SAP Joins A Host Of Companies In Ditching Annual Reviews

Europe’s biggest software maker SAP, which is known for making software used to grade the performance of millions of employees worldwide, is joining a host of companies in ditching its annual performance reviews.


Dr Wolfgang Fassnacht, Senior Vice President and HR Director, SAP, Germany said they found the annual review process, with its focus on separating over- from under-performers, was often counter-productive to the goal of constructive dialogue. “Grading workers did not work. People are open to feedback, also to harsh criticism, until the moment you start giving scores. Then the shutters go down,” he told Reuters. He stated that the old system was too static and no longer reflected the dynamic circumstances they are operating in.

In its place, the company is testing a new process, which includes more regular check-in talks, on about 8,000 of its workers and aims to implement it for its entire workforce of about 80,000 next year. SAP is among the first major European companies to join the trend that began across the Atlantic.

Earlier this year, IBM replaced its annual performance review system with a new app-based performance review system called Checkpoint. Under this system, employees set shorter-term goals, and managers provide feedback on their progress at least every quarter. At the end of the year, employees will be judged across five criteria: business results, impact on client success, innovation, personal responsibility to others, and skills.

Other notable companies which have moved away from the annual performance review include Microsoft, Accenture, Adobe, Deloitte and General Electric (GE). At GE, employees use a mobile app PD@GE to give one another feedback at any time. Deloitte uses a platform called Impraise for feedback on immediate performance.

Companies have been aware that the annual review system comes with its faults. In a survey by research firm Society for Human Resource Management, while nine out of 10 companies surveyed reported using annual or semi-annual performance reviews, only three out of 10 believed they did them well. Despite this, there has been reluctance in moving out of it. Still, it is hoped that the trend would pick up in the future and enable employees to have a more realistic and relaxed evaluation of their work and also help companies do away with this expensive and time-consuming exercise.