In the Washington Post, Lillian Cunningham reported that management consulting giant Accenture will disband rankings and the once-a-year evaluation process starting in September. The company will implement a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.
Accenture is certainly not the first to move in this direction. Per research by CEB, 12 percent of Fortune 1,000 companies have gotten rid of rankings.
Earlier this year, Accenture’s competitor Deloitte abolished rankings and rolled out a new evaluation program that is more incremental in nature. Microsoft, Adobe, Gap and Medtronic have also overhauled their programs.
“It’s gone from an interesting, quirky thing that some companies do to a viable strategy that a good chunk of companies are pursuing,” says Brian Kropp, executive director of CEB’s HR practice, in a 2015 article for the Society for Human Resource Management.
CEB found that the average manager spends more than 200 hours a year on activities related to performance reviews (including training sessions, form completion, and in-person meetings). Adding these hours plus the cost of the performance-management technology itself, CEB estimates that a company of 10,000 employees spends roughly $35 million a year on reviews. Yet, nearly 90 percent of HR leaders say the process doesn’t yield accurate information or drive better performance.
The Slippery Slope
If current ranking and performance review systems made this little sense, you’d think every company would be doing away with them. But old habits die hard, and frankly, some organizations are afraid of going too far in the opposite direction. I don’t blame them.
While I’ve never been a fan of forced rankings – it doesn’t do much good to compare an employee in Memphis to one in Melbourne, and the sight of 50 anxious junior-level colleagues backstabbing one another to get into the top 20 percent is really quite unseemly – I believe performance reviews do have merit.
For the rest of my POV, head on over to Intuit's Fast Track blog.