Accenture dumped performance reviews, here is why

“Digital is poised to radically disrupt HR, and redefine the future of the human resource function,” predicts Accenture, one of the biggest multinational companies providing management consulting, technology and outsourcing services.

In line with their vision, Accenture CEO Pierre Nanterme told The Washington Post that, beginning September 2015, they will be doing away with annual performance reviews and rankings throughout its 330,000 people organization. The Fortune 500 company will instead implement a more flexible system with ongoing feedback provided to employees right after assignments.

Serving as the chief leadership officer at Accenture at one point, Nanterme explains to The Washington Post that he learned to give people enough freedom to challenge themselves. His own experience in this role taught him that the bureaucracy and the complex nature of performance reviews blocked people from developing their own leadership skills and caused frustration. “We are not sure spending all that time on performance management has been yielding a great outcome,” says Nanterme about their performance reviews, “Performance is an ongoing activity, it is every day.”

Nanterme recognizes that millennials do not want to be restricted by performance reviews being used for the last 30 years:

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.”
Pierre nanterme accenture
Pierre Nanterme

Accenture’s research into how technology will disrupt HR has resulted in 5 key observations. Let’s explore these one by one:

Data and integration will be king

Digital technology now allows us to quantify almost every kind of output, and the new frontier is quantifying human performance. Research into HR trends reveals that HR data and analytics will likely be a high priority for HR spending.

Why? Tracking, analyzing and interpreting performance enables companies to have a clear understanding of how each and every employee is performing over a given year. This allows managers to tailor development plans for each employee to get the best out of them.

Digital will give power - and people management - to people

Digital technologies will assist HR to better address troubling issues regarding voluntary leaves and employee engagement. In our previous post, we explained how traditional performance management increases voluntary leaves, undermining its intended purpose.

With the help of engagement surveys and frequent feedback, companies will not be bound to pre-set structures and rules, but specialize their talent management. This means that HR tools will serve people, not the other way around.

Consumer applications will find a home in the enterprise

Information Services Group, a leading technology insights, market intelligence and advisory services company, predicts that companies expect three things from HR software: an improved user and candidate experience, access to on-going innovation and best practices to support the business, and speed of implementation to increase the value of technology to the organization.

Given that tech-savvy millennials will soon constitute a large proportion of the modern workforce (46 percent by 2020), it is possible to assume that they influence HR tech as well. Easy-to-use, effective HR software providing real value to people is rising in popularity by meeting the demands of the new generation.

Digital will enable customized talent management

Some of today’s greatest companies, as Accenture puts it, have a “markets of one” policy when it comes to their interaction with their customers. A perfect example could be personalized content suggestions on Netflix or custom product recommendations on Amazon. However, most companies still depend on monolithic HR practices without considering individual differences in performance.

Applying this insight into talent management, Accenture offers treating company talent on a “workforce of one” principle. The diversification at the workplace and the dominance of millennials spoiled by custom products and services mean that the modern workforce has to tailor its practices according to each employee’s performance and expectations. One way such a big mission can become scalable is through HR software that provides custom performance management processes and convert big data into bite-sized chunks.

Cloud computing will enable new flexibility and agility

Forrester Research predicts that public cloud market will grow into $119 billion by 2020 from $58 billion in 2013. HR cloud solutions are not an exception to this. Today’s consumers are defined by their need to be mobile and accessible at anytime, and research shows that 64 percent of Americans own a smartphone.

Cloud solutions in HR give workplaces necessary tools to conduct 360-degree reviews, give and receive feedback, comment on the given feedback, and export performance data easily. All this can be done with only a few taps on your smartphone. Our cases with clients like GameHouse and have shown that they managed to decrease their performance review cycles from 2 months to 2 weeks. Mobile-first design is cited to be a top reason for this agility and it has helped them save time for more frequent, proper and actionable feedback.

Brian Kropp, HR practice leader for CEB, tells The Washington Post that the biggest gain of the new trend in HR is not the time or money saved. The return on investment on these new tools will be the real benefit as companies will empower their people to perform better and grow personally and professionally.

As stated by Nanterme, Accenture’s take on this challenge reflects their determination in investing in their people. Following a philosophy of being relevant to clients, Nanterme also believes in being relevant to his employees: “I am not going to impose on the millennial generation something that is not the environment in which they want to develop and grow,” and he continues:

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.”
Pierre nanterme accenture
Pierre Nanterme

Download this whitepaper to learn more about why organizations such as Accenture, Deloitte, Adobe and others have replaced the Annual Performance Review.

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