Most states and cities have some kind of employee performance evaluation systems in place that are intended to help their workforce improve performance through contacts with their supervisors. 

Unfortunately, while the idea is sensible, the system is often broken. Over many years, the weakness of performance appraisal has riled state and local employees, supervisors and multiple government observers who worry that traditional annual reviews are often little more than a check-in-the box kind of conversation rather than a real exchange of ideas and means for improvement.

For many years, the State of North Carolina has been a poster child for the shortcomings of this process. But change is coming due to a bipartisan law, the Public Modernization Workforce Act, which was signed into law by Governor Josh Stein on July 6. The law will take effect on October 1 to revamp the system for the first time in decades. This work could provide guidance for many other states and local governments.

Consider this from Eating Policy, a substack by Jennifer Pahlka, founder and former executive director of Code for America, “In 2025, 99.4 percent of state employees (in North Carolina) received a performance rating of satisfactory or better. State HR executives bluntly (said) that the rating system’s actual function was not to help employees improve, but to build a paper trail for discipline or termination. But it wasn’t doing that either. In 2025, only 13 employees were let go for poor performance, about .025 percent of the workforce. Imagine supervising almost 4,000 employees, and only one of them is terrible at their job.”

The old system evaluated employees annually using a simple three-point scale: exceeds expectations; meets expectations and does not meet expectations. But many managers were uncomfortable in assigning lower ratings. Further, it was primarily a paper-work exercise that did not encourage regular communication between managers and employees to guide them to the goals of the organization.

By contrast, according to the North Carolina State Department of Human Resources, the state has now set out to ensure that employees:

• “Understand core responsibilities and work towards our goals”

• “Communicate with your supervisor to clarify expectations and organizational needs.”

• “Ask for help, training or resources when needed.”

• “Take an active role in your performance and career development.”

Supervisors are expected to create an environment in which employees can make these principles a reality. For example, the new rules require that supervisors “have regular timely conversations about performance that cover progress, concerns and accomplishments.” These discussions also are to be documented.

All of this has the potential to work because agencies are required to:

• “Assign a performance management coordinator to oversee this policy within the agency.”

• “Set strategic priorities so employee work plans connect to the agency’s mission.” 

• “Review and calibrate goals and ratings across the organization.”

• “Build a culture of continuous feedback that promotes productivity, growth, and engagement.”

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