In a complete redesign of its appraisal processes, Accenture has scrapped its annual performance reviews and will focus on a more individualised form of staff evaluation.
“Imagine, for a company of 330,000 people, changing the performance management process - it's huge,” Pierre Nanterme, CEO of Accenture, told The Washington Post. “We're going to get rid of probably 90 per cent of what we did in the past.”
The company is ditching these reviews as they failed to achieve their primary purpose: to promote better staff performance. Instead, the firm will switch to a more fluid system in which employees receive regular feedback from their superiors.
Accenture sees annual appraisals as an excessive use of time, money and effort, and is one of the few businesses moving away from them. In 2014, a survey by the Society for Human Resource Management (SHRM) looked at 391 US and multi-national organisations and found that only 3% had fully eliminated reviews. Despite 72% of respondents saying their firms conducted annual performance appraisals, only 2% of HR professionals believed their company deserved an A-rating with regards to how well they managed performance as a result of the data gained.
One of the reasons why Accenture has made this move is that they wish to evaluate employees based on their individual roles and performance.
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."
Although Accenture is one of the few companies to completely overhaul their performance review processes, it turns out that many organisations are aware of their flaws. A recent PwC study conducted in Australia showed that 81% of companies had performance management systems which were only “somewhat effective” at achieving their goals.
There is, however, a mixed bag when it comes to scrapping this sort of review process altogether. When a firm has no performance ratings, the PwC study found that this move could result in:
- Reduced employee disengagement and less of a fixed mindset
- Fewer negative feelings from respondents about being judged
- Greater benefits especially in high talent populations
- Increased bias with managers creating their own rules
- An unofficial, unregulated employee ranking system
"It's all about selecting the person. And if you believe you selected the right person, then you give that person the freedom, the authority, the delegation to innovate and to lead with some very simple measure," Nanterme said.
As to whether the company gets the best value out of this change, only time will tell.