Performance reviews’ end is nigh

As of September, one of the largest companies in the world will do all of its employees and managers an enormous favour: It will get rid of the annual performance review.

Accenture chief executive Pierre Nanterme said that the professional services firm, which employs hundreds of thousands of workers in cities around the globe, has been quietly preparing for this “massive revolution” in its internal operations.

“Imagine, for a company of 330,000 people, changing the performance management process — it’s huge,” Nanterme said. “We’re going to get rid of probably 90 per cent of what we did in the past.”

The firm will disband rankings and the once-a-year evaluation process. It will implement a more fluid system, in which employees receive timely feedback on an ongoing basis after assignments.

Accenture is joining a small but prominent list of major corporations that have had enough with performance reviews. Six per cent of Fortune 500 companies have got rid of rankings, says management research firm CEB.

These companies say their own research, as well as out-

Employees that do best in performance management systems tend to be the employees that are the most narcissistic and selfpromoting. Brian Kropp, CEB

side studies, convinced them that all the time, money and effort spent didn’t ultimately accomplish their main goal — to drive better performance.

In March, Deloitte said it was piloting a new programme in which rankings would disappear and the evaluation process would unfold throughout the year. Deloitte is also experimenting with using only four simple questions in its reviews, two of which simply require yes or no answers.

Microsoft did away with its rankings nearly two years ago. Adobe, Gap and Medtronic have also transformed their performance-review process.

Though many major companies still haven’t taken the leap, most are aware that their current systems are flawed. CEB found that 95 per cent of managers are dissatisfied with the way their companies conduct performance reviews, and nearly 90 per cent of HR leaders say the process doesn’t yield accurate information.

“Employees that do best in performance management systems tend to be the employees that are the most narcissistic and selfpromoting,” said Brian Kropp, HR practice leader. “Those aren’t necessarily the employees you need to be the best organisation.”

Brain research has shown that even employees who get positive reviews experience negative effects from the process. It often triggers disengagement, and constricts openness to creativity and growth. CEB also found the average manager spends more than 200 hours a year on performance review activities.

Kropp said companies aren’t likely to save much time or money by transitioning to a new evaluation process. Where they stand to benefit is, instead, the return on those investments. Accenture found it needed to regularly support and position workers to perform better in the future.