CASE STUDY: Xerox Revamps Performance Appraisal System
Xerox Corporation was faced with a problem its performance appraisal system was not working. Rather than motivating the employees. Its system was leaving them discouraged and disgruntled. Xerox recognized this problem and developed a new system to eliminate it.
|THE OLD SYSTEM |
|The original system used by Xerox encompassed seven main principles: |
|The appraisal occurred once a year. ...view middle of the document...
Merit raises for people in |
|these two groups only varied by 1 to 2 percent. Essentially, across-the-board raises were being given to all employees, regardless of performance. |
THE NEW SYSTEM
Rather than attempting to fix the old appraisal system, Xerox formed a task force to create a new system from scratch. The task force itself was made up of senior human resources executive; however, members of the task force also consulted with councils of employees and a council of middle managers. Together they created a new system, which differed from the old one in many key respects:
1. The absence of a numerical rating system.
2. The presence of a half-year feedback session.
3. The provision for development planning.
4. Prohibition in the appraisal guidelines of the use of subjective assessments of performance.
The new system has three stages, as opposed to the one-step process of the old system. These stages are spread out over the course of the year.
The first stage occurs at the beginning of the year when the manager meets with each employee. Together, they work out a written agreement on the employee’s goals, objectives, plans, and tasks for the years. Standards of satisfactory performance are explicitly spelled out in measurable, attainable, and specific terms.
The second stage is a mid-year, mandatory feedback and discussion session between the manager and the employee. Progress toward objectives and performance strengths and weaknesses are discussed, as well as possible means for improving performance in the latter half of the year. Both the manager and the employee sign an “objectives sheet” indicating that the meeting took place.
The third stage in the appraisal process is the formal performance review, which takes place at year’s end. Both the manager and the employee prepare a written document, stating how well the employee met the preset performance targets. They then meet and discuss the performance...