Global consulting firm Accenture announced it is making a bold move this fall: It’s eliminating annual performance reviews.
What’s that you hear? It’s the collective sigh of relief coming from the company’s 330,000 employees. Along with the performance review system, Accenture (ACN) is also disbanding its rankings system, a common way of comparing employees to one another based on their performance. Rather than having managers rank and review workers once per year, the new initiative — called Performance Achievement — calls for informal reviews that can be given at the manager’s discretion, for example, after a worker has completed a specific project.
“It’s huge,” Accenture CEO Pierre Nanterme told the Washington Post. “We’re going to get rid of probably 90% of what we did in the past.”
With this announcement, Accenture is following in the footsteps of another major employer, Microsoft, which got rid of its ranking system in 2013. So far, they are in the minority. In a recent survey of 100 Fortune 500 CEOs, only six said they had eliminated their rankings system, according to management research firm CEB.
Criticism of performance reviews is ubiquitous among academics who study workplace management. Their main pain points: the system wastes time and money, alienates employees, and is all-in-all redundant, since any good manager is already keeping an eye on employee performance without a system in place. A whopping 95% of managers said they are dissatisfied with their performance review process, according to a 2014 survey of 10,000 workers, also conducted by CEB. Nearly 60% of employees said they felt reviews weren’t worth their time. CEB also estimates that for a big company with more than 10,000 workers, annual reviews can easily cost upwards of $35 million with less than stellar results. Ninety percent of HR professionals surveyed by the firm said they did not feel performance review results painted an accurate picture of workplace productivity.
Part of the problem seems to be that although many people agree that reviews and rankings could be a lot more effective, no one has quite been able to come up with a better alternative yet. Some companies have made public their efforts to tinker with their management systems, including Gap (GPS), ConAgra (CAG), and Adobe (ADBE). The Gap, for example, asks managers to have monthly conversations with workers. Google (GOOG) relies on quarterly reviews, as well, using a system called Objectives and Key Results (OKRs) that asks employees to set measurable goals for themselves and post them on an internal network visible to all workers. Yahoo Finance’s parent company Yahoo (YHOO) has a similar quarterly performance review system -- employees set quarterly goals that are made public within the company.
Accenture says it is in the early stages of rolling out the new review process (set to launch in September).
“Accenture is on a journey to redefine performance management in order to strengthen how we develop and grow our people,” Stacey Jones, an Accenture spokesperson, told Yahoo Finance. The new system is intended to give workers more opportunities to get feedback from managers and coaching to improve their performance. The new system will still be used to inform decisions made about compensation and promotions, Jones added.
Cumbersome as they may be, however, some workers look forward to one-on-one time with their bosses for one particular reason: a means to a (financial) end. Without a structured process for reviews and meetings with managers to discuss them, workers will have to be more proactive if they want argue for a pay bump or a promotion.
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