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Evolution of Performance Management

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The term performance management gained its

importance from the times when the
competitive pressures in the market place
9
Shares
started rising and the organizations felt the need
of introducing a comprehensive performance
management process into their system for
8
improving the overall productivity and
performance effectiveness.
The performance management process
evolved in several phases.

1. First Phase: The origin of performance

management can be traced in the early 1960s
1
when the performance appraisal systems were
in practice. During this period, Annual
Confidential Reports (ACRs) which was also known as Employee service Records were maintained
for controlling the behaviors of the employees and these reports provided substantial information on
the performance of the employees.

Any negative comment or a remark in the ESR or ACR used to adversely affect the prospects of career
growth of an employee. The assessments were usually done for ten traits on a five or a ten point rating
scale basis. These traits were job knowledge, sincerity, dynamism, punctuality, leadership, loyalty, etc.
The remarks of these reports were never communicated to the employees and strict confidentiality
was maintained in the entire process. The employees used to remain in absolute darkness due to the
absence of a transparent mechanism of feedback and communication. This system had suffered from
many drawbacks.
2. Second Phase: This phase continued from late 1960s till early 1970s, and the key hallmark of this
phase was that whatever adverse remarks were incorporated in the performance reports were
communicated to the employees so that they could take corrective actions for overcoming such
deficiencies. In this process of appraising the performance, the reviewing officer used to enjoy a
discretionary power of overruling the ratings given by the reporting officer. The employees usually
used to get a formal written communication on their identified areas of improvements if the rating for
any specific trait used to be below 33%.
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3. Third Phase: In this phase the term ACR was replaced by performance appraisal. One of the key
changes that were introduced in this stage was that the employees were permitted to describe their
accomplishments in the confidential performance reports. The employees were allowed to describe
their accomplishments in the self appraisal forms in the end of a year. Besides inclusion of the traits in
the rating scale, several new components were considered by many organizations which could
measure the productivity and performance of an employee in quantifiable terms such as targets
achieved, etc. Certain organizations also introduced a new section on training needs in the appraisal
form. However, the confidentiality element was still being maintained and the entire process
continued to be control oriented instead of being development oriented.
4. Fourth Phase: This phase started in mid 1970s and its origin was in India as great business tycoons
like Larsen & Toubro, followed by State Bank of India and many others introduced appreciable reforms
in this field.
In this phase, the appraisal process was more development driven, target based (performance based),
participative and open instead of being treated as a confidential process. The system focused on
performance planning, review and development of an employee by following a methodical approach.
In the entire process, the appraisee (employee) and the reporting officer mutually decided upon the
key result areas in the beginning of a year and reviewed it after every six months. In the review period
various issues such as factors affecting the performance, training needs of an employee, newer targets
and also the ratings were discussed with the appraisee in a collaborative environment.
This phase was a welcoming change in the area of performance management and many organizations
introduced a new HR department for taking care of the developmental issues of the organization.
5. Fifth Phase: This phase was characterized by maturity in approach of handling peoples issues. It was
more performance driven and emphasis was on development, planning and improvement. Utmost
importance was given to culture building, team appraisals and quality circles were established for
assessing the improvement in the overall employee productivity.
The performance management system is still evolving and in the near future one may expect a far more
objective and a transparent system.

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Performance Management

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Performance Management - Introduction (performance-management.htm)

Objectives of Performance Management (objectives-of-performance-management.htm)

Evolution of Performance Management (performance-management-evolution.htm)

Performance Management System (components-of-performance-management-system.htm)

Need for Performance Management (need-for-performance-management-system.htm)

Performance Appraisal vs Management (performance-appraisal-and-performancemanagement.htm)

Benefits of Performance Management (benefits-of-performance-management-system.htm)

Performance Management - Requisites (prerequisites-for-performance-management-system.htm)

Development & Implementation (development-implementation-of-performance-managementsystem.htm)

Competency Management Approach (competency-management-for-performancebenchmarks.htm)

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Performance Assessments Techniques (performance-assessment-techniques.htm)

Role of Managers at Different Levels (role-of-managers-in-performance-management.htm)

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