THE PERFORMANCE MANAGEMENT REVOLUTION

Journey of traditional appraisal process towards the frequent performance

management started when it was revealed that competent and healthy
workforce supply is required. Since then Performance Management has become
of greater concern for the organizations across the world. Hence they started
converting employees into supervisors and managers into executives by
empowering them and letting them set their own goals.

By 1960 this practice of talent hunt and development of the same had become so
much common that organizations rarely bothered to keep a track of past
performances of employees which lead to the issues like ranking the employees
according to their performance as the management was unable to differentiate
between good or bad performers.

In 1970’s due to inflation and the salary raise policies made the organizations to
split the process of annual appraisal into segments so that income raise can be
decided through their past performance. During this era accountability on the
employee’s part had become more important than the development.

By 2000’s organization’s basically used to follow this annual appraisal system in

order make the employees answerable for their performance. Moreover the
forced ranking system which was followed by most of the U.S corporations and
the changes in the corporate setup of organizations made it impossible for the
management to follow the developmental process and achieve the time
consuming goals.

Therefore. In 2005 a major shift took place again as people were not comfortable
with the forced ranking system, which lead to, leg-pulling and sabotaging among
employees. Hence the concept of annual appraisal process once again has faded
away as employees didn’t like to be ranked and being judged by their scores.
Also managers also found it very inappropriate to judge their subordinates
which researches as well latters proved an ineffective process.

In order to get away with these traditional processes, few High Technological
companies came up with a new solution and introduced a software which
focused on employee’s response towards change, self organizing process, setting
self direction and getting to know how to work effectively and responding to the
customer issues more quickly. This new process is known as ”Agile “method
which replaced the common practice of assessing employees on set goals once a
year.

Wading through the history we came to know that business organizations got
away with the traditional appraisal process due to following three reasons.

1. Organizations wanted to have and retain the skilled labor or at least to

transform the workforce into skilled labor by developing and training
process for which a continuous process of performance management was
required.
 2. Another reason was the frequent innovations in the market due to which
the organizations never wanted their employees to keep on doing the
same things. Thus to meet the frequently changing market requirements
and remain updated the long term goals of appraisal process were
converted into short term goals according to which the supervisor would
still have the year end discussion report from the subordinates but the
main objective of that would be to facilitate the frequent discussions.

3. Last but not the least, reason for moving away from the traditional
practice is to promote the teamwork among employees, which suffered a
lot due to forced ranking system.

After effects of changing from traditional appraisal process to a continuous more

effective performance management process proved that communication
between subordinates and supervisors is an integral part in goal achievement.
Moreover communication allows people to convey their problems or hurdles
they are facing during their work and also help in finding the solution then and
there.

There are still a lot of challenges for the organizations to implement new
performance management process as many of the HR practices, which are
established over the years, are based on the old ranking systems. Few challenges
are as follows.

1. It is not always possible for organizations to align individual goals

with organization’s goal specially where the projects changes
frequently. It is only possible where the course of action is held for
a year at least.

2. Another challenge is of reward system, which is purely based on

the ranking or appraisal system.

3. According to the new performance management process it is very

hard for HR to distinguish among good performers and bad
performers.

4. Discrimination issues arises if the raise in pay and promotions are

not awarded to employees and which of course demand a ranking
system, although ranking system is also not free of discrimination.

5. Another problem faced by the organizations while implementing

the new process was the system used by the HR departments over
the year, as it was only to provide appraisals and incremental
information. The systems were not designed to provide feedback
on employee’s performance.
Organizations like General Electric, IBM and Amazon has come up with such
updated systems where not only feedbacks are readily available to the
supervisors but also peers can provide feedback about each other performances
making sure that the supervisor receives a copy as well.

All the organizations do not necessarily need to change the appraisal process, as
there are a lot of other ways through which supervisors can distinguish among
the good or the bad employees. What actually they should consider or keep in
mind is if the process they are following is strong or effective enough to get what
they want from their subordinates in order to achieve the organizational goals.