Evolution Of Performance Management System

by Srikant Chellappa Sep 6,2023

The People Strategy Leaders Podcast

with Srikant Chellappa, CEO

Organizations these days have become more employee-focused and less process-driven. Performance management has changed in many ways over the past few decades. Many organizations have ditched their annual performance reviews. This has been the era where continuous feedback became popular as one of the most effective ways of managing performance.

What led to the evolution of performance management? There are many early references to performance appraisals in America that date back over a century. Here’s a timeline of how performance management has evolved over the last century.

Evolution Of Performance Management

The following section provides a detailed history of performance management. It will help you understand how performance management evolved over time and the various instances that led to those changes.

First Phase: 1908 – 1914

Rise Of Taylorism And Scientific Management Principles 

In 1908, Frederick Winslow Taylor applied his ‘Scientific management’ principles to find out how the work potential of individuals affected their productivity.

F. W. Taylor’s scientific management principles can be summarized as follows (1)

  1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
  2. Scientifically select, train, and develop each worker rather than passively leaving them to train themselves.
  3. Cooperate with the workers to ensure that the scientifically developed methods are being followed.
  4. Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning

Henry Ford who introduced mass production of cars, was highly influenced by F. W. Taylor’s scientific principles and adopted Taylorism from 1909 to 1913(2). Taylorism meant dividing vehicle production into uncomplicated repetitive steps there would be no need for skilled workers, men could learn to do any job quickly

Also Read: Why Adobe Ditched Its Annual Performance Reviews

Second Phase: 1914 – 1920

Taylorism’s Popularity In The USSR

In 1914, F.W. Taylor introduced a performance appraisal process that focused more on current worker productivity and ways to improve it over time. His appraisals focused more on the individual’s personality and traits like knowledge, punctuality, loyalty etc. instead of accomplishment of workplace goals and service quality.

Ford was a heroic figure for many in the Soviet Union during the 1920s for his contribution to assembly-line production and his rationalization of labor practices. So, when Taylorism was introduced into the Soviet Union in 1920, it was enthusiastically accepted by many in the USSR. It was also accepted by popular Bolsheviks like Trotsky and Vladimir Ilich Lenin himself. While, Lenin did not totally approve of Taylorism in the beginning (1913), by 1918 his views had dramatically changed(3).

Third Phase: 1930 – 1960

Growing Popularity Of WD Scott’s Performance Appraisal Process

Walter D Scott of WD Scott & Co. of Sydney (which is one of the largest consultancy firms in Australia) introduced the concept of rating the abilities of his staff as early as World War I (1914 – 1918). He introduced his ‘man to man comparison’ scale influenced by Taylor. WD Scott’s documented performance appraisal system wasn’t widely recognized until the 1930s.

By the mid- 1950’s this formal performance appraisal process was commonly used by many companies. It helped managers measure the performance of their workers based on personality traits which had nothing to do with their productivity at the workplace.

Fourth Phase: 1960 – 1970

Annual Confidential Reports Become A Part Of Performance Appraisals

In the early 1960’s, performance appraisals were based on ‘Annual Confidential Reports’ which provided significant information about employee performance. These reports were also known as ‘Employee Service Records’. The contents of these reports would be kept confidential from employees. This approach was mostly used by Government organizations.

These ACRs acted as a vital source of employee information and any negative remarks about employees in the report would negatively affect their career growth.

During the 1970’s, employees were communicated the negative remarks from these reports so that they could take corrective measures for it. Gradually, the performance appraisals based on inherited personality traits transformed into evaluations based on goals & objectives. They focused more on what an individual employee can achieve in the future with the correct action plan. Even though this is a old system of performance appraisals, it is still used in public sector organizations of many middle-income countries like India, Sri Lanka and Swaziland.

Fifth Phase: 1980 – 2000

360 Degree Feedback Became Ubiquitous 

Multi-person rating became popular during 1980’s & 1990’s as 360 degree feedback. It wasn’t accepted by some organizations because it consumed a lot of their budget. It is during this time that performance appraisals started focusing on motivating employees and improving their performance. Organizations began measuring various new traits like team-work, communication, conflict-reduction, efficiency etc.

Esso Research and Engineering Company was the first one to use 360 degree feedback back in 1950’s. 360 degree feedback grew in popularity after the invention of typewriters because it was difficult to achieve complete anonymity with hand-written feedback forms.

In the 2000’s, the performance appraisal process became more development driven, open and flexible instead of being restricted to employees. The process would require the employee and manager to mutually decide in the beginning of the year, their goals and objectives for the year ahead. This was a phase where the structure of performance management started changing. Annual performance reviews were the most effective way of measuring performance.

The Upcoming Trends In Performance Management

In recent years, performance management has evolved even more. Companies are now ditching annual performance reviews and choosing frequent feedback. The definition of an effective performance management will continue to change as more organizations recognize the importance of having a positive and productive work culture.

According to Josh Bersin, a well-known industry analyst in corporate HR, Artificial Intelligence is likely to transform HR operations. Another prediction for performance management is that the focus will shift from the number of feedback check-ins to the quality of the feedback given; the emphasis is said to shift from quantity to quality. In the future, performance management processes are predicted to be less complicated and more flexible.

Infographic On Evolution Of Performance Management

evolution of performance management

References :

(1) Scientific Management, comprising Shop ManagementThe Principles of Scientific Management and Testimony Before the Special House Committee, by Frederick Winslow Taylor, Harper & Row, 1911

(2) EyeWitness to History, “Henry Ford Changes the World, 1908,” 2005,

(3) V. I. Lenin, ‘The Taylor System-Man’s Enslavement by the Machine’, 13 March 1914, Collected Works, vol. 20, p. 153.

We hope the details mentioned in the article regarding the evolution of performance management have helped you. Do share your thoughts about performance management in organizations in the comments section below.

Performance Management System

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Srikant Chellappa
CEO & Co-Founder of Engagedly

Srikant Chellappa is the Co-Founder and CEO at Engagedly and is a passionate entrepreneur and people leader. He is an author, producer/director of 6 feature films, a music album with his band Manchester Underground, and is the host of The People Strategy Leaders Podcast. He is currently working on his next book, Ikigai at the Workplace, which is slated for release in the fall of 2024.

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