Talent Management

Still a Good Question: Do We Really Need Annual Performance Reviews?

performance-review

Do we really need annual performance reviews?

I’ve written before that there is a balance between ongoing feedback from multiple sources and annual feedback from one source. I’ve also written about what it would look like if you scrap the performance review.

The latter seems to be the more prevalent – and more pertinent – question in recent conversations. Today, I’m pleased to share with you two recent case studies of organizations that have done just that, both of them relying on more frequent feedback and recognition given in the moment – the hallmark of truly strategic recognition programs.

Kelly Services Case Study

A new case study of Kelly Services by Bersin & Associates shares both how Kelly Services addresses compensation and promotion without annual reviews as well as addressing one of the most common questions: “Don’t I need a formal performance review for legal reasons?”

The answer is no. From the Bersin case study of Kelly Services:

“Today, I am proud to announce that we have published our case study on how Kelly Services abolished performance scores. In the case study, we share the answers to the most frequently asked questions we receive about abandoning performance scores.  These are questions such as:

  1. How do you compensate employees without performance scores?
  2. How do you deal with compliance in countries that require documentation?
  3. How do you identify high-potential employees?

“The answers to these three questions, in a nutshell, are below:

  1. Kelly Services provides annual market adjustments as appropriate, given an employee’s position within the salary range.  Further, the company has developed an evolved definition of “total rewards” that reflects the holistic approach the company takes in providing appropriate recompense to employees.  This approach includes incentives, recognition and other rewards.
  2. Kelly learned that the documentation requirement in most countries only extends to proving that conversations were taking place — not recording what was being said.  Since performance conversations still most definitely take place at Kelly, this arrangement was not a problem.
  3. Kelly created the concept of senior leader talent summits, which are forums for leaders to discuss their talent, the development activities that have occurred and next steps in development.  Talent summits typically cover discussions of the top two to three levels of management below the executive level and a small number of other top talent employees who leaders wish to highlight.”

Adobe Systems Case Study

Adobe Systems also recently announced they are scrapping the annual review, focusing instead on regular, ongoing feedback:

“About 10,000 employees at Adobe Systems, including 2,000 in India, have just completed what could probably be their last performance review. The global product services company plans to scrap the age-old practice of being pitted against colleagues and measured up by the bosses once a year.

“‘Instead of feedback, we will look at feed-forward,’” says Jaleel Abdul, HR head for the Indian arm. Not a borrowed practice, the roots can be traced to management guru Marshall Goldsmith’s theory on how instant and real-time feedback can boost performance. ‘Course correction is also faster and more immediate this way,’ says Abdul. Companies constantly innovate and tweak their appraisal systems.”

Would you tear up the annual performance review if you could?

You can find more from Derek Irvine on his Recognize This! blog.

Derek Irvine is Vice President, Client Strategy & Consulting Service at Globoforce, a global provider of strategic employee recognition and reward programs. In his role as a thought leader for employee recognition at Globoforce, Derek helps clients set a higher ambition for global, strategic employee recognition, leading consultative workshops and strategy setting meetings with such organizations as Avnet, Celestica, Dow Chemical, Intuit, KPMG, Logica, P&G, Symantec, and Thompson Reuters. Contact him at irvine@globoforce.com.