Companies have long spent considerable energy trying to develop scalable systems for keeping track of, motivating and rewarding the performance of their employees. In the 1970s, Aubrey Daniels coined the term “performance management”, and so began a universal experiment to make this process more objective and scalable. Inspired by the “management by objectives” movement, companies started to get employees to specific goals and then rate efforts on a one to five scale against these goals, annually. It seemed logical to try to be objective and give people specific feedback about their performance. The hope was that this would help pay people fairly, motivate everyone and help remove the worst performers.
However, there was a flaw in the plan. Human beings are not necessarily logical when it comes to receiving feedback from others.