The History of Performance Management: Then vs. Now!

The history of performance management has been all about annual appraisals and preliminarily appraising past performances of employees. Such assessments were crucial for determining each employee's compensation and termination.

Performance management did not arrive suddenly. It evolved through generations of belief in work, people, and power. It started as a tool for commanding and controlling forward-looking teams. Moreover, it is a canvas of trust, growth, and alignment. 

This is not just history but a mirror of how far we have reached and how much further we need to go. It would be interesting to study the evolution of performance management. 

1900s–1950s: The Industrial Origins

Performance management began as a system of efficiency, not human enablement. Between the 1900s and 1950s, it evolved from sporadic evaluations. Today, we have formalized, personality-based systems. The focus at the start was to ensure basic job expectations were fulfilled, with managers relying on their judgment. In the mid-1950s, companies started using more structured and well-defined systems.

In the early 1900s, Frederick Taylor emphasized efficiency and productivity. Later, the focus shifted to efficiency for optimizing work processes. Between the 1930s and 1950s, Elton Mayo's research focused more on the importance of psychological and social factors. This period also focused on people's understanding of how humans perceive work. 

1960s–1980s: The Corporate Era

The era between the 1960s and 1980s witnessed a dynamic shift in the understanding of performance management from personality-based assessments to a more focused approach. This approach now includes more emphasis on the goals, objectives, and future potential of individual employees. 

This period also witnessed the rise of a new concept called 'Management by Objectives.' Under this concept, more emphasis is placed on self-appraisal, with a greater focus on communicating performance feedback to employees for their improvement. Formal performance appraisals are becoming trending these days. Sometimes, lacking input and transparency across some systems may result in dissatisfaction. 

With the evolution of this performance management system, organizations began documenting their employee' performances. However, they are not yet able to develop those efficiently. Beyond the 1960s, organizations started shifting their focus to employees' objectives and goals rather than solely performance-based assessments. The 'Management by Objectives' concept emphasizes setting clear objectives for employees to measure performance against those preset objectives. 

Post-1970s, performance appraisals witnessed a lack of objectivity and potential for bias. This lack attracted critics to comment on the effectiveness of the system. Organizations began incorporating more efficient performance management tools, such as rating scales and psychometric assessments, to measure the performances of their employees. 

From the 1980s, organizations continued emphasizing employee development and improvement through feedback or coaching. This era also witnessed the evolution of the performance management system. Under this system, your manager derives feedback from multiple sources. The use of more advanced performance management tools also became evident in this era. 

1990s–2000s: The Knowledge Work Shift

Performance management started to ask, "What if performance is more than a number?" Its evolution continues beyond the dimensions of quantifiable results. It is now recognising broader aspects of employee characteristics such as engagement, growth, and contribution to the overall purpose of the organization. 

Between the 1990s and 2000s, performance management underwent a significant evolution. This era reflected the rising importance of knowledge work and the necessity of adopting more holistic approaches. Organizations slowly started shifting their focus from annual appraisals to incorporating systems related to continuous feedback, employee development, and engagement strategies. 

In this era, organizations shifted from an approach based on outcome to a more holistic approach. This holistic approach focuses more on motivating, developing, and engaging employees. Now, the systems are more about identifying the needs of training and developing individual employees. They now assess how the employee works in a team environment, their communication skills, and their skills to resolve conflicts. 

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2010–2015: The Breaking Point

The period between 2010 and 2015 witnessed the breaking point for organizations in assessing the performance of their employees. It witnessed a gradual shift in adopting approaches that are more holistic and strategic in their mechanism of action. This shift is driven more by increasing the emphasis on aligning with the organization's goals, continuous feedback, and developing employees.  

Companies like Adobe, GE, and Deloitte have abandoned annual reviews. Today, Bell curves and ratings have become symbols of rigidity and disengagement. HR professionals started asking: Is this system helping or just hurting? Startups started rejecting traditional models in favor of informal feedback. 

2015–2020 The Rebuilding

The period between 2015 and 2020 witnessed the rebuilding phase of the organizational performance management system. The focus now was more on individual growth contributing to organizational growth. This phase involved rethinking the purpose, process, and principles of managing performance better to support the development of employees. 

Instead of focusing only on employees' past performances and rating them, the focus has shifted to what employees and leaders contribute to organizational goals. Performance management has now become a key resource for employees' ongoing learning and development. Formal and informal feedback sessions supplement annual reviews by creating a more continuous dialogue about performance. 

Organizations have streamlined performance management processes by incorporating more advanced technology. Managers are now becoming coaches rather than judges. OKRs are re-emerging with a cultural twist, with agility, transparency, and alignment. 

2020–Today: The Present Moment

The workplace no longer runs on surveillance—it runs on clarity, feedback, and trust. Presently, performance management is highly influenced by the shifts and challenges of the 2020 pandemic. The performance management system now focuses more on continuous feedback, agile goal-setting, and an employee-focused approach. 

Traditional annual performance reviews are now being replaced with systems of continued feedback. Under such systems, employees and managers have regular conversations about how the employees and organization are collectively progressing. The focus is also shifting from goal-setting to identifying the needs for self-development. Today, performance is all about taking ownership of one's own and the team's performance. Teams needed clarity without micromanagement and autonomy with alignment.

Performance management became a system for culture, not just control:

• Regular check-ins
• Self-reflections
• Shared goals
• Peer feedback loops
• Performance = Clarity + Accountability + Development

Performance as a Continuous Conversation

Klaar's approach to performance management revolves around a continuous and effective conversation rather than the static approach of the past. This means that managers and employees engage in regular and ongoing performance discussions to develop employees.

Here is how Klaar is leveraging technology for effective performance management reviews: 

Regular Check-ins

Klaar's approach encourages organizations to conduct regular check-ins with their employees. This allows for more frequent constructive feedback to adjust goals and strategies. 

Focusing on Development

Performance management conversations are not just about evaluating how your employee has performed in the past. Today, they also identify the areas for employee growth and development to ensure they have the proper support as their motivation for improvement. 

Diversified Feedback Systems

Klaar utilizes several feedback types, including feedback from past managers, matrix managers, and peers. It offers a more comprehensive understanding of how your employee is performing and identifies improvement areas. 

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