Member preview

Performance Appraisal for the Information Age

The Industrial Revolution and What Comes After (Part 1)

The idea of performance appraisal probably didn’t exist prior to the Industrial Revolution. It had to be invented, and no single person is more responsible for its invention than Frederick Winslow Taylor (1856–1915).

It was Taylor who advocated for replacing the hourly wage system of compensating laborers to a piecework system that paid according to their productivity. Taylor argued that when labor is paid an hourly wage, workers do not have an incentive to provide employers with their best efforts. But when labor is paid for each piece produced, workers have an incentive to work harder. Wherever Taylor’s system was implemented, productivity increased, as did worker compensation and profits.

Yet, the system was considered so controversial that Congress held hearings investigating Taylor and his ideas about improving industrial productivity. Their concern was about whether it was fair and humane to workers because to implement the system, Taylor had to establish the rates by which workers would be paid. There were no customs for piece work as there were for daily or hourly wage rates, and so no standard by which to compare what Taylor felt should be an honest rate of pay for an honest day’s work.

So Taylor devised a system of time and motion studies for determining the “one best way” by which the standard of productivity for an honest day’s work could be judged. In Taylor’s view, the experimental and quantitative basis for his rate-setting system made it “scientific,” and so he called it “Scientific Management” and wrote a best-selling and extraordinarily influential book by that title.

The controversy and objections to Taylor’s system of scientific management focused primarily on the methods used to assess the performance of the workers. Most workers objected to Taylor’s ideas on performance measurement. At that time, the country was far less industrialized than it is today. Many of the new factory workers had either been trained as a tradesman, craftsmen, or farmers, and they objected to being reduced to the repetitive motion machines hired to perform specialized tasks.

The movie Seabiscuit dramatized the transition from craft to factory work in the opening scenes, to help capture the disillusionment of the specialized laborer.

Seamstresses became button-sewers. Furniture makers became knob-turners. It was the beginning and the end of imagination, all at the same time.
 — narration from the opening scenes of the movie Seabiscuit (2003), characterizing New York City in 1910.
The 1936 classic silent film Modern Times by Charlie Chaplin dramatizes the dehumanizing effects of factory work. It was reportedly a 1931 meeting with Ghandi that Chaplin was inspired to create film critical of mechanization and industrialization. https://commons.wikimedia.org/w/index.php?curid=20214730

At the core of the objection was the fact that, once productivity could be measured, the worth of individual workers was reduced to their metrics. Despite Taylor’s protests that he personally respected the humanity of the worker, and that his performance measurement system aligned the interests of workers and employers, labor leaders and artists like Charlie Chaplin sensed something more insidious was happening in the factories of America.

Largely the same objection was dramatized in the movie Moneyball, when the sabermetric version of Taylor’s scientific management was introduced by Billy Beane, General Manager of the Oakland A’s baseball team, in preparation for the 2002 season. Although Grady Fuson argued that a baseball scout’s traditional wisdom was based on 150 years of experience, in fact Fuson was nearly 100 years out of date. The A’s went on to win 103 games, and finish with the second best record in the American League (behind the Yankees) and almost all American professional sports teams now have analysts on staff to do the quantitative performance appraisal that Taylor first described.

“There are intangible here that only baseball people understand,” says scout Grady Fuson (Ken Medlock) to Oakland A’s General Manager Billy Beane (Brad Pitt) after Beane introduced a Tayloristic approach to baseball player performance appraisal called sabermetrics, based on the research of author and analyst Bill James.

Decades after Taylor’s death, his methods of industrialization and productivity measurement were credited with helping to lift the country out of the Great Depression and win the Second World War. in 1952, the popular television show I Love Lucy reprised Chaplin’s critique of scientific management with a scene reminiscent of Chaplin’s classic Modern Times. But the moral of the satire had changed. Although Chaplin’s was a critique of the dehumanization of the factory worker, Lucille Ball’s was a reinforcement of the 1950's-style specialization of labor according to traditional gender roles. Lucy’s experiences suggested women were unsuitable for wage work, and men unsuitable for housework.

After their husband’s complaints about spending, Lucy (Lucille Ball) and Ethel (Vivian Vance) go to work in a candy factory. The narrow gauge of performance measurement creates a perverse incentive structure that causes them to hide their incompetence from their supervisor.

At present, Tayloristic systems of performance appraisal are so deeply entrenched in our expectations of work that we barely think to question them. From the time we are in elementary school, we are graded, assessed, and compared to our peers. We are standardized, and monetized, all in pursuit of Taylor’s pervasive ethic of efficiency. The only question with regard to performance assessment is how to do it better and more often.

The famous management consultant Peter Drucker summarized Taylor’s enormous impact on modern society:

The first man to (both) work as a manual worker and then to study manual work — was Frederick Winslow Taylor (1856–1915)… . What Taylor saw when he actually looked at work violated everything poets and philosophers had said about work from Hesiod and Virgil to Karl Marx. They all celebrated “skill.” Taylor showed that in manual work there is no such thing. There are only simple, repetitive motions. What makes them more productive is knowledge, that is, the way the simple, unskilled motions are put together, organized, and executed. In fact, Taylor was the first person to apply knowledge to work.
Moreover, Taylor advocated — and this is still anathema to a labor union — that workers be paid according to their productivity — that is, for their output, rather than for their input (e.g., for hours worked).
Whatever his limitations and shortcomings — and he had many — no other American, not even Henry Ford, has had anything like Taylor’s impact. ”Scientific Management” (and its successor “Industrial Engineering”) is the one American philosophy that has swept the world. — Peter Drucker in ‘Knowledge Worker Productivity’ from California Management Review (1999).

However, the purpose of Drucker’s article is not to eulogize Taylor, but to draw attention to his limitations. Drucker was prescient about foretelling the transition from a factory-based to a knowledge-based economy. In 1959 he coined the term “knowledge worker” to differentiate from those on the assembly line whom Taylor discouraged from thinking to those who were paid for intellectual, rather than physical labor.

In developed countries, the central challenge is no longer to make manual work more productive — after all, we know how to do it. The central challenge will be to make knowledge workers more productive. Knowledge workers are rapidly becoming the largest single group in the work force of every developed country. They may already compose two-fifths of the U.S. work force— and a still smaller but rapidly growing proportion of the work force of all other developed countries. It is on their productivity, above all, that the future prosperity — and indeed the future survival — of the developed economies will increasingly depend. — Peter Drucker in ‘Knowledge Worker Productivity’ from California Management Review (1999).

The difficulty is that it applying Tayloristic scientific management to the post-Industrial knowledge economy makes no sense. When worker productivity is no longer measured in pieces of wrapped chocolate, but in ideas and innovation, how can productivity be measured and workers incentivized and paid? What we already know for sure is that Taylor’s piece-work incentive structure is antithetical to creative work.


According to Sir Ken Robinson, author of the best-selling Do Schools Kill Creativity? and the most popular TED talk ever, our modern system of education is constructed with the metaphor of the factory in mind — which is to say, it is constructed with Taylorism in mind.

Schools are still pretty much organized on factory lines: ringing bells, separate facilities, specialized into separate subjects. We still educate children by batches, you know? We put them through the system by age group.
Why do we do that? Why is there this assumption that the most important thing kids have in common is how old they are? It’s like the most important about them is their date of manufacture. — Ken Robinson, excerpted from his RSA Animate talk Changing Education Paradigms.

Like all good Taylorists, our educational institutions sought to solve the problem of performance assessment, and do it largely at the scale of the individual. The educational solution has been to offer standardized exams, and stack-ranked performance assessments (i.e., class rank, exam percentiles) based on objectively determined grading rubrics. To the extent that grades are viewed as an incentive for student labor, then Taylorism demands a honest grade for an honest day of student work.

The parallels between the factory and our current system of education are so close that the analog cannot be overestimated. We have a system of performance appraisal in education that is intended to socialize workers into the culture of factory expectations, to eschew collective action and bargaining (e.g., unions) by elevating an ethic of individual achievement, and to respond to Tayloristic incentives in the service of an industrialized society.

The irony of our current education system is not that it is now decades out of step with the needs of our society, but that a system purported to be about the production, accumulation, and application of knowledge should be organized in the service of an industrial paradigm that discourages workers from thinking.

One of the reasons that education in the United States is so critical for determination of social status — even more important that income or creative accomplishment — is the persistence of Tayloristic views that managers do the thinking and factory workers do the laboring. Thus, the key to becoming a manager is to prepare oneself to think, and to present the educational credentials that identify you as such.

Yet, assessing the quality of thinking is extraordinarily complex. It is not reducible to the standardized forms of performance appraisal necessitated by Taylor’s methods. As a substitute for quality, educational assessment typically resorts to an assessment of quantity. That is, students in American educational institutions are typically appraised on the basis of what they know and how quickly they can recall it.

Given the evolution of the American business enterprise from one that is based on specialization of labor, economies of scale, capture of monopoly, and industrialization, to an enterprise that is based on the production of useful knowledge, it should come as no surprise that the current methods of educational performance appraisal are failing modern American business enterprises.

Google has spent years investigating its own hiring practices in an attempt to discover what qualities best correlate with productivity and career success at Google. They tried to assess for problem-solving skills by using brain-teasers. This was a long-standing Silicon Valley custom. For example, “Why are manholes round?” was one of the questions a former classmate of mine was asked during a job interview with Sun Microsystems in 1989. At the time, he congratulated himself on getting the right answer, which was “Because that’s the only shape that will ensure the manhole cover cannot fall down the manhole.” Later, he invented the ubiquitous programming language, Java. So perhaps the brain-teaser approach had some merit back then, but it’s since fallen out of favor.

Alternatively, Google tried hiring only those applicants with college degrees from highly-ranked, exclusive colleges. They’ve largely abandoned that practice, too. According to Glassdoor, companies like Google, Apple, Bank of America, Costco, Starbucks, and Whole Foods no longer require new hires to have college degrees for management jobs.

Former Google Human Resources Executive Lazlo Bock says that by the time he left the company in 2016, hiring at Google was “down to a near science” — an ironic homage to Taylor, because there is nothing in his public comments that suggests anything scientific. His advice is to: 1) maintain high standards (however you define them), 2) ask current employees to refer people they know, 3) document and diversify assessment to minimize bias, and 4) give applicants a list of well-known people who already work at the company in the hope that it motivates them to accept an offer.

What is conspicuously absent from this list is any mention of academic achievement.


The current trend in performance appraisal in Silicon Valley and other technology companies is to discard the dreaded, Tayloristic performance appraisal.

One of the biggest shifts we intend to make around Reviews is to shift the context for employees from one where it seems that it’s primarily about being judged and graded to one where it’s primarily about supporting them on their journey of continued growth, development, impact and success (while still maintaining there still is an essential component allowing the manager/employer to effectively assess their people). — David Hassell, CEO of 15five, in The Performance Review Is Dead, Long Live The Performance (er…Best-Self!) Review.

Hassell’s view is that each individual knowledge worker is on an individual trajectory. Thus, what used to be a performance appraisal should now become a reflective exercise in personal and professional development.

This aligns with a change in Drucker’s thinking that came late in his career. Back in 1954’s The Practice of Management, Drucker wrote that there was “one right way to manage people— or at least there should be.” But later, after reading Maslow on Management (originally titled Eupsychian Management), Drucker changed his mind to believe that there must be as many different ways of managing knowledge workers as there are workers.

That one way or another people need to be managed remains the prevailing view, but it is wrong. Abraham H. Maslow (1908–1970) showed in his Eupsychian Management (1962; new edition, 1998, under the title Maslow on Management) why both McGregor and I were dead wrong. He showed conclusively that different people have to be managed differently.
I became an immediate convert — Maslow’s evidence for his view that different people require different ways of managing is overwhelming. But to this date very few other people have paid much attention.
On this fundamentally wrong assumption that there is only one right way to manage people rest all the other assumptions about people in organizations and their management. — Drucker in Management’s New Paradigms (1998)

This critique of departure from normative performance standards for knowledge workers leaves open the question of how should the performance of the most critical functions of any business enterprise be assessed? To evaluate the knowledge worker is to evaluate the performance of the mind, because it is with the mind that knowledge workers perform their work.

There are three aspects of the mind of the knowledge worker that might factor into performance assessment:

  • Cognitive: What they know and how fast they learn.
  • Affective: Their motivation and how others within the organization feel about them.
  • Conative: What they do when they are at their most productive.

The difficulty behind the academic approach to evaluation is that it is predicated of what students know. It is cognitive to the neglect of the affective and the conative. And companies don’t want to pay people to know things. They want to pay people to do things.

So when students move from an academic environment to a business environment, they’re likely to discover that the standards of performance appraisal change. While we all might complain about office politics, Hamish’s advice in the Hunger Games remains a fact of organizational life.

The mentor Hamish (Woody Harrelson) admonishes his protege, Katniss Everdeen (Jennifer Lawrence), to be more affable in the movie The Hunger Games.

The two aspects of the mind that lie outside the traditional academic purview are affective and conative. Assessment instruments that examine these are related to personality and behavior, rather than to knowledge. The difficulty in conducting performance appraisals based on personality and behavioral assessment is that many organizations fail to understand how to relate these two qualities to the mission of the business. Whereas some loose correlation between knowledge and performance can be ascertained (e.g., someone in the title of Computer Programmer should know how to program computers), it is a much more complicated question to ask, “What sort of Big 5 personality traits should a person with this set of job responsibilities have? What sort of behavioral instincts?”

But it’s not impossible.

There are a plethora of personality assessment instruments, and blended personality/behavioral assessment instruments. These include the Myers-Briggs Type Indicator, Strength Finders, DISC, Colors. There is also one conative assessment instrument, called the Kolbe A, which is effective in delivering unbiased descriptions of the behavioral expectations under which individuals will thrive. Once these personalities and instincts can be described as an independent variable, they can be correlated with performance measures as an independent variable to discover whether their are recognizable patterns. The difficulty is that it is still impossible to disaggregate individual performance from context to determine how much any single individual has contributed to business value.

Although employees receive individual salaries, company performance is assessed as the whole sum of all its constituent parts. It’s no wonder that start up technology firms typically award stock options to incentivize knowledge workers. On the one hand, it may seem that a measure so broad as the market capitalization of the firm is beyond the control of an individual knowledge worker, and consequently useless as an incentive structure for all but the most senior executives. On the other hand, a broad, aggregated measure reflects the fact that performance in business is a team undertaking.

Studies of team performance are likely to conclude that a diversity of personalities and instincts must be represented for the team to succeed. Thus, the relevant question in many hiring, appraisal, or promotion situations will not be, “What type of personality or profile do we need for this job description?” but “What type do we need in this team context?”

To the extent that there are successful theories of team composition for start ups, the importance of having a diverse set of skills, personalities, and behavioral instincts has been recognized for at least a decade. The broader question of how to evaluate the contributions of each team member has not. A more comprehensive understanding of knowledge work and it’s commercialization, such as the Wheel of Knowledge, must be postulated first, so that individuals can be identified relative to the essential roles of ideation (i.e., tacit knowledge creation), innovation (i.e., reduction of knowledge to practice), and replication (e.g., commercial exploitation of knowledge at scale). Only then can the right incentive structures be tested that align individual performance with the necessary functions.

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by + 378,529 people.

Subscribe to receive our top stories here.