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A Short History of Performance Management
By: Mohammad Salim Roll #: 11294

Outline of the Presentation:

Antecedent Performance Management According to Religions Schools of Management Human Resource Development Merit-rating and performance appraisal (earlier version) Attack on merit-rating and performance appraisal Management by objectives

Outline of the Presentation

Critical-incident technique Behaviorally anchored rating scales Performance appraisal (1970) Enter performance management Why performance management Exam Questions

Literature Review
Performance Management Systems and Strategies (By Dipak Bhattacharyya 2011) Performance Management A Strategic and Integrated Approach to Achieve Success (Michael Armstrong and Angela Baron 2010) Management 6th Edition 2011: James A. F. Stoner, R. Edward Freeman, Daniel R. Gilbert Qur'an or Koran (a) (Al-Quran: Surah (46) Al-Ahqaf Ayah 19) (B) (Surah (49) Al-Hujaraat, Ayah 13)

Literature Review
Strategic Human Resource Management
Tanuja Agarwal (2010) Reader, Faculty of Management Studies University of Delhi

Management 6th Edition

James A. F. Stoner R. Edward Freeman Daniel R. Gilbert

Industrial Relations: C.S. Venkata Ratnam 2011 Human Resource Development

Randy Desimone, John Werner and David Harris

HRD Score Card 2500 by Dr. T. V. Rao

(Published by: Response Books, Sage Publications, 2008)

History of Performance Management

No one knows precisely when formal methods of reviewing performance were first introduced. Somewhere or other, everyone had the experience of performance appraisal in some context. As old as mankind itself.

Performance Management According to Religions

History of Performance Management According Sri Krishna: Work culture Sri Krishna elaborates on two types of work culture Daivi sampat " or divine work culture and Asuri sampat " or demonic work culture.

Performance Management According to Religions

History of Performance Management According to Quran and Hadith And to all are assigned degrees according to the deeds, no injustice be done to them. (Quran: Surah (46) Al-Ahqaf Ayah 19) Verily the most honoured of you in the sight of Allah is the most righteous of you. (Surah (49) Al-Hujaraat, Ayah 13) Pay the worker before his sweat dries. (Al-Hadith: Ibn Majah 2443)

Performance Management According to Religions

History of Performance Management According to the Bible The Lord has filled him (Bezalel) with the spirit of God, in wisdom and understanding, (Exodus, 35, pp. 31-3). Moses selected men who were known to be most skilled craftsmen

PM Antecedents
-AD 221-265: Imperial Rater -1491-1556 : Ignatius Loyola, society of Jesus.

Human Resource Development

-Early Apprenticeship Training Programs (eighteenth century) -Early Vocational Education Programs (1809) -Early Factory Schools (late 1800s) -Early Training Programs for Skilled and Unskilled Workers (1913)

Schools of Management
- Scientific Management 18901930 - Classical Organization Theory School - Human Relations Movement (Hawthorne effect)

-1st formal monitoring system out of work of Taylor before world war I. -1920: Rating of officers in US armed service spread to UK also

PM Antecedents
-1920: Rating of officers in US armed service spread to UK also -1950-1960: Merit-rating USA and UK

Human Resource Development

-The Human Relations Movement (1938) -The Establishment of the Training Profession (World War II)

Schools of Management
- The Behavioral School - The Management Science School (World War II) - The systems Approach -The Contingency Approach

-1960 and 1970s: MBO and simultaneously critical - Emergence of incident technique and Human Resource BARS - Development (1980s) - 1980s: Performance Management and why


Not very old, The Royal Commission on Labour in 1931 for appointment of labour officers to deal with the recruitment and to settle their grievances. The Factories Act, 1948, and labour welfare officers. Today personnel management function in India encompasses welfare, industrial relations, personnel administration, HRD, etc.

Performance Management Systems and Appraisal Practices in India

PA is varied in India from no appraisal to sophisticated It is conducted for personnel decisions Some organizations have annual confidential reports, considering certain trait only Some organization considering semi confidential format Most of Government department fall in the 1st category Private and public sector in the second Some organization in between having sophisticated PA system of confidential and semi confidential

Survey of 45 Organizations by Rao 1982

Including 34 private and 11 public 50% regulating HR behavior and developing capabilities 30% only for controlling and regulating employees behavior 10% only for development purpose . A high percentage of the organizations use the components of appraisal discussed in the book

Appraisal Systems in Banks

Great degree of attention is given to PA in banking sector Several have changed or are in process of change their PAS SBI is in the process of adopting an open system of PA and Associate banks may also follow the same Till that time they may follow the traditional one

Experience of last decade (1990s)

Round table conference in by the Academy of HRD in 1995 The experiences published in Redesigning PA Systems by Rao and Pareek (1996), some experiences:
L&T one of the pioneers in HRD The appraisal system in TELCO is MBO Rashtriya Nigam Ltd. Introduced development oriented appraisal system Modi Xerox: its PM linked with career development, succession planning and management of motivation by rewards

Another Survey by Rao in 1978

588 officers surveyed 98% felt appraisal should to know about their stregths and weaknesses 60% felt it is very difficult to have objective appraisal 50 to 60% said that even in confidential format their supervisor communicate their perception 88% wanted to know more from their bosses

General Trends
Series of workshop training by author at IIM in 1979 More than 100 executives from private and public sector Presenting their perception of merit and demerit of these systems Following conclusion could be drawn:

Impact of Labour laws on PM

Followings are some of the labour laws which left changed the way and working conditions for workers: The Trade Unions Act, 1926 The Industrial Employment (Standing Orders) Act, 1946 The Industrial Disputes Act, 1947 The Factories Act, 1948 The Unroganized Workers Social Security Act 2008 ..

Impact of Industrial Relations to PM

Followings are the theoretical aspects of Industrial Relations which left significant impact on the relationships between employers and workers:
Unitary Pluralist Radical Trusteeship

Merit-rating and performance appraisal

WD Scott before world war I, influenced by Taylor, man to man comparison Even todays works are influenced by Taylor Scotts scale was modified and used to rate efficiency of US army In 1920s and 1930s Scotts efforts were developed into graphic rating Used for repots on workers and for rating managers and supervisors: Inspiring-favourable-indifferent-unfavourable-repellent Subordinates were periodically analyzed in terms of traits in subjective way.

Attacks on merit-rating and performance appraisal

Strong attack by McGregor :appraisal to analysis.
Not only weaknesses, But also Strengths and potentials More future focused than the past Analysis of behavior to achieve agreed results not assessment of personality

Rowe concluded :
Appraisers were reluctant to appraise The follow-up was inadequate Difficulty of achieving standards

History of T-Group

Kurt Lewin, founder of modern social psychology facilitated group dialogue in Training Groups (or T-Groups) that advocates open-minded appreciation and inclusion of differences which is the beginning of HRD profession according to (Dipak Bhattacharyya PMS 2011)

Management by objectives
By Peter Drucker: An effective management must direct the vision and efforts of all managers towards a common goal. McGroger 1960: Theory Y:
Strategic Plan

Reward and Control

Tactical Plans

Individual Managers key results and improvement plan

Unit Objectives and improvement plan

John Humble: MBO :

Reviewing critically and restating companys strategic and tactical plan Each manager key results and performance standards and commitment individually and as a team member Providing conditions for achieving the key results Developing management training plan Strengthening the motivation of managers

Criticism of MBO
Levinson 1970:
failure might be because of a partner, supervisor, subordinate or colleague, Emphasis on quantification and quality will be sacrificed MBO leaves out the individuals needs and objectives

Much time is spent on developing goals for the year MBO often became a top-down MBO is intended to concentrated on mangers leaving the rest to be dealt with in old-fashioned merit-rating

Criticism of MBO
Fowler (1990) criticized MBO because:
Not right for all organizations emphasis was on mangers roles limited recognition of corporate goals Line mangers perceived it as centrally imposed administrative task Formal once-a-year and little relationship with day-to-day activities Overemphasis on quantifiable objectives Administratively top-heavy form filling became an end in itself

Critical-incident technique
1954: Developed by Flangan. On the basis of his research he came to a conclusion that to avoid trait assessment. Evidence of actual performance are recorded in black book It did not gain much acceptance perhaps because the black book accusation stuck, but also it seemed to be time consuming

Behaviorally anchored rating scales

Designed to reduce the rating errors. performance dimensions are rated such as:
Continually contributes new ideas Takes a full part in grout meetings Delivers opinions and suggestions Tendency to comply passively Tendency to go own way Generally uncooperative

But it is more time consuming room for making subjective judgments

Performance appraisal (1970)

1970s: revised approach under the influence of MBO sometimes called result oriented appraisal Trait ratings were also used recently replaced by competency rating Popular during 1980s because of performance based pay
Appraisal defined by ACAS 1988: regularly records an assessment of an employees performance, potential and development needs. It is to take an overall view of work content, loads and volume, to look back at what has been achieved during the reporting period and agree objectives for the next

Levinson 1976: he wrote that there were many things wrong with most of PA systems such as:
Usually subjective Delays in feedback occur Managers generally have sense of inadequacy individual objectives were seldom related to the objectives of business There is no such a perfect performance review.

Lazer and Wikstrom 1977 as follows:

A good performance appraisal scheme must be job related, reliable, valid for the purpose for which it is being used, standardized in its procedures, practical in its administration and suited to the organizations culture.

PA was perceived as the property of personal department The worst feature of PA in 1970s and 1980s: not a normal process of management, somehow isolated even the same is true today Line mangers often criticized it. rate first in accordance pay increase Fletcher (1993a) stated: what we are seeing is the diminishing of the traditional appraisal system instead new processes are evolving according to the needs however the term appraisal has outlived its usefulness in some ways.

History of 360-degree feedback

The German military first began gathering feedback from multiple sources in order to evaluate performance during World War II. One of the earliest recorded uses 1950s at Esso Research and Engineering Company. The idea of 360-degree feedback gained momentum

HR Scorecard- Rao, 1999

HR Scorecard to measure the maturity level of HR in an organization was developed in India by Rao (1999), HR is audited as following:
1. 2. 3. 4. Maturity of any HR system Competencies of HR staff, line managers and top management HRD culture and values HRs impact on business or organizational goals

HRD Score Card 2500: gives pointes each of the above as following: (1) 1000 points (2) 500 points (3) 500 points (4) 500 points

Enter performance management

The first use of the term performance management is in Beer and Ruh (1976). The aim of PMS is described at Corning Glass Work as following:
Emphasis on both development and evaluation Use of a profile defining the individuals strengths and development needs Integration of the results achieved with the means by which they have been achieved Separation of development review from salary review

Enter performance management

In the UK the first published reference to PM:
meeting of the IPM Compensation Forum in 1987 by Don Beattie

By 1990 PM had entered the vocabulary of HRM in the UK as well as in the USA. Fowler (1990) defines what has become the accepted concept of PM.
Management has always been about getting things done, and good managers are concerned to get the right things done well. That in essence is the PM.

Enter performance management

PM established: Full recognition of the existence of PM was provided by the research project conducted by the IPM (1992) and following definition was produced:
A strategy which relates to every activity of organization set in the context of its HR policies, culture, style and communication systems. The nature of strategy depends on the context of organization and can very from organization to organization.

Enter performance management

IPM researchers Bevan and Thompson 1991:
Reward-driven integration: role of performance pay in changing organizational behavior . It is appeared to be dominant mode of integration Development driven integration: which stress the importance of HRD. Performance pay is perceived to be complementary to HRD activities not dominating it.

Enter performance management

Conclusion of Bevan and Thompson research:
No evidence that PM is associated with improvement of performance Psychological research makes it clear that setting targets enhance performance Process most often relying on subjective based on incomplete evidence and spiced with bias. There is little consistency of viewpoint on the motivating power of money. The focus has been on improving the bottom line

Why performance management

Negative aspects of merit-rating and MBO Trait assessment PM simply replaced PA just as HRM and Personal Management. PM may often be no more than new wine in old bottles. The rise of HRM also contributed to emergence of PM

Exam Questions
What is management by objective? Merit and demerit of MBO?

Bhattacharyya, D. (2011). Performance management systems and strategies. Pearson Education India. Armstrong, M. (2006). Performance management: Key strategies and practical guidelines. Stoner, J. A., Freeman, R. E., & Gilbert Jr, D. R. (1995). Management (6th edn). Qur'an or Koran (a) (Al-Quran: Surah (46) Al-Ahqaf Ayah 19) (B) (Surah (49) Al-Hujaraat, Ayah 13)

Tanuja Agarwal (2010). Strategic Human Resource Management:
Reader, Faculty of Management Studies. University of Delhi

J A. F. Stoner R. E Freeman, R. Gilbert Management 6th Edition

C.S. Venkata Ratnam (2011) Industrial Relations Werner, J., & DeSimone, R. (2011). Human resource development. Cengage Learning. HRD Score Card 2500 by Dr. T. V. Rao
(Published by: Response Books, Sage Publications, 2008)