Angela Baron, OD and Engagement adviser for CIPD explains how performance management has established itself and what role it has in HR’s future.

Performance management is not a new concept. The idea of measuring how well individuals perform has been around at least since the third century when the emperors of the Wei dynasty in China had an ‘Imperial Rater’ whose task it was to evaluate the performance of the royal family. The industrial revolution provided ever more ways to measure human endeavour and by the 1970s it was ‘management by objectives’ for managers, and time and motion for everyone else, ensuring everyone was told to do the right things and then actually did them.

But times change and performance management has had to reinvent itself to recognise and drive performance in the knowledge age. We are now less concerned with how fast or efficiently a task can be done but how well it is done and how knowledge is acquired and deployed that means it can be done better and in ever more innovative ways. As a result performance management is now much less bureaucratic, more inclusive, integrated with other HR practices such as career management, talent management and development and concerned to consider performance not just in terms of quantity of output but also in terms of the quality of an individual’s contribution both to their own and team objectives.

Earlier this year we set out to look at performance management, to discover how it is being used and positioned in organisations to both drive individual contribution and translate that contribution into organisational performance. Over the last 15 years or so we have seen a number of changes in performance management. Whilst many of the tools, such as appraisal and objective setting, remain relatively constant there has been a shift in emphasis away from being a determinant of pay and development towards becoming an integrated communication and relationship building process emphasising the importance of management behaviour in driving the performance of individuals.

The work comprised a survey to which 507 HR practitioners responded and a number of interviews following up on the issues raised. It confirmed that people are largely still engaged in the same kind of activities to manage performance with over 80 per cent using appraisals but that the shift in emphasis continues. Whilst the activities are still largely centered on the individual, the emphasis is on the contribution that individuals make to the organisation. Although most of our respondents still felt individuals benefited the most from performance managed, when probed most evaluated this in terms of the contribution they were making to the business.

One of the key issues for our respondents was that of alignment and most believed that performance management is most effective when it aligns individual objectives with key business priorities enabling individual to get a clear line of sight between what they achieve and how this impacts on the organisation. This means there has to be a clear communication strategy ensuring that everyone is aware of the core purpose of the organisation, its direction and what it is hoping to achieve. It was also apparent that alignment would be more likely to happen if there was a strong culture with well defined values which helped to guide and shape behavior and if line managers were delivering messages and managing people consistently and in line with this culture.

As one manager put it: “Fundamentally performance management is a mechanism for delivering the priorities of the business, ensuring you can see a clear alignment between the business plan at the most senior level and individual objectives at the most junior.”

Performance management was recognised by many respondents as a key driver of engagement. By ensuring clarity of role and facilitating a positive relationship with line management our respondents felt people were more likely to develop an emotional commitment to their work. However once again to be effective this must be driven within a framework where people are delivering what is expected of them.

It was not surprising therefore that the role of the line manager was identified as a key factor in the success of performance management. No one thought that a performance management process alone would make good line managers, but they thought it would encourage positive behaviours and bring clarity and consistency to communication and objective setting.

So it’s been a long journey for performance management and whether the Imperial Rater would recognise it its present form will probably never be known. But it seems that performance management has acquired a central role in linking individual endeavour with the achievement of organisational goals and ultimately organisational performance. We can expect to see this link strengthen in the future as performance management cements its position as the primary vehicle to align individual effort with organisation outcomes and by doing so ensure that employee engagement and commitment are effectively translated into organisational success.

Angela Baron is OD and Engagement adviser for the CIPD.

Further reading: The CIPD hot topic “Performance management in action – current trends and practice” can be downloaded here.