Performance Management: Evolution Without an Outcome

Every organization insists performance management exists to drive performance. Ask employees if it does, and the numbers embarrass the premise. In nearly two decades of my consulting career with Indian and APAC organisations on performance process redesign, I've watched most of them reach for the same shelf: MBO, Balanced Scorecard, OKRs, Continuous feedback; Western philosophies, imported wholesale. I have asked, many times, what I suspect many others have quietly asked too: does an appraisal need to be designed differently for organisations with different culture, context and industry ? I rarely stopped to ask before I implemented.

Kyun

The author asks two questions. Which one do you think goes deeper? Tap it, and I'll ask you again at the end.

1. Why does the fix keeps not fixing the problem ?
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2. Why does the business treat this as HR's exercise, not its own ?
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Why does the fix keeps not fixing the problem ?

The oldest ancestor of the appraisal isn't corporate at all, it's the U.S. Army's WWI and WWII rating scales, built to sort soldiers for promotion or discharge. Its DNA was compliance and elimination, not growth. Corporate America adopted it wholesale after the war; by the 1960s, roughly 90% of U.S. employers had one Indian subsidiaries of multinationals, followed by India's own emerging corporate sector, inherited the same DNA a generation later.

In 1954, Peter Drucker's Management by Objectives proposed that goals be agreed, not handed down. But once increments got tied to MBO scores, employees learned to negotiate soft targets instead of stretch ones. The 1980s gave the world Jack Welch's forced ranking at GE; a 20-70-10 curve that removed a fixed bottom decile whether the team deserved it or not. India adopted this version with unusual enthusiasm: ICICI Bank, several PSUs including ONGC and SAIL, and most visibly, the entire large-cap IT services industry ran bell curves for the better part of two decades, largely because a strict forced distribution was administratively convenient for organisations managing hundreds of thousands of employees across a rigid, pyramid-shaped billing and utilization model.

I was myself part of some of the discussions with top HR leaders when Infosys scrapped the bell curve for "iCount" in 2015, and TCS and Wipro followed within a year. The reason given was almost word-for-word what American companies had said years earlier; it killed collaboration, it felt arbitrary, and it was quietly driving attrition of exactly the people it was meant to retain. We, as consultants, picked up new mandates redesigning performance management and rewards distribution in the very same breath and quietly noted the irony of an industry redesigning, at great expense, the very system it had insisted on building at equally great expense a decade earlier.

Running in parallel, Andy Grove at Intel rebuilt Drucker's MBO around Key Results and a hard wall between goal-tracking and pay, precisely to prevent the evils MBO had invited. John Doerr carried the framework to a thirty-person Google in 1999, and OKRs became the default language of ambition everywhere that wanted to look like Silicon Valley including a large share of India's startup and technology sector today, adopted with the same imported enthusiasm, and largely the same absence of anyone asking whether a 100 -year-old Tech manufacturing company needed the framework applied differently than a 22-year-old IT company in Mountain View.

Why does the business treat this as HR's exercise, not its own

Here is the part, history doesn't fully explain. In all the organisations that I have worked with, Sales runs a live pipeline dashboard, reviewed weekly, sometimes daily. Operations runs against a production target or a project milestone that it checks every shift/ every week. Finance closes the books every month. Every core business function manages its own performance continuously, as part of running the business. Never, ever it’s the Performance management platform (likes of Successfactors/Workday/Darwinbox). Then, once or twice a year, HR arrives with a form and asks the same business leaders who have been managing performance in real time all year to do it, in the HRMS, in a different vocabulary, for a different audience: the calibration committee, not the customer or the P&L.

Is it any wonder the business treats it as separate? It genuinely is separate, separate cadence, separate owner, separate purpose. The business's real performance management happens in the Monday pipeline review and the monthly ops call. What HR runs in March is not that. It is a compensation-allocation and documentation exercise wearing performance management's name and most business leaders can tell the difference even when they can't articulate it, which is exactly why they fill it out in twenty minutes and go back to the dashboard that actually runs their business.

Ask this plainly: does your organisation's business leadership see the annual review cycle as how performance gets managed, or as a compliance step that happens after performance has already been managed, all year, somewhere else? If it's the second and for most companies, it is, then HR isn't failing to run performance management well. HR is running the only cycle nobody in the business actually uses to manage anything.

HR is running the only cycle nobody in the business actually uses to manage anything.