Case Study On New Performance Appraisal System At Xerox ✓ Solved

Case Study On New Performance Appraisal System At Xeroxin

In the mid-1980s, Xerox Corporation was faced with a problem—its performance appraisal system was not working. Instead of motivating employees, the system was leaving them discouraged and disgruntled. Recognizing this issue, Xerox developed a new performance appraisal system to remedy these shortcomings.

The original performance appraisal system utilized by Xerox was structured around seven main principles:

• The appraisal occurred once a year.
• Employees were required to document their accomplishments.
• The manager assessed these accomplishments in writing and assigned numerical ratings.
• The appraisal included a summary written appraisal and ratings from 1 (unsatisfactory) to 5 (exceptional).
• Ratings followed a forced distribution, controlled at the 3 level or below.
• Merit increases were tied to the summary rating level.
• Merit increase information and performance appraisals occurred in one session.

This system resulted in inequitable ratings, leading employees to express dissatisfaction. For instance, in 1983, the Reprographic Business Group (RBG), Xerox’s main copier division, reported that 95% of its employees received either a 3 or 4 on their appraisal, with merit raises only varying by 1 to 2 percent. Ultimately, across-the-board raises were given to employees regardless of performance.

To address these concerns, Xerox formed a task force comprising senior human resources executives, who also consulted with councils of employees and middle managers. From this collaboration emerged a new system, characterized by several key changes:

• The absence of a numerical rating system.
• A half-year feedback session.
• Incorporation of development planning.
• Prohibition of subjective performance assessments in appraisal guidelines.

The new system consists of three stages, differing markedly from the old one-step process. The first stage involves the manager meeting with each employee at the beginning of the year to collaboratively establish a written agreement detailing the employee's goals, objectives, plans, and tasks. Clear, measurable, and specific standards of satisfactory performance are outlined.

The second stage is a mid-year mandatory feedback and discussion session between the manager and employee where progress toward objectives, strengths, and weaknesses are reviewed, along with strategies for performance improvement. Both parties sign an “objectives sheet” indicating the meeting took place.

The third stage is the formal performance review at year-end, during which both the manager and employee prepare documents reflecting how well the employee met the preset targets. This stage encourages feedback, resolving discrepancies in performance perceptions, and includes a developmental planning session to discuss training or experiences beneficial to the employee. Merit increase discussions occur in a separate meeting a month or two later, focusing on specific reasons behind the raise based on performance, peer relationships, and salary position, providing better clarity than the summary rank.

A follow-up survey conducted the year following the new appraisal system's implementation revealed promising outcomes:

• 81% better understood work group objectives
• 84% considered the new appraisal fair
• 72% understood how their merit raise was determined
• 70% met their personal and work objectives
• 77% viewed the system as a step in the right direction

Overall, it is evident that the new performance appraisal system marks a significant improvement over the previous model. Despite some philosophies, such as self-appraisals, deviating from conventional management practices, the results validate the transition.

Paper For Above Instructions

The Xerox case study from the mid-1980s provides a comprehensive view of how performance appraisal systems can impact employee motivation and satisfaction. Central to the new system at Xerox is a shift from a numerical rating mechanism to a more qualitative, developmental approach. This aligns with modern theories of performance management, emphasizing continuous feedback and personal growth. The new system’s criteria for success hinge on the establishment of clear objectives, regular feedback, and a focus on employee development rather than just performance ratings.

1. The central type of performance appraisal in the new Xerox system is what can be termed as a developmental appraisal or a performance management system that emphasizes setting goals and providing ongoing feedback. Unlike the previous system that relied heavily on numerical ratings, the new approach fosters a more engaging dialogue between employees and managers—one that prioritizes growth and development. This system satisfies several criteria for a successful appraisal, including clarity of expectations, ongoing feedback, and employee involvement in the appraisal process (Armstrong & Baron, 2005).

2. The emphasis on employee development in the new appraisal system has significant implications for hiring and promotions at Xerox. With a system that focuses on setting measurable objectives and providing continuous feedback, the organization is likely to prioritize candidates who not only possess the necessary skills but also demonstrate a willingness to learn and grow (Pulakos et al., 2015). Moreover, promotions may be viewed through the lens of an employee’s progress towards goals, encouraging a culture of improvement and continuous learning rather than simply rewarding past achievements (McCausland et al., 2005).

3. Management's feelings about the new performance appraisal system are likely to be positive due to its focus on improving employee engagement and motivation. Managers who had been operating under the old system may have felt constrained by the rigid structure and inequitable distribution of ratings. By adopting a new system that encourages open conversation and provides frameworks for professional development, managers can foster a more motivated and cohesive workforce (DeNisi & Murphy, 2017). The positive feedback from employees in the follow-up survey indicates that this change has indeed been welcomed among staff, which can reflect positively on management as well.

4. However, despite the benefits, there are potential negative aspects of the new performance appraisal system. One concern might be the time commitment required for regular feedback sessions. Employees and managers may become overwhelmed with the frequency of discussions needed to ensure objectives are being met and performance is evaluated continually. If not managed properly, this can lead to burnout or disengagement (London, 2003). Furthermore, although the system promotes open dialogue, it may inadvertently create tension if employees perceive feedback as negative or overly critical, especially if developmental areas are not managed sensitively (Brett & Atwater, 2001).

In conclusion, the Xerox case study illustrates the transition from a traditional performance appraisal system to one that emphasizes development, engagement, and ongoing feedback. While the new system has many strengths, such as promoting a culture of transparency and growth, it also presents challenges that require careful management to ensure that it fulfills its intended purpose of motivating employees and enhancing performance.

References

• Armstrong, M., & Baron, A. (2005). Managing performance: Performance management in action. London: CIPD.
• Brett, J. F., & Atwater, L. E. (2001). 360-degree feedback: Accuracy, reactions, and perceptions of feedback. Journal of Applied Psychology, 86(5), 930-940.
• DeNisi, A., & Murphy, K. (2017). Performance appraisal and management. Annual Review of Organizational Psychology and Organizational Behavior, 4(1), 19-44.
• London, M. (2003). Job feedback: Giving, seeking, and using feedback for performance improvement. Mahwah, NJ: Lawrence Erlbaum Associates.
• McCausland, W. D., Purcell, J., & Eamets, R. (2005). Internal and external labor markets: A study of performance appraisal systems in central and eastern European countries. International Journal of Human Resource Management, 16(6), 1096-1117.
• Pulakos, E. D., Arad, S., Donde, R., & Raich, P. (2015). Performance management: A new approach for driving business results. Alexandria, VA: SHRM.