Why it's Time to Ditch the Annual Performance Review


News came at the end of last month that Accenture were killing off performance reviews and rankings for their employees. They're not the first (Deloitte, Microsoft and Adobe have apparently done so too) but this was notable in being one of the largest companies by headcount (330,000) to do so.

Good riddance I say. Performance reviews that are conducted infrequently (many companies are still seemingly locked into an annual frequency) can do more harm than good. I'm not the only one to think so. This piece by Samuel Cuthbert (Professor in the Anderson School of Management at UCLA) articulates well how easily PDRs can become an intimidating, ineffective, overly subjective, truth inhibiting, and often demotivating experience. And there's quite a bit of research around that shows how dissatisfied employees and even HR managers are with the quality of the process. Worse, in my experience PDRs are often not rigidly enforced anyway meaning that many managers ignore the need to do them, which in turn (ironically) leads to staff feeling that their contribution is not valued at all.

No. Performance should be reviewed, but reviewed differently. Instead of a performance review being built up into this huge, high pressure annual event that then becomes soul-suckingly demotivating, it should be a far more embedded into every day working. 

When Deloitte got rid of them they seemingly replaced them with an evaluation process that unfolded incrementally throughout the year and was based on four simple questions. The workplace is becoming a far more fluid environment with adaptive structures and ways of working, and an increasing amount of work being conducted iteratively or on a project basis. When you're working in this way, there should be plenty of opportunity for more regular feedback and also built-in reflection time. If there's not, you're not doing it right. Combine this with a strong vision of where the employee wants to go and you have something that enables us all to see progress, see it more regularly, course-correct where necessary, and recognise great work more frequently. That sounds a whole bunch more motivating to me.

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Thanks to the always good Wunderkammer newsletter for pointing me at this piece on OKRs (Objectives and Key Results) the simple but very sensible organisational system that originated in Intel but has been a long-term staple at Google. The system, involving setting quarterly measurable, definitive objectives at a company, team and/or individual level, and then supporting that with quantifiable key results seems obvious but I suspect most companies fail to do it in quite such a simple, straight forward way.

I particularly liked the idea of a scoring system between 0-1 that not only highlights when things need serious attention but also one where the goal is not to achieve a perfect 1 (since that would mean your goals were too easy) but instead to aim for around 0.6-0.7.

And I also liked the way that Google apparently make all OKRs (from Larry Page down) public knowledge within the company, going as far as making them and the associated scores visible within the public directory and on internal profiles. This transparency helps everyone understand what everyone else is working on, ensuring greater empathy and understanding for individual or team priorities, and giving focus to how an individual might make their own priorities align with someone else’s in order to get stuff done. Simple. But then the best ideas always are.