Hate annual performance reviews? What if they were abolished?

The cost is not worth the return, says CEO

Professional services firm Accenture will eliminate annual performance reviews and rankings this September, joining 6% of Fortune 500 companies, Lillian Cunningham reports for the Washington Post.

From our Business Affairs Forum
The high-efficiency HR department

Accenture is one of the world's largest companies—it employs around 330,000 people, CEO Pierre Nanterme told Cunningham. Nanterme says the former review process was massive and costly, for example, requiring managers to compare and rank employees who work thousands of miles away from each other.

Management research company CEB reports that managers average more than 200 hours each year on performance reviews and related activities. The cost of all those hours, plus a performance management system, comes to about $35 million per year for a company of 10,000 staff members, according to CEB.

And according to studies on the brain, even employees who do well in reviews become less engaged and less creative after the process.

"The process is too heavy, too costly for the outcome," Nanterme told Cunningham. "And the outcome is not great."

So the company plans to overhaul—and mostly abolish—the system this fall. Instead of making one huge effort annually, the company will integrate performance assessment more into the day-to-day routine.

Research brief: Staff performance management and performance-based pay

When workers finish a big project, managers will provide feedback on that project and follow up across later projects.

Nanterme says the new system will give employees and managers more freedom and regular support (Cunningham, Washington Post, 7/21).

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