The Origins of Performance Appraisal
The Origins of Performance Appraisal
Performance management and performance appraisal are symbiotic strategies that yield great results in the human resource and business world. The term performance management is a shift from performance appraisal, as it was actually intended to sustain the approach/strategy in the business world. Performance management is a data-oriented and scientifically based management system (Daniels, 2000) which creates culture in other to bring about the improvement of individual skills, business processes as well as employees behaviour and contribution towards the development of the organisation. It can also be seen as a holistic approach bringing together various strategies and rudiments that comprise of successful performance management practices, including employee self development (Armstrong and Baron, 2005, p1-2). Performance management has been defined by diverse HR scholars such as Lockett, Armstrong, Angela Baron, Hendry etc, and below are some of the definitions: “A process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved” (Armstrong, Baron,2005, p.2).
“A systematic approach to improving individual and team performance in order to achieve organisational goals” (Hendry et al). “The development of individuals with competence and commitment, working towards the achievement of shared meaningful objectives, within an organisation that supports and encourages their achievements“(Lockett, 1992). The above definitions provided by Daniels Aubrey amidst other scholars, do not fail to pin point the systematic nature of performance management process, as well as emphasize on the importance of organisational development. They map out the fact that PM is a strategy that positively affects every sector of an organisation, in the context of its style, human resource policies and communications system. The term performance appraisal has broadened as a strategic concept (Fletcher, 2001) and also as a set of practices in performance management which serves as an essential opportunity for employees and those involved with performance: Chief executives, line managers etc, to take on a dialogue about each employee’s performance and development, as well as the necessary support needed for their personal advancement and company growth and development (Janet Egan, 2012).
Though performance appraisal is an integral part of performance management, it shouldn’t be mistaken as performance management, because it is one of the HR strategies/tools (Armstrong and Murlis, 1998) used to manage performance. As Michael Armstrong and Angela Baron pointed out in their CIPD book “Managing performance”, performance appraisal is an unloved punitive strategy, as against performance management which is seen as a total approach in engaging every employee in the organisation which helps improve the organisations profit and development as well as enhance employee growth and advancement. According to the CIPD online journal “performance appraisal guidance”, performance appraisal is the pillar of performance management, as it is wrong to assume that performance management is not needed once performance appraisal has taken place in an organisation. In the remaining pages of this essay, the origin as well as the differences between performance management and performance appraisal will be discussed in full length.
Over the years, the emergence of HR scholars who have written scholastic journals and articles like Frederick Winslow Taylors “time and motion study”, ( Busi and Bititci ,2006) and (Neely, 1998) have discussed in-depth the history and origin of performance management and performance appraisal and have successfully been able to come up with not one, but diverse origins. In the book performance management systems (Arup Varma, 2008) the origin of performance management and performance appraisal varies, as the systems emerged on a country basis. He points out that different country have their ways of managing and appraising organizational performance, hence the emergence of both systems should be discussed on a country by country basis. He further more stated that of France and Germany respectively.
Performance management system is a relatively new field which has barely stayed up to fifteen years, and as a result of this, less professional mastery as well as concrete origin of the system can be boasted of by any HR scholar. This has made it a loosely defined discipline, with a high level of limited standardisations (Neely, 2005). The origin of performance management can be seen to have evolved in several phases and timeframes. It has been traced back to the first phase in the 1960’s when performance appraisal strategy was still practiced. Records have it that Annual Confidential Reports (ACR), also known as Employee Service Records were responsible for the control of employee’s behaviour and attitude to work, and the reports provided a significant amount of information needed to know by the employers, on the performance of their employees.
The assessments were carried out by the employer’s to ascertain ten traits on a five or a ten point rating scale basis (McGregor, 1957) which included sincerity, dynamism, loyalty and knowledge. Negative statements uttered by employees, drastically and negatively affected their career growth. The results of the assessments once attained, were never revealed to the employees, as confidentiality was their watchword. This act the employers portrayed was described in McGregor’s article in the Harvard business review as “playing God” because the workers were always in the dark about their performances (McGregor, 1957) as the system lacked employer and employee communication as well as transparent mechanism of feedback (Bohlander et al., 2001). This process suffered from so many setbacks, as it was deficient in diverse ways. The second phase of the origin of performance management emerged during the late 1960’s up until the early 1970’s (CIPD, 2011).
Unlike the practices of the first phase, negative remarks which were discovered in the performance reports of the employees were usually communicated to them so that they could apply corrective measures to rid themselves and their performance of such deficit. Also, whatever remark had been stated by the reporting officer could be overruled by the reviewing officer, especially if areas of improvement on the part of the employee had been identified by the reviewing officer. This phase brought about the improvement of performance management and how it was perceived in the work force and business world. The third phase came up with a term called PERFORMANCE APPRAISAL (Brundan, 2009), which replaced the then ANNUAL CONFIDENTIAL REPORT (ACR). It allowed for employees to be able to write about and describe their achievements and accomplishments in the self appraisal forms and in the confidential performance report.
Asides the writing of accomplishments done by the employees, they were also allowed to showcase their skills and several new components which they possessed and believed had brought about success in the organisations development. This helped the employers identify quickly, the key players of the organisation through the number of targets they have achieved etc. The need for employee training also emerged in this phase of performance management origin, but the confidentiality of the performance report was still very much practised (Abdulla et al., 1999) which still gave room for a control style of leadership rather than the development style. From the set time performance management originated, it started developing over the years in different phases, and the fourth phase started in mid 1970 (Beer and Ruh, 1976) originated from India, where prominent business tycoons like Larsen and Toubro, brought about dynamically diverse reforms in performance management.
Unlike the first and second approach, the process was development driven and target/performance based, creating room for the employees to be able to openly participate in the system instead of being treated as a confidential process. The development of employees is the primary focus in this phase, as employers focused on annual review and performance planning, giving room for a reporting officer to review the employee’s performance, and state out newer targets for competent and well performed employees in order for them to advance in a collaborative environment. This phase brought about a dynamic change in the area of performance management (Williams, 1998), as several organisations introduced a new HR department which is responsible for developmental issues of an organization. And the final phase of performance management which is this present 21st century period is well known for the level of maturity in handling people’s issues.
Large emphasis is based on development, improvement and planning. Team work, appraisals, measurement, feedback, dialogue, positive reinforcement (Armstrong, 2009) and quality circles are also employed in the day to day running of an organisation, and this is used to assess the productivity and improvement of overall employee performance. Performance management is a dynamic system which evolves from time to time, and from decade to decade, and for sure, it is still evolving. In the near future, a better and much more transparent approach to performance management might emerge. As I stated in the earlier pages of this essay, performance management doesn’t seem to have a specific origin, as various researchers and scholars like Michael Armstrong, Angela Baron, Aubrey Daniels and Lockett have over time come up with diverse origins. PM became commonly used in the HR field, as far back as the early 1990’s and gained its popularity from the times when there was a high level of competition in the market place, as several organisations and companies dimmed it fit to initiate an innovative and comprehensive management process which would improve performance effectiveness as well as productivity (Armstrong and Baron, 2000).
Although it is believed that performance related pay, assessment and review were carried out prior to the 90’s (Drucker, 1954), but it was in 1990 most employers started getting concerned about the management of an individual employee in a holistic way. In 1992, a research was carried out by the institute of personnel management, about what performance management really is. For some people, it was an assessment and review strategy, for others it was a performance related pay strategy, and the rest saw it as training and development. On the other hand, performance management has been seen to have emerged from the late 1970’s by Dr Aubrey Daniels, which he coined as a way of making people do what you want them to do, and still have them enjoy what it is they are doing (Daniels, 2000). Daniels perceived performance management as the technology behind managing behaviour as well as productivity and results.
He brought performance management into play, in other to bring out the best in employees, while creating a high level of value for the organisation. In 1881, Frederick Winslow Taylor was seen to have invented the performance management system during the emergence of the time and motion study (Taylor, 2008) he implemented at his work in the Midvale steel company in Philadelphia Pennsylvania. Midvale steel was a steel factory with a high number of workers/ employees, and therefore needed a highly effective management to run it efficiently. Taylor believed that any individual making use of manual labour must be stupid (Graban, 2011), so he provided the right tools and implements, as well as the incentives for very high performance. Taylor divided each job into constituent motion; assigned workers to each motion and timed them with a stopwatch. Whoever fell behind the scheduled frame time was eliminated, and this made the workers more productive and enthusiastic about their jobs, as none of them was ready to be laid off of the company.
Due to Taylors urge for a more efficient and productive workforce, he devised a more enhanced management system through close observation of the individual worker. Though his technique faced a lot of criticism and resentment from the Labour when it was carried out, but there was no denying of the fact that his system was indisputably efficient, as it brought about high performance and production. Performance appraisal on the other hand, has its origin based on three different approaches, the military, industrial companies and public administration (Brundan, 2009). Irrespective of the diversity in approaches, some were based on merit rating systems which were highly subjective and biased assessment systems as they focused basically on the individual personalities and not their performances (Ivancevich, 2001).
Like performance management, the exact origin of performance appraisal is unknown, but the system can be dated as far back as thousands of years ago. It was used as a system in the 3rd century (Grint, 1993) between 221 and 265 AD, when emperors of the Wei Dynasty appointed an imperial rater to assess the performance of the official family members (Wiese and Buckley, 1998). This was done in a highly subjective and biased manner and was noticed by a Chinese philosopher named Sin Yu (Patten, 1977 as cited in Banner and Cooke, 1984). He discovered and pointed out the fact that the imperial raters were not accrediting and appraising people according to their good work and input, but according to whom the imperial raters liked and disliked (Ivancevich, 2001). During the early 1800’s, performance appraisal in industry was introduced by Robert Owen, in Robert Owen mills in Scotland (Newstrom and Davis, 1993).
He made use of a device known as “silent monitors”, which were wooden, but shaped in form of ice-cubes (Randell, 1994). They were used to represent a grade rate of the performance of each employee in the mill at the end of each working day. The monitors were painted with different colours on each side (white, blue, yellow and black), as white indicated an excellent performance, yellow represented a good performance, blue represented a normal performance, and black represented a bad performance (George, 1972). These silent monitors with the performance appraisal ratings were displayed at the employees work table at the close of day. . Performance appraisal was officially introduced to the United States of America through the military in 1813 (Weise and Buckley, 1998).
This method of appraisal was through description mode, as Army General Lewis Cass reported to the US war department about the performance of each officer, by describing and appraising them on how their performance was by word of mouth. He expressed his appraisal in phrases like “a good hard-working man”, “a Jack of all trades, highly efficient” (Bellows and Estep, 1954). After the military had induced the use of performance appraisals as a management system, the system gradually became popular and widespread in the US industry. After the World War 1, there was need for documentation and uniformity in standard due to the large amount of employees in organizations, and so, some of the army officers who made use of the man to man performance appraisal rating system were employed in various organisations, companies and public sectors, so they could implement the same rating system as it was in the military (Scott et al., 1941 as cited in Wiese and Buckley, 1998).
It is highly evident from the diverse origins discussed above, that despite the outdated age in time, each generation of workers needed a system that could account for the effectiveness and efficiency of employees and workers, irrespective of the style and way it is implemented. Overtime, the relevance of performance appraisal in the business world globally became heightened, as it is now seen as a universal systemic tool used to manage human resources. Though performance management and performance appraisal are in a way synonymous, in that they both strive to enhance organizational performance, there are also some recorded differences between them.
Performance management is a forward looking process unlike performance appraisal which is a rather retrospective based system (Longo, 2011). PM aims at maintaining and developing a balanced relationship between employers and employees for a long term period as well as ensuring the development and growth of the employees (forward looking process), while Performance Appraisal is regarded as the retrospective journey of employees over the working year, conducted by the managers to judge the overall performance of employees in an organisation. While PM is “management by agreement or contract”, PA is “management by control” (Armstrong, 2006 as cited in Longo, 2011).
Performance management is considered to be strategic (CIPD, 2011) as it embraces a wide range of organisational activities in a holistic manner, aimed at causing positive improvements. Performance appraisal on the other hand deals majorly with individual performance, and as such, symbolizing a distinct system rather than an integrated process (Longo, 2011). (CIPD, 2011) has argued that some organizations practicing annual performance appraisal believe that they have a performance management process, which is a mere facade because performance appraisal is just a tool, the leading tool of performance management.
Performance appraisal when practiced without a performance management process, is considered as been pointless, as been a mere “administrative exercise” (Torrington et al, 2008) and as been a “dishonest annual ritual” (Armstrong and Murlis, 1998) by both members of staff and employers. Performance appraisal systems in most organizations are used to take decisions on giving out bonuses, rewards, salary increase as well as financial individual incentives (Brown and Heywood, 2005). PA is seen as judge over individual employee performance, and is often linked to performance related pay.
Performance management works differently because its employee performance data/information is usually not used for pay related purposes, as it is seen as a legal crime especially in the US (Longo, 2011). The illegal practice of merit element of pay by a few organizations in performance management, is seen as an unnecessary step to motivate employees, as the in some cases, members of staff find it rather insulting than motivating (Torrington et al., 2008). Conclusively, though PM and PA are symbiotically related, one of them is a process (PM), while the other is a system (PA).
Subject: Human resources,
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 15 November 2016
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