For being a subject many people dread to think about, performance reviews have been getting a lot of thought lately. Business publications have been relating how big name companies like Microsoft, Adobe, Deloitte, and most recently Accenture have scrapped traditional rankings and once-a-year reviews in favor of new thinking. Tired of the possibly ineffective and definitely time-consuming—and therefore costly—old-style reviews, some major players in the corporate world are moving on. 
Accenture announced in July that beginning in September, it will do away with annual reviews for its 330,000 employees worldwide. But the professional services company and others that have taken a similar course aren’t so much abandoning a system as reinventing it.
“All this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that,” Accenture CEO Pierre Nanterme told The Washington Post in July. “We’ve totally done too much effort for a limited outcome. We’re going to evaluate you in your role, not vis a vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you.”
Nanterme acknowledged the need for evaluation and a process for setting compensation, but the traditional performance evaluation methods are “too costly for the outcome.”
“It doesn’t mean we’re going to be easy—that we’re not going to measure, to evaluate,” Nanterme said. “We’re going to do all of this, but we’re going to do it in a very different way.”
An article in the April issue of Harvard Business Review describes the “different way” Deloitte went in redesigning its performance management system. The authors tell of a survey the consulting giant published in March 2014 that concluded that “today’s widespread ranking- and ratings-based performance management is damaging employee engagement, alienating high performers, and costing managers valuable time.”
The survey also found that “only 8 percent of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time.” Deloitte also reported that leading organizations are moving to systems providing ongoing feedback and coaching.
Developing a sound system
Moving away from an old-style annual review system is just fine with Raanon Gal, an attorney with Taylor English Duma LLP in Atlanta, Georgia. Companies that do employee evaluations just to be doing them and not focusing on doing them right put themselves on shaky legal ground, he says.
Too often employees aren’t evaluated accurately and consistently. Gal says he’s been in many depositions in which an employer has to explain why it put information in a performance evaluation that seems inconsistent with reasons given for an employee’s termination.
“The tough part is when you have a manager just trying to get it done … rushing through and not really doing it right,” Gal says.
Gal thinks any kind of performance evaluation system should have “the flexibility to express performance properly.” Allowing supervisors to address performance when they have time to do it and when problems occur can benefit all.
Changing to a more frequent and less formal system can be good for both the evaluator and the employee being evaluated. Gal says he likes frequent feedback by email since the email can provide a documentation trail. Employers that may not have a formal evaluation system but still manage to effectively document discipline and employee performance are easier to defend than organizations with faulty evaluation processes. So he says don’t adopt a system “just to do it,” since an evaluation not carefully done is worse than no evaluation at all.
“As an employment lawyer, I dread looking at performance evaluations because when they’re not done right, they can really hurt your case,” Gal says.
Evaluations play important role
Susan Llewellyn Deniker, an attorney with Steptoe & Johnson PLLC in Bridgeport, West Virginia, agrees that flawed evaluations are dangerous. They need to be thorough and consistent. “Otherwise, it is better for employers to throw out performance evaluations altogether,” she says.
But evaluations do serve an important purpose in human resources management, Deniker says. “They assist with professional development of employees, they can boost the morale of good employees who need at least an annual pat on the back, and they force employers to deal with performance issues of employees at least once a year,” she says.
Coming up with an evaluation form doesn’t need to be complicated, Deniker says. “In fact, simpler is often better.” Forms that include numeric systems may be easier for supervisors to complete, but they can be too subjective and they may not tell employees what they are doing well and where they need to improve, she says. Therefore, managers need to provide written feedback on forms instead of merely checking the box beside a number.
Deniker says a form should address three basics:
- What job duties the employee is performing well.
- The areas in which the employee needs to improve.
- Resources available to the employee to assist with improvement and professional development.