From Appraising Performance Appraisal by Steven Sinofsky:
The following are ten of the most common attributes that must be considered and balanced when developing a performance review system: ...
3. Measuring against goals. It is entirely possible to base a system of evaluation and compensation on pre-determined goals. Doing so will guarantee two things. First, however much time you think you save on the review process you will spend up front on an elaborate process of goal-setting. Second, in any effort of any complexity there is no way to have goals that are self-contained and so failure to meet goals becomes an exercise in documenting what went wrong. Once everyone realizes their compensation depends on others, the whole work process becomes clouded by constant discussion about accountability, expectation setting, and other efforts not directly related to actually working things out. And worse, management will always have the out of saying “you had the goal so you should have worked it out”. There’s nothing more challenging in the process of evaluation than actually setting goals and all of this is compounded enormously when the endeavor is a creative one where agility, pivots, and learning are part of the overall process.
Best practice: let individuals and their manager arrive at goals that foster a sense of mastery of skills and success of the project, while focusing evaluation on the relative (and qualitative) contribution to the broader mission.