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Getting Rid of Annual Performance Reviews

| by Savita Pahuja Follow 3 Followers on Aug 23, 2015. Estimated reading time: 3 minutes |

Accenture CEO Pierre Nanterme, shared with The Washington Post that Accenture will get rid of annual performance reviews and rankings.

The firm will disband rankings and the once-a-year evaluation process starting in fiscal year 2016, which for Accenture begins this September. It will implement a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.

According to Nanterme the professional services firm, which employs hundreds of thousands of workers in cities around the globe, has been quietly preparing for the “massive revolution” of getting rid of annual performance reviews and rankings, in its internal operations.

A few months ago, Deloitte also announced that it was piloting a new program in which, rankings would disappear.

Replace “rank and yank” with coaching and development - Companies worldwide are questioning their forced ranking, rigid rating systems, and once a year appraisal process. This is the year a new model of performance management will likely sweep through HR.

Richard A. Moran, President at Menlo College, gave reasons of getting rid of performance appraisals in his blog: Death to Performance Reviews as:

First, there is a real business reason – do the math.  Accenture has 330,000 employees.  Assume that the time spent on each performance review is one hour (a low estimate) and that two people (the reviewee and the reviewer) are involved.  Next, assume that since Accenture people bill their time and that the billing rate is $100/hour (way low).  Then the annual cost (at the very least) looks something like this formula:

333,000 employees x 2 people in each session = 660,000 hours x billing rate of $100/hour = DO THE MATH.

Second, and more importantly, why continue a practice that no one likes. A practice that is seen as an annual ritual of pain and may or may not be effective.

Brian Kropp, Executive Director of CEB’s HR practice, shared his thoughts on performance reviews in his blog “HR: Want to Do Away with Performance Reviews? Think Again”.

The best advice to HR teams before they make any rash decisions about their performance review process is to stop. The firms that get the best results, don’t use performance scores as the centerpiece of the discussion. Instead of using performance management as a record of past performance, they use it to improve employees’ future performance.

Brian says that we should ask three questions before making any changes:

  1. Is your performance review backwards? Managers should use past performance as a guide for what they can do to help their employees be more productive in the future, rather than cast their feedback backwards and either highlighting successes or failures.
  2. Who provides the input during a review? Managers have more direct reports now than they ever did, and employees must collaborate more with peers than they ever did to get their jobs done. Given all these changes, feedback should come from a multitude of sources (e.g., peers, co-workers, customers).
  3. Is feedback provided constantly, or once or twice a year? If it’s only during scheduled “performance reviews,” then HR teams should think about teaching managers provide coaching throughout the year, instead of trying to remember everything good and bad at the end. This is more valuable for both manager and employee.

Tom Monahan, Chairman and CEO at CEB, proposes to stop focusing on scoring to start driving performance.

To be clear, none of these companies eliminated performance reviews completely—nor should they in my view. They have done away with what became arcane and ineffective aspects of the process in their industries, namely using scores or stack ranking as the centrepiece. Rather than being beholden to bi-annual review cycles, managers and employees at progressive companies are engaging in constant dialogue around expectations, goals and development areas. Whether you call them ‘check-ins’ as Adobe does or something else, what’s important is that you model the approach that emphasizes what can and should be done today and in the future, rather than deconstructing the past.

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