What is a Performance Management System (PMS)?

The Performance Management System has gone through several iterations before reaching its current form. The concept of performance management cycle and appraisals can be traced for over a century.

Hence, it is essential to check out the rudimentary early systems to understand the evolution of performance management systems through the years:

▸1908 – 1914

1908 was the year when famous American Mechanical Engineer Frederick Winslow Taylor proposed that his ‘Scientific Management’ principles can be utilized to find out how work potential affects productivity. These principles laid the foundation for a performance management process. Later, in 1909, Henry Ford adopted these principles into his assembly line method of mass production. It ensured that employees with limited training quickly undertake their repetitive tasks as it has been divided into simple steps.

▸1914 – 1920

By the start of 1914, the principles of Taylor were being utilized as ‘Taylorism’. His principles were altered to consider the specific employee’s traits such as knowledge, integrity, etc. while considering them for appraisals, instead of their adherence to their duties alone. Taylorism soon became the go-to method for employee appraisal since it was proving effective in improving the productivity of the staff, with Vladimir Lenin himself being a staunch supporter.

▸1930 – 1960

The WD Scott & Co., which is one of the largest management consultancy firms in Australia, introduced a system of ‘man-to-man’ comparison based on Taylorism, as early as 1918. However, it grew in popularity in the 1930s and became an effective tool for employee performance rating by the mid-1950s. Since it was using the modified Taylorism principles, the employees were being measured based on their traits than their workplace productivity.

▸1960 – 1970

The start of the 1960s saw the creation of ‘Employee Service Records’ which kept in-depth information about each employee’s performance, and hence, they were highly confidential in nature. However, the negative remarks in these records were communicated to the staff to ensure corrective action. As a result, the performance appraisals started focusing on evaluations based on organizational goals instead of the individual’s abilities.

▸1980 – 2000

Due to the nature of the performance evaluations, multi-person ratings became popular in the 1980s. It also introduced the concept of 360-degree feedback, thereby motivating the employees to improve their performance. As a result, companies like Esso Research started measuring traits like teamwork, efficiency, etc. With the advent of the new millennium, the performance appraisal process became even more flexible with the introduction of goal-setting and performance reviews throughout the year.

▸2000 – Present

While the system of goal setting and annual performance reviews is still the norm, it is constantly being transformed into continuous performance appraisals. The annual reviews were initially broken down into quarterly ones, which have been further divided into continuous ones. Similarly, companies are focussing on the positive traits in the employees to motivate them to work harder and create a productive environment. Similarly, the introduction of Artificial Intelligence (AI) is radically changing the game for performance management nowadays with a shift from a quantity to a quality mindset.