Accenture joins the ranks of those eliminating performance reviews and employee rankings. But is this the right move?

In the Washington Post, Lillian Cunningham reported that management consulting giant Accenture will disband rankings and the once-a-year evaluation process starting in September. The company will implement a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.

Accenture is certainly not the first to move in this direction. Per research by CEB, 12 percent of Fortune 1,000 companies have gotten rid of rankings.

Earlier this year, Accenture’s competitor Deloitte abolished rankings and rolled out a new evaluation program that is more incremental in nature. Microsoft, Adobe, Gap and Medtronic have also overhauled their programs.

“It’s gone from an interesting, quirky thing that some companies do to a viable strategy that a good chunk of companies are pursuing,” says Brian Kropp, executive director of CEB’s HR practice, in a 2015 article for the Society for Human Resource Management.

CEB found that the average manager spends more than 200 hours a year on activities related to performance reviews (including training sessions, form completion, and in-person meetings). Adding these hours plus the cost of the performance management technology itself, CEB estimates that a company of 10,000 employees spends roughly $35 million a year on reviews. Yet, nearly 90 percent of HR leaders say the process doesn’t yield accurate information or drive better performance.

The Slippery Slope

If current ranking and performance review systems made this little sense, you’d think every company would be doing away with them. But old habits die hard, and frankly, some organizations are afraid of going too far in the opposite direction. I don’t blame them.

While I’ve never been a fan of forced rankings – it doesn’t do much good to compare an employee in Memphis to one in Melbourne, and the sight of 50 anxious junior-level colleagues backstabbing one another to get into the top 20 percent is really quite unseemly – I believe performance reviews do have merit.

Here’s the thing. If you want to promote one employee over another, if you want to fire an employee, or if you want to increase (or not increase) an employee’s compensation, you need documentation for actions to be legally sound. Also, managers are busy people. In an ideal world, they’d provide their direct reports with real-time feedback every day, but that’s not reality. The performance review system exists because it forces managers to sit down and focus on their employees’ development.

Is there a better way to do performance reviews? Probably. After all, the business world has changed dramatically over the last few years, and performance management systems haven’t kept up. But I’m concerned that by abolishing them completely, companies will get lazy and many employees will receive less information about their performance and development goals than they did before. Expectations may be unclear, and engagement and motivation may flag. When feedback is given, it will be so informal that no one will keep track of it, and no data will exist from which to make critical HR decisions.

Finally, human beings by nature don’t enjoy confrontation. The beauty of the performance management system is that it facilitates the tough conversations managers sometimes need to have with their employees. If leaders are given the ultimate freedom to deliver negative feedback on their own terms, will the conversations happen at all? Will objectively poor performance continue unabated, and will team productivity decrease as a result? These are questions all organizations should consider before chucking their current systems.

What do you think is the best way to handle performance feedback?