Is the era of employee performance reviews and rankings coming to an end?
That’s the question buzzing in the air this week after Accenture, one of the world’s largest companies, announced its decision to toss these nail-biting measures of employee success out the window.
Accenture CEO Pierre Nanterme told The Washington Post that starting in September, the performance of the company’s 330,000 staffers will no longer be judged based on company rankings and annual evaluations. Instead, the professional services firm will implement “a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.”
“All this terminology of rankings -- forcing rankings along some distribution curve or whatever -- we’re done with that,” Nanterme said. “We’re going to evaluate you in your role, not vis à vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you.”
Nanterme added that this change will fundamentally, and dramatically, alter the company’s 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.”
Accenture joins the ranks of several big-name companies that have, in recent years, done away with this source of employee stress.
The Post, citing data from management research firm CEB, reports that six percent of Fortune 500 companies have stopped using annual performance reviews and forced rankings. Microsoft, Adobe, Expedia and Motorola are some of the companies that have recently overhauled their employee review system.
Some studies have shown that performance reviews and rankings don’t improve, and may actually hurt, performance.
“The reality is that the traditional performance appraisal as practiced in the majority of organizations today is fundamentally flawed and incongruent with our values-based, vision-driven and collaborative work environments,” Ray Williams, author of "The Leadership Edge," wrote for Psychology Today last year.
Reviews and rankings have also been described as being too time-consuming, expensive and generally ineffective.
However, some companies and business consultants have defended the system. Victor Lipman, a retired Fortune 500 CEO, wrote in a Forbes.com post that reviews and rankings can bring a sort of “disciplined rigor” to the management process.
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