Its not new. But its bold.

First Microsoft did it, then Deloitte and now Accenture. (the list also includes Adode, Gap and Medtronic)

Slowly and steadily companies are realizing that performance reviews are a thing of the past. Flawed and time consuming.

Accenture’s latest move of doing away with the annual performance management system has put into perspective, yet again, the very constricting and disengaging annual performance reviews.

In a recent interview, Accenture’s CEO, Pierre Nanterme quoted the move as a massive revolution and stated that, “We’re going to get rid of it. Not 100 percent, but we’re going to get rid of probably 90 percent of what we did in the past. It’s not what we need. We are not sure that spending all that time on performance management has been yielding a great outcome. And for the millennium generation, it’s not the way they want to be recognized, the way they want to be measured. If you put this new generation in the box of the performance management we’ve used the last 30 years, you lose them. Performance is an ongoing activity. It’s much more fluid. People want to know on an ongoing basis, am I doing right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. Now it’s all about instant performance management.”

So why this change?

Companies are soon realizing that the forced rankings, time-consuming paperwork and frustration among managers and employees which the annual review processes engender are not conducive to the organizations as well as the employees.

According to the CEB data, 6% of the Fortune 500 companies have done away with the ranking system as the goal of driving better performance among employees has been unachieved. CEB also revealed that 95% of managers are dissatisfied with the performance management of their organizations and almost 90% of the HR leaders that such a process does not even furnish complete or accurate information. As stated by Brian Kropp, the HR practice leader for CEB, “Employees that do best in performance management systems tend to be the employees that are the most narcissistic and self-promoting. Those aren’t necessarily the employees you need to be the best organization going forward.”

Such performance reviews are also seen to induce a feeling of mistrust, disengagement and curtails the sense of creativity. Filling forms, attending trainings and delivering evaluations to employees along with the costs involved in such processes is overbearing and excessive for many organizations and do not really give any positive results. Time and money are the two biggest assets which companies invest in in their employees and companies want returns. According to a CEB research, companies that have eliminated numerical rankings or the entire performance appraisal process fare better in employee surveys measuring effectiveness than those companies that still use traditional reviews.

The world of business is changing rapidly. Performance is an ongoing activity. This is a world where everything has to be instantaneous. Employees need to know if they are progressing or not on a daily basis. Looking backwards to the past one year and then deciding what is to be done seems like a worthless activity. Even forget the 360 degree reviews. Instant performance management is the new mantra that the organizations will have to follow for a better employee engagement and even retention.

For Pierre Nanterme’s (Accenture CEO) full interview, click here.

Credits: The Washington Post, CEB, SHRM