This is a continuation of Tracie Sponenberg's three-part series on the Evolution of Performance Management. You can find Part One: The Foundation Years: How Performance Management Was Born, here.
In Part 1 of "The Evolution of Performance Management," we traced performance management from factory floors through my first corporate review—the one where I learned my skirts were "unprofessional." We watched systems designed to measure industrial output get applied to human development, with predictably awkward results. The forms got longer, the processes got more rigid, and we kept layering on complexity instead of asking whether any of it was actually helping people grow.
Then the internet happened, and everyone thought: finally, technology will fix this.
Spoiler alert: it did not!
Watch for the final installment next week. I appreciate your support and feedback for this project, especially the support of my friends at WorkStory!
The late 1990s felt like the dawn of a new era for performance management. The dot-com boom promised to revolutionize everything, including how we managed human performance.
As I was creating simplified feedback systems at the newspaper and publishing company where I worked, the broader business world was going all-in on sophisticated technology. They were convinced we could finally solve the longstanding problems with performance management if we just built better systems.
For the first time, organizations could imagine performance management that was dynamic, data-rich, and continuously updated rather than confined to annual paper-based reviews. Email became the primary communication tool. Intranets enabled company-wide knowledge sharing. Early web-based applications made remote access to HR systems possible.
We were finally able to wonder: what if performance reviews could be directly linked to compensation decisions, career planning, and succession management in real-time? What if individual performance could be tied to organizational objectives through cascading goal systems?
Companies like PeopleSoft, Oracle, and later Workday began building comprehensive HCM platforms to make this happen. HR thought leaders and consultants championed this approach, and suddenly it seemed practical for the first time in large organizations.
The technology was impressive. The assumption underneath it? Not so much.
Multi-source feedback became incredibly popular during this era. Organizations like the Center for Creative Leadership and Korn Ferry developed sophisticated 360-degree assessment tools, and suddenly everyone wanted in.
The logic seemed airtight: people work with many different colleagues, so why limit performance feedback to just the direct manager? Technology made it feasible to gather input from peers, direct reports, customers, and other stakeholders. It felt democratic. Comprehensive. Modern.
Major companies like General Electric, Johnson & Johnson, and Microsoft implemented enterprise-wide 360-degree programs. I’m pretty sure most of us who worked in HR during this period were either implementing 360-degree feedback, or getting asked to implement it by our executive teams.
However, complex systems like 360-degree programs are, well, complex. Managing multiple feedback relationships was not feasible for many organizations. The potential for gaming the system was enormous. (You say good things about me, I'll say good things about you in my 360 survey.) And synthesizing conflicting perspectives turned out to be far harder than anyone expected.
What looked revolutionary on paper turned into an administrative nightmare in practice. And we wondered if anyone was actually developing better because of it.
But we kept doing it, because that's what sophisticated organizations did at the time!
The Balanced Scorecard Influence (1990s-2000s)
Robert Kaplan and David Norton's Balanced Scorecard approach was introduced in the early 1990s but it wasn’t widely adopted until the late 1990s and 2000s. And it gave us a new framework to complicate things further!
The core idea was beautiful! Measure performance across multiple dimensions (financial, customer, internal process, and learning/growth) rather than just financial outcomes. When adapted for individual performance evaluation, it meant employees were evaluated on various competencies and objectives instead of getting a single overall rating.
This led to more sophisticated goal-setting processes and multi-dimensional rating systems. Companies began implementing "cascading goals" where organizational objectives flowed down to department goals, which were further divided into individual objectives. Software platforms like SuccessFactors were specifically designed to support this approach.
It all made perfect sense in theory. Connect everyone's work to the bigger picture. Track it all systematically.
In practice? More forms. More ratings. More dimensions to evaluate. More complexity layered on top of complexity.
We were building increasingly sophisticated systems to measure human performance. What we weren't asking was whether all this measurement was actually helping humans perform better.
This was my paper-first era. I still believed that better systems and processes would lead to better outcomes. I focused on making forms clearer, processes more streamlined, documentation more consistent. Important work, especially for an HR professional trying to establish credibility.
While working at the Concord Monitor, though, I was learning something the enterprise software companies weren't teaching.
Here I was at a Pulitzer Prize-winning newspaper, surrounded by talented journalists and editors who had one overwhelming priority: getting the newspaper out every single day.
Performance reviews? Those happened when there was time.
Which often meant they didn't happen.
Deadlines ruled everything. The news cycle waited for no one. And asking an editor who'd just put the morning edition to bed to sit down and complete performance documentation felt like asking them to prioritize paperwork over journalism.
I couldn't compete with the urgency of daily deadlines and breaking news. No system I designed, no matter how streamlined, could overcome the fundamental reality that performance management felt like a distraction from the real work.
Meanwhile, HR publications were showcasing elaborate technology platforms and sophisticated goal-cascading systems. And I was just trying to get reporters and editors to turn in a one-page form.
The gap between what the technology promised and what managers actually needed (or would use) was vast.
But I observed something really interesting through my frustration in chasing down forms.
The managers who were good at developing their people didn't need my forms to help them grow.
They were having quick conversations at the editing desk or the pressroom or the distribution center. They were giving feedback during story reviews. Coaching while on deadline. Building relationships in the work itself, not in scheduled review meetings.
My simplified systems could document those conversations, but they couldn't create them. You can't systematize care. You can't process-manage someone into being a good coach.
This insight helped shape the rest of my career: in environments where people are focused on urgent, important work that serves customers every single day, performance management has to integrate into the flow of work. Not interrupt it.
The best system is the one people will actually use, not the most comprehensive one. Sometimes "good enough" documentation that captures a real conversation is infinitely more valuable than a perfect form that never gets completed.
What I didn't yet understand was how to scale this insight beyond newspapers into other industries, or how technology could eventually help rather than hinder.
That lesson was coming. Along with a 51-page packet of paper. But that's a story for another day.
This era brought the widespread adoption of competency-based performance management, and organizations went all-in.
Companies like Hay Group and DDI developed extensive competency libraries and assessment tools. The promise was exciting! Performance management could become more objective and development-focused by evaluating people against clearly defined behavioral competencies rather than subjective overall impressions.
Finally, we'd have clarity! Specificity! Objectivity!
Technology enabled sophisticated competency assessment platforms that could track individual development against multiple behavioral dimensions over time. Organizations could identify skill gaps, create targeted development plans, and measure progress systematically.
However….. some organizations developed competency models with dozens, sometimes over 100, behavioral indicators. What started as a tool to make conversations more concrete became an evaluation process so comprehensive it was difficult to use effectively.
The focus shifted from "are people developing?" to "did we rate them accurately on all 47 competencies?"
We'd taken a good idea and made it unusable through over-application. A pattern that should be familiar by now!
The first generation of dedicated performance management software emerged during this period. Companies like Halogen Software, Cornerstone OnDemand, and SuccessFactors built platforms specifically designed for performance review processes.
These systems digitized traditional review processes like automated review cycles, standardized rating scales, goal tracking, reporting capabilities, integration with compensation systems. It made performance management more consistent and easier to administer.
But the software also made performance management more rigid. Many systems were designed around annual review cycles with fixed processes that couldn't easily accommodate different approaches for different teams or roles.
If the software said you evaluated people this way, that's how you evaluated people.
We learned to digitize inflexibility.
While enterprise software companies were designing sophisticated platforms for Fortune 500 companies, something completely different was happening in mid-sized organizations where about half of American workers actually spend their careers.
These companies faced a unique challenge: they needed efficiency but couldn't afford complexity. They had small HR teams (often just 1-4 people, if they had a team at all) supporting hundreds of employees across multiple locations.
This is where I spent a good portion of my career. And where I learned that constraints can drive innovation.
When you don't have budget for a full-time HR systems administrator or a team of trainers to onboard managers to complex platforms, you're forced to ask different questions:
What's the simplest thing that could work? What would actually make managers' lives easier? How do we automate paperwork without automating away the human conversations we're trying to enable?
These weren't the questions the technology vendors were asking. They were building for enterprise scale and enterprise budgets, selling sophistication and comprehensiveness.
But for those of us working in smaller companies? We had to be more resourceful. We had to focus on what mattered most. We couldn't afford the luxury of complexity.
And sometimes—often—that resourcefulness led to better solutions.
Looking back, this era did give us some tools worth keeping.
Goal alignment systems that connected individual objectives to organizational priorities became standard practice for good reason. When done well, these systems help people understand how their work contributes to the bigger picture. That clarity has real value.
Multi-source feedback introduced an important concept: performance occurs in relationship with many different people, not just the direct manager. The insight was valuable even when the execution was exhausting.
Competency frameworks provided useful language for discussing specific behaviors and skills. Instead of vague feedback like "be more professional," managers could point to concrete competencies and behavioral indicators. When kept simple, this was helpful.
Technology platforms improved the administrative efficiency of performance management and made data collection more systematic. The ability to track goals, document conversations, and generate reports added real value.
But.
We were drowning in complexity. I’ve seen competency models balloon from simple frameworks to evaluation matrices with dozens of behavioral indicators. What started as tools to guide conversations became compliance exercises that managers rushed through to check a box.
The emphasis on platforms and processes distracted from what actually mattered: the quality of manager-employee relationships. We were measuring everything except the things that determined success. Did this person feel supported? Did they grow? Did the conversation help?
Our one-size-fits-all approaches didn't accommodate the reality that different people need different types of support. A software engineer needs different feedback than a sales representative. A new graduate needs different development support than a seasoned professional. Yet our systems treated everyone the same because that's what the software required.
For companies with lean HR teams, the administrative burden of enterprise systems often outweighed the benefits. The cost-benefit equation simply didn't add up.
And then there was the urgency problem. In fast-paced environments—newsrooms, manufacturing floors, retail stores, distribution centers—where people were focused on serving customers or meeting daily operational demands, performance management felt like a distraction from real work. The systems designed in corporate offices didn't account for the reality of frontline work.
We'd built impressive systems. We just hadn't built systems that worked for how people actually work.
By the mid-2000s, organizations had largely digitized their performance management processes and implemented sophisticated goal-setting and competency assessment systems.
Employee satisfaction with performance reviews remained stubbornly low. Managers still struggled with effective development conversations. We were pouring enormous resources into systems that weren't delivering results.
Something had to give.
The technology infrastructure developed during this era would provide the foundation for more dynamic, real-time performance support systems in the following decade. But more importantly, we were learning very slowly, sometimes painfully, what technology could and couldn't do.
It could automate processes, but it couldn't automate care. It could track data, but it couldn't create trust. It could standardize forms, but it couldn't standardize human growth.
We'd spent a decade trying to solve human problems with technology solutions. The correction was coming, and it would question everything we'd built.
The bottom line: This era proved that technology could make performance management more systematic and data-rich. But we were solving the wrong problems. We were making evaluation more sophisticated when we should have been making development conversations more human. Companies were about to start throwing out their rating systems entirely—and that disruption would change everything.
