In looking at the history of performance management, we can go as far back as Sun Tzu's The Art of War. The text states that to succeed in war, one should have sufficient knowledge of one's own strengths and weaknesses as well as those of one's enemies.
There is probably a lot more history to cover between the fifth century B.C. and now. But we'll skip forward to the 20th century when the evolution of performance management really began to take off thanks to things like computerization of big data, automation, and academic works to guide the philosophy behind the work HR departments do. In this post, we'll explore the history of performance management, and use that knowledge to help inform us about its future.
Early in the evolution of performance management, everything existed on paper. Annual appraisals were conducted in a largely inflexible way, and it didn't yield much in the way of business results. After all, there wasn't any real way to process the data gained from conducting these reviews, and decisions made based on these appraisals were largely based on intuition.
Without any kind of automation, reporting and compliance monitoring were nearly impossible. Worst of all, this process was slow. Companies came to productivity halts during performance review season and little was gained in all that time lost.
Once the 90's come around, we start to see early signs of modern performance management. Computers became more prevalent in the workplace and HR departments rushed to automate their clunky, inflexible paper-based systems.
However, performance management still had lots of room to evolve. Conversations about employee performance were typically held only once per year- far less frequently than was ideal - and were largely focused on the past instead of looking forward. Human resource functions were still siloed, so performance management didn't necessarily help influence other talent management functions like learning and development and succession planning. Performance management existed apart from business decisions, when it really should have been a part of them.
This era saw some important improvements, but it was largely known for creating process efficiency and not as much for improving processes itself or gaining meaningful data.
As we pass the mid 2000's, we start to see the early stages of the integrated "talent management suite" (TMS). Performance management no longer operated in isolation of other aspects of talent management. Information and data gathered from performance management helped inform decisions about an organization's talent. This allowed for some serious improvements, not least of which is a greater ability to manage organizational goals. With an integrated performance management system, HR departments could help set organizational goals, help employees at all levels set commitments in alignment with organizational goals, and monitor goal progress.
Advances in computing helped HR departments hand the keys over to managers. Since HR departments could now use talent management suites to direct coaches on a department-by-department basis and cascade goals from the top down, they felt more comfortable giving control over performance management to those who would be doing the coaching.
A turning point in the evolution of performance management
Two very influential pieces of content are published in this era that will dictate next evolution in performance management. The first was Get Rid of the Performance Review, a book by Professor Samuel Culbert. The second was a Reuters article which stated that 4/5 workers were dissatisfied with their job performance reviews and would like to see them better reflect their work. These two pieces resulted in HR departments taking a step back and looking at what they were doing, and where big shifts could be made.
We've reached the present era in our performance management timeline. Studies have been released stating that employee engagement has a positive effect on performance and organizations are taking note. In the early stages, companies tried to buy their employees' engagement with free food, parties, and providing amenities at work. While this worked as a short-term solution, employers were finding that engagement was difficult to keep up. Enter ongoing performance management.
Numerous studies have shown that a great indicator of engagement is the frequency with which an employee has one-on-one discussions with their immediate manager. A stable, positive relationship here not only opens up lines of communication, but helps keep performance discussions forward-focused. So, as more organizations adopt a model of continuous performance management, frequent feedback, and ongoing growth, employee engagement began to flourish.
Perhaps the biggest change in this period is the relationship HR has with the rest of the business. HR is no longer seen simply as a personnel department in charge of administrating pay, benefits, and employee grievances. It is now a strategic partner in crafting strategies and driving business outcomes.
The future of performance management is all about empowering workers. The developments in the previous four eras have landed HR departments with a new problem to solve: What can we do to help our employees?
This is an outcomes-driven way of thinking about performance management. HR departments can empower employees with learning and development opportunities, engaging in ongoing performance management, keeping performance conversations forward-focused, and remaining adaptive. When employees are satisfied and have feelings of contribution, there are better business outcomes every time.
Driving the Future of Performance Management
This is the next generation of performance management. To learn more about how your organization can get to the next stage in your performance management journey, download our free ebook here.