Another annual performance review program bites the dust: Is yours next?

A 330,000-employee corporation just decided to scrap yearly performance reviews. Think it might be time for your organization to do the same?  

Pierre Nanterme, CEO of consulting giant Accenture, recently told the Washington Post, “We’re going to get rid of [annual reviews]. Not 100 percent, but we’re going to get rid of probably 90% of what we did in the past. It’s not what we need. We are not sure that spending all that time on performance management has been yielding a great outcome.”

The problem with the old process? “Performance is an ongoing activity,” Nanterme said. “It’s every day, after any client interaction or business interaction or corporate interaction. It’s much more fluid.

“People want to know on an ongoing basis, am I doing right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. Now it’s all about instant performance management.”

He said that “[F]or the millennium generation, it’s not the way they want to be recognized, the way they want to be measured. If you put this new generation in the box of the performance management we’ve used the last 30 years, you lose them.”

‘We’re done with that’

So how’s the new program going to work? “At the end of the day, you need to give some evaluation. You need to give a compensation increase,” said Nanterme. “But all this terminology of rankings — forcing rankings along some distribution curve or whatever — we’re done with that.

“We’re going to evaluate you in your role, not vis-a-vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you. How are you performing now, and do we believe you are prepared to move to another role? We are getting rid of all this comparison with other people.

“My philosophy has always been very simple: You need to be relevant to your clients, not the other way around. It’s the same thing with your people. You need to be relevant to them. I’m not going to impose on the millennial generation something that is not the environment in which they want to develop and grow.

“It doesn’t mean we’re going to be easy—that we’re not going to measure, to evaluate. We’re going to do all of this, but we’re going to do it in a very different way.”

A shift in focus

Accenture isn’t the first mega-employer to change its performance review philosophy. According to the Post, Microsoft did away with its rankings nearly two years ago. Adobe, Gap and Medtronic have also transformed their review process.

The consulting and accounting giant Deloitte recently announced a new program in which rankings would disappear and the evaluation process would progress over the year, the Post story said. Deloitte is also experimenting with using only four simple questions in its reviews — two of which simply require yes or no answers.

Is this trend going to catch on in small- and mid-sized firms? If you’ve made changes to your performance evaluation process, tell us about it in the Comments section below.