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Case Study on New Performance Appraisal System at Xerox
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In the mid-1980s 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.

Old Performance Appraisal System

The original system used by Xerox encompassed seven main principles:

1. The appraisal occurred once a year.
2. It required employees to documenet their accomplishments.
3. The manager would assess these accomplishments in writing and assign numerical ratings.
4. The appraisal included a summary written appraisal and a rating from 1 (unsatisfactory) to 5
(exceptional).
5. The ratings were on a forced distribution, controlled at the 3 level or below.
6. Merit increases were tied to the summary rating level.
7. Merit increase information and performance appraisals occurred in one session.

This system resulted in inequitable ratings and was cited by employees as a major source of

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. which differed form the old one in many key respects: 1. the results speak for themselves. education.Case Study on New Performance Appraisal System at Xerox | MBA Kn. The first stage occurs at the beginning of the year when the manager meets with each employee. Merit raises for people in these two groups only varied by 1 to 2 percent. or development experiences that can help the employee are discussed. and tasks for the year. This allows the employee to better see the reasons behind the salary increase amount. They then meet and discuss the performance of the employee. attainable. Essentially. Questions: 1. objectives. regardless of performance. mandatory feedback and discussion session between the manager and the employee. The new system has three stages. The provision for development planning. which takes place at year’s end. The second stage is a mid-year. The presence of a half-year feedback session. The merit increase discussion takes place in a separate meeting from the performance appraisal. 4.. Both the manager and the employee prepare a written document. usually a month or two later. if any. Standards of satisfactory performance are explicitly spelled out in measurable. which tells the employee very little. Xerox’s main copier division. as opposed to the summary rank. Prohibition in the appraisal guidelines of the use of subjective assessments of performance. such as performance. A follow-up survey was conducted the year after the implementation of the new appraisal system. however. Progress toward objectives and performance strengths and weaknesses are discussed. they work out a written agreement on the employee’s goals. Together.com/management-case-studies/case-study-on-new. plans.. http://www. dissatisfaction. Both the manager and the employee sign an “objectives sheet” indicating that the meeting took place. members of the task force also consulted with councils of employees and a council of middle managers. run counter to conventional management practices. and specific terms. Despite the fact that some of the philosophies. The third stage in the appraisal process is the formal performance review. 3. across-the-board raises were being given to all employees.mbaknol.. and position in salary range.Together they created a new system. 2. it can be clearly seen that the new system is a vast imporvement over the previous one. of the 2 de 6 29-10-2010 10:50 . This stage also includes a developmental planning session in which training. stating how well the employee met the preset performance targets. The absence of a numerical rating system. What type of performance appraisal is central to new system at Xerox? Which. Results were as follows: 81 percent better understood work group objectives 84 percent considered the new appraisal fair 72 percent said they understood how their merit raise was determined 70 percent met their personal and work objectives 77 percent considered the system a step in the right direction In conclusion. New Performance Appraisal System Rather than attempting to fix the old appraisal system. The discussion usually centers on the specific reasons for the merit raise amount. the Reprographic Business Group (RBG). such as the use of self-appraisals. in 1983. Xerox formed a task force to create a new system from scratch. reported that 95 percent of its employees received either a 3 or 4 on their appraisal.The task force itself was made up of senior human resources executives. This meeting emphasizes feedback and improvement. Efforts are made to stress the positive aspects of the employee’s performance as well as the negative. In fact. resolving any discrepancies between the perceptions of the manager and the employee. as well as possible means for improving performance in the latter half of the year. relationship with peers. These stages are spread out over the course of the year. as opposed to the one-step process of the old system.

. Brand Case Study: Virgin Atlantic.Xerox.Ikea and Accenture 2. Case Study on HR Issues: Supervisory Support 9.com/management-case-studies/case-study-on-new.Adidas..mbaknol. Methods of Performance Appraisal 5. Given the empahasis on employee development. Importance of Performance Appraisal Systems 6. How do you think. Are there any potential negative aspects of the new performance appraisal system? Related posts: 1. criteria for a successful appraisal does this new system have? 2. Case Study of Nestle: Training and Development 10. Performance Appraisal 3.. Case Study on the Managerial and Leadership Philosophies: Triumvirate Leadership at Google Home > Management Case Studies > Case Study on New Performance Appraisal System at Xerox Search Mbaknol Get Blog Updates Via Email Enter your email address: Tags: Human Resource Concepts Management Case Studies Leave a Reply * Required ** Your Email is never shared Name * Email ** Website 3 de 6 29-10-2010 10:50 .Case Study on New Performance Appraisal System at Xerox | MBA Kn. Common Mistakes in Performance Appraisal 7. Benefits of Performance Appraisal 4. http://www. management feels about the new performance appraisal system? Why? 4. 360-degree Performance Appraisal 8. what implications does this have for hiring and promotions? 3..

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