In what is probably a huge and a bold move by a company of its size, Dublin based multinational consulting company Accenture is eliminating annual performance appraisal reviews come September.
Accenture CEO Pierre Nanterme told The Washington Post 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 percent of what we did in the past.”
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.
These companies say their own research, as well as outside studies, ultimately convinced them that all the time, money and effort spent didn’t ultimately accomplish their main goal — to drive better performance among employees. Traditional performance reviews can be counter-productive in helping employees improve and instead be driving them away to seek greener pastures. Or worse, they remain with the organization, but the heart and passion has been extinguished from their work, which can ultimately lead to uninspired products and flat revenue lines. Besides the cost and time involved in the labourious performance review processes didn’t justify the output of such a procedure and could be utilised towards more productive causes.
Accenture is joining a small but prominent list of major corporations that have had enough with the forced rankings, the time-consuming paperwork and the frustration engendered among managers and employees alike. Six percent of Fortune 500 companies have gotten rid of rankings, according to management research firm CEB. (Source: The Washington Post)
Performance reviews have been a part of institutional life since formative Harvard Business School studies of the 1930s. Professor Elton Mayo found that “happiness and productivity were directly related to the social structure of the workplace. Then, in 1950, the performance review was enshrined in law. The Performance Rating Act of 1950 mandated the annual review of federal workers. Additional laws tethered bonuses and salaries to the grades given in those evaluative meetings, setting a nationwide precedent of annual performance reviews.
Other corporate giants like Deloitte, Adobe, Microsoft have also done away with the conventional yearly review and ranking system and have adopted a more employee and manager friendly system of regular feedback and assignment based reviews.