Why Accenture is saying goodbye to annual performance reviews

Of all the things that may keep a CEO up at night—including me—attracting and retaining the best people is high on the list. In an age where millennials dominate the workforce and digital has transformed the workplace, the old ways of employee engagement simply don’t cut it.

Millennials are the embodiment of today’s real-time world, getting everything they need to know instantly from their social media networks and digital devices. Our job as leaders is to create the right environment for this new generation to flourish in their careers—we shouldn’t expect them to adjust to the status quo. And nowhere is this more true than in the area of performance management.

This is why Accenture has taken a bold step of saying good-bye to annual performance reviews.

No longer will we rely on forced rankings and comparisons of employees to peers around the globe to measure performance. No longer will we fill out time-consuming assessment forms that focus on the past. It’s not what we need, and it’s not how the millennial generation wants to be recognized. The focus is on the future and how—through frequent, timely and individualize coaching discussions—people can improve their performance, develop professionally and achieve their career aspirations.

Millennials make up 70 percent of Accenture’s workforce—with Gen Z not far behind—and they tell us they want flexibility in how they work and immediate feedback about how they are doing. If we put them in the decades-old, traditional box of rear-view performance management, we will lose them, and rightfully so. After all, who wants to wait for an annual cycle for feedback, when, in fact, performance happens every day?

As well, many large companies are finding that the return on the quite significant investment in the traditional annual review process does not justify the cost, effort or outcome. What’s more, the process can actually demotivate the very people that companies want to retain and develop as future leaders.

So the change we are making at Accenture puts people at the center, at an individual level, more than ever before. Our people are looking for real-time, on-demand conversations to define priorities and to get and give feedback—and we are putting this power in their hands to set the rhythm for conversations they need to be successful. This new approach is entirely digitally-enabled so that conversations can happen anywhere, anytime and on any device. This is the new world all of us are operating in—with fluid feedback at the point of need. In many ways, digital and social technologies are both the essence and the enabler of the change we’re going through.

Of course it isn’t enough to eliminate annual appraisals. It’s a massive shift in culture. And we are on a journey to help leaders and supervisors adopt and master a mindset of coaching in the moment, not after the moment. Ultimately, we are creating an experience and environment for all people to continuously learn and grow.

To me, the art of leadership is not about spending time measuring or evaluating. It’s about selecting the right people, giving them the freedom and authority to innovate and lead with very simple measures, and then guiding them to succeed.

di Pierre Nanterme
Chairman and CEO, Accenture