraisal is "one-to-one" feedback, constructive criticism and career guidance rolled into one formal interview or written report. Performance reviews are said to motivate good workers, who know their efforts will be recognised and rewarded. Regular rating and ranking of employees spurs performance, as staff scramble into action to avoid the working world's equivalent of a "could do better" on your school report card.

But despite its wide use, performance appraisal is attracting a reputation for being a well-intended but often flawed management tool - a time-consuming, morale-shattering exercise rather than the profit-enhancing, confidence-boosting technique it is designed to be.

A recent report by the Institute of Employment Studies, based on research with 1,000 British managers, found that appraisals are too often rushed discussions, "dreaded by both managers and staff alike", where performance ratings are handed out and petty lapses in performances are picked up on.

Some performance appraisals try to do too much, "giving conflicting messages between encouragement and control"; employees may feel encouraged by a discussion about training or promotion opportunities one minute, but disheartened during an assessment of past performance the next, believing that the constant checking of their work proves they are not trusted.

"Most classes of reviews end up making people feel a little bit raw," says Mr Deiric McCann, chief executive of human resources company Profiles Assessments Ireland.

"The traditional appraisal process is boss-down: 'I'm your boss and once a year I'm going to tell you all the things you've done wrong'. People are left thinking: 'What do they know? When was the last time they were at the coalface?'"

Mr McCann believes that staff react negatively to appraisal because they consider it to be the subjective opinion of a single individual. This judgment can be influenced by the nature of the personal relationship between both parties, so an employee may feel under pressure to smile in the direction of their immediate supervisor from nine to five in order to avoid a low mark for "attitude" at the end of the year.

In other words, their efforts are diverted from getting on with their job to keeping "in" with the boss.

For this reason, performance appraisal systems have become a new source of complaints about discrimination in the workplace in Britain. In December 1999, the Commission for Racial Equality investigated a civil service department because white staff were receiving higher job performance ratings than colleagues from ethnic minorities.

Under the marking system, 10 per cent of the total of white secretaries were said to be "excellent" and awarded a 4.7 per cent pay rise, but not one of the 35 non-white secretaries was given this grade. There were also substantial disparities at administrative and executive levels, and in the number of staff being graded "very good".

There have not yet been any similar cases of discrimination in performance appraisal in the Republic, according to a spokesman for the Equality Authority, but if there was a case brought on these grounds, it would be comparable to claims of discrimination in interviews, promotions and bonus schemes.

"We would need evidence," stresses Mr Brian Merriman of the Equality Authority. "If the employee could produce recommendations or earlier accolades and the performance review failed to match up to these, then we would investigate."

"Performance reviews must not simply be balanced, objective and fair, they must be provably so," according to Mr McCann, whose company recently set up a Web-based staff appraisal tool called Checkpoint 360. The product is based on the principle of 360-degree feedback, where performance appraisal includes the views of not just the employee's manager but of their colleagues, juniors and customers.

Like "upward appraisal" systems, where managers are assessed by their staff, 360- degree feedback is said to be more effective than "one-to-one" performance appraisal because it often takes the form of a confidential questionnaire, where respondents feel free to be honest.

While it is more difficult for employees to dismiss collective feedback as just biased opinion, some types of organisations are able to remove the human element to performance appraisal completely and simply set a series of targets that workers are required to meet.

The call centre industry is one example of how every aspect of staff performance can be translated into numbers and percentages. These may be calculated by specialist human resources software packages such as Emvolve Performance Manager from Dublin-based company Performix Technologies.

"Performix was founded because, although there had been technological advancement in the industry, very little had changed in the way people's performance was harnessed to get the best results for the company," says Ms Rosemary Turley, marketing manager for Performix.

"You need to set the right targets and give constructive feedback in a timely enough manner so that employees can improve. If you have 250 people constantly taking calls, then there needs to be feedback at least daily or the business will not be as successful as it could be," Ms Turley explains.

Emvolve gathers data on telephone activity, including the percentage of time spent on the phone during the shift and the rate at which calls are converted into sales, displaying the results to both the employee and the supervisor. The employee can see if they are above or below the average performance of the team in each category.

Close monitoring of performance is essential to drive profit, according to Ms Turley. "On average, a call centre worker handles 1,440 customer contacts every month, so if they don't know how to handle customers, a lot of damage can be done."

However, performance management software has contributed to the "21st century sweatshop" image of call centres, having been used by managers to monitor the amount of time workers spend at the lavatory or threaten staff with disciplinary action if calls last longer than a set number of seconds. Staff turnover in the sector is high.

"The software is only as good as the people who are using it," concludes Mr McCann from Profiles Assessments Ireland. Whether it is calculated by computers or colleagues, takes the form of a written report or marks out of 10, the principle of performance appraisal is still correct, he says.

"What is important is that people always know what is expected of them. Managers will frequently say during a performance appraisal: 'your work is not up to an acceptable standard'. And the person will be left there, thinking, 'but what is an acceptable standard?'"