Starting in September professional services firm Accenture, one of the largest companies in the world, will be eliminating the practice of annual reviews and instead focus on giving reviews on performance as needed. The company will also be scrapping the practice of employee rankings, following in the footsteps of software giant Microsoft, which ceased its ranking system two years ago. Accenture joins many other Fortune 500 companies who have stopped ranking their employees after research showed that the practice wasn’t improving their performance.
Accenture CEO Pierre Nanterme stated about the new policy, “All this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that. 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.”
In a similar move, consulting and accounting firm Deloitte stated in March that they would be remove rankings from their evaluations and also move away from the annual reviews toward an ongoing evaluation process.
Management research firm CEB found that the employees that do best in performance reviews are usually the most narcissistic and self-promoting. After crunching the numbers on their performance review research, CEB also found that at a company of 10,000 employees, $35 million will be spent per year to conduct their reviews. Nanterme emphasized the point, “The process is too heavy, too costly for the outcome. And the outcome is not great.”
Despite the change in company policy, the advantages will not come in the form of saving time and money on employee evaluations, but instead on the return on investment from the new method itself. HR leader Brian Kropp from CEB stated, “The smartest companies are asking, how do we get the best value out of the time and money we are spending?”
Accenture acknowledged all this by realizing that performance reviews that only occur once a year, are too far removed from the behavior they are intended to evaluate, which led them to implemented their ongoing review policy, where staff are reviewed at the conclusion of each assignment rather than at the end of the year.
“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.