Take Stock of the Performance Review —A Look at its History
If you are considering the OPerf for your company’s employee performance management needs, you have likely experienced problems or limitations with other performance review tools or perhaps with outside contractor performance review efforts. And we say “likely” because performance reviews have generally proven problematic since the concepts behind them started gaining traction in the workforce about 120 years ago.
Before 1900, the terms “performance management,” “performance review,” and “performance measurement” did not exist in the workplace. Your boss either liked the work you did, or didn’t, and if it was the latter, you were probably out of a job. Starting around the turn of that century, researchers started taking a closer look at work and productivity and discovered the novel concept that greater worker satisfaction led to better productivity. While this early research did not lead to immediate changes in employee management, the idea of “managing” workers rather than just bossing them around with threats of docked wages or termination started taking root.
Perhaps the first performance management innovator of note was Frederick W. Taylor, who was the first to put names to many of the concepts involved with performance management. Known as the “Father of Scientific Management,” Taylor was the first person to systematically measure workflow efficiency and productivity in an industrial setting. Many of his ideas, published in “Principles of Scientific Management,” were adopted by companies across the country during the first half of the century, with a resulting boost in industrial efficiency.
While Taylor’s work primarily benefited companies, sometimes at the expense of employee comfort, in the late 1920s Elton Mayo, known as the “Father of Human Relations,” focused his research on how the work environment could boost productivity. Not only did Elton discover that improved employee conditions — such as better lighting — improve worker productivity, but also that a more open, conversational approach to employee management also boosted productivity.
Research by Mayo, Taylor, and others led to a massive shift in worker-employer relations that had pretty much been adopted by many businesses by the end of the 1940s. In the 1950s the federal government got into the act by passing the “Performance Rating Act” and the “Incentive Awards Act,” with the first adopting a rating system — outstanding, satisfactory or unsatisfactory — for federal employees, and the latter establishing honorary recognition and cash payments for superior accomplishments by them. This was followed in the 1960s with the “Salary Reform Act,” which authorized a scaled salary increase for high-quality federal employees.
While performance management evolved steadily over the century, measurement of performance did not follow apace. Walter D. Scott, an Australian management consultant, is believed to have developed the first-ever performance appraisal during the World War I years, though his system was never widely adopted. In fact, business use of formal performance appraisal systems did not become relatively common until the 1950s. These early performance reviews generally took a personality-based approach, and by the late 1950s were falling out of favor because they were failing to actually monitor performance, but instead, reviewing a worker’s innate personality.
During the 1960s, researchers began developing performance appraisal systems that considered actual achievement by focusing more on goals and objectives. This new form of performance appraisal for the first time allowed for self-appraisal and was tailored to examine what workers might be able to achieve in the future. While this proved to be a step up from the personality based appraisals, by the mid-1970s these new performance appraisal methods were being criticized for being too subjective and based on opinion rather than any objective truth. Some workers even took companies to court over bad reviews, claiming inherent unfairness due to their lack of objectivity. In response, performance management researchers and companies started adding more psychometrics and rating scales to the appraisals, and the “appraisal” term was ditched for “review.” Interestingly, the term “performance management” was only coined late in the 1970s,
In the 1980s extending into the 2000s, researchers and companies worked on making performance reviews more holistic and in making them an integral part of “performance management” a term only coined in the late 1970s, despite its 70-year evolving history. This holistic approach introduced new metrics into the review process and measured things such as teamwork, self-awareness, communication, conflict resolution, and the ability to keep calm during times of stress, among others. Performance management by objectives also became more prominent, with goal management serving as part of performance reviews.
The 2000s also brought in other ideas, such as the elimination of the hierarchy within performance reviews, and use of multiple feedback sources in reviews, commonly known as 360-degree feedback. Technology also changed how performance reviews were handled, with computerized programs, and then online performance reviews, replacing the pen and paper forms.
Despite all that, companies and employees tended to remain dissatisfied with performance review systems. A 1992 Bricker survey determined that only 20 percent of companies were satisfied with the performance review process, a number that decreased to only five percent when the same survey question was asked in 1997.
Research on performance reviews continues, as does the debate over their effectiveness. With this in mind, OPerf believes that the best approach allows for customization to fit your company need, while also providing ease of use by both the administrator and employees.
To learn more about OPerf visit us at www.operf.io
