A growing list of companies, including General Electric, Gap, Accenture and Adobe, are putting the annual performance review on the back burner and replacing it with more frequent, direct feedback. In fact, approximately 10 percent of Fortune 500 companies no longer review or rate employees on a yearly basis, according to a 2016 survey by the Institute for Corporate Productivity, which studies the management policies of large companies.
Pierre Nanterme, CEO of Accenture, ended the company’s annual performance reviews last year, opting instead for continual responses from their managers. “Performance management used to mean that once a year, I’m going to share with you what I think about you. It didn’t make any sense. Performance is an ongoing activity. It’s every day, after every business interaction, every corporate interaction,” Nanterme said. “People want to know on an ongoing basis ‘am I doing the right thing? Am I moving in the right direction? Do you think I’m progressing?’ Nobody’s going to wait for an annual cycle to get feedback. Now it’s all about instant Performance Management.”
John Putzier, author of “Get Weird! 101 Ways to Make Your Company a Great Place To Work” (American Management Association, $17.95), says an overlooked benefit of more frequent, less formal reviews is that managers have more opportunities to help their employees understand the metrics by which they’ll be judged. “You can explain criteria to every new worker that walks in the building but if they only see it put into practice once a year, it’s going to take some time to stick,” Putzier says. “If you make those metrics part of the regular conversation, your employees will know what you expect from them and they’ll realize that you can help them succeed.”
An additional benefit of an ongoing performance management approach is an increase in thorough feedback from managers. Annual reviews, especially those that are based on the calendar year and not an employee’s start date, can pile up and lead to cut-and-paste performance summaries and arbitrary rankings. Ongoing feedback, often done through a quick email or conversation, is fresh, pertinent and almost immediately applicable, an improvement that doesn’t go unnoticed by employees.
“I hated my annual review,” said Tricia Lowell, a medical information specialist in Dallas. “I would do good work all year but when it was time for my review, it became a numbers game – 122 missing keystrokes, 12 mislabeled entries, 11 cost discrepancies more than $50 – and I felt like I had to go back and check each error and explain it. I’m accountable for any and all mistakes I make but I shouldn’t need to wait 10 months to hear about them and what I need to do to fix them.”
Lowell says her employer began sending weekly feedback – both empirical and anecdotal – which she says led to increased productivity. “I’m smart that way,” she said. “I’ll fix it on the fly. I don’t need to wait until January to find out how I can improve my work.”