The history of performance management

The history of performance management

Nowadays, many organizations have figured out the secret to modern performance management. Between setting clear goals, creating an ongoing feedback loop between leaders and their teams, and offering development opportunities, companies can take a robust approach to performance management and promote outcomes like higher employee engagement and better performance.

Of course, this isn’t how performance management always was. Understanding where we’ve come from can help us move forward effectively, so let’s take a brief look at the history of performance management.

The 1800s: the first performance appraisals

Performance has always mattered, and some historians suspect it was being managed as early as 221 AD, when Wei Dynasty emperors rated their family members’ performance. Its origins in workplace settings, however, likely began in the 1800s, when Robert Owen had “silent monitors” observing the performance of his cotton mill workers in Scotland. While this helped assess individual performance, it didn’t look at the performance of the cotton mill as a whole.

The 1920s & 30s: operational performance management

By the time the 1920s and 30s rolled around, there was a shift towards operational efficiency and effectiveness. It was during this period that the concept of ROI was introduced;to get the most out of their budget, organizations wanted to make sure outcomes like company performance and net income were meeting expectations.

The 1950s: MBOs (management by objectives)

In 1954, management consultant Peter Drucker penned a book called The Practice of Management, in which he described a concept called Management by Objectives, or MBOs. His principle was based on a need to manage business based on its needs and goals.

The 1990s: OKRs

By the 1990s, leading companies were beginning to see that they could improve operational performance by linking their team, individual, and departmental goals with top corporate objectives. This is how OKRs (objectives and key results) were introduced by John Doerr at Intel, and then used by Google. To this day, Google—and many other leading organizations—still use OKRs to accomplish aggressive goals.

While OKR performance doesn’t have to be the only factor your company uses to measure performance, it should certainly be a component of your modern-day, continuous performance management approach. (Read more about how to use OKRs with continuous performance management here). In doing so, you’ll give employees clarity on what’s expected of them, support an ongoing feedback loop between leaders and their teams, and foster better performance and engagement by giving employees goals to achieve.