Five companies that have led the way in setting new performance management trends
Note: This blog post was updated in July 2019 for accuracy.
Performance management is an ever-evolving field. The more we learn, the better we can adapt our performance management systems to make our companies healthier, more motivational places to work. This is why it is so important to keep up with the latest performance management trends. Companies who fall behind lose out to their competitors. They also run the risk of losing their best performers along the way.
Since 2012, companies all over the world have been moving away from old-fashioned annual appraisals and towards continuous performance management. More than ever before, human resources executives and line managers alike understand the human need for regular feedback, effective coaching and human interaction.
A number of revolutionary companies have led the way in dramatic changes to how organisations — both Fortune 500 multinationals and SMEs — conduct their performance reviews and motivate their employees. In their wake, companies the world over are adapting their performance management practices and readjusting their once-firmly held beliefs regarding performance ratings and annual performance appraisals. Here at Advanced, we have helped over 200 organisations effortlessly shift away from traditional annual appraisals.
Below, we have collated five notable performance management case studies. These organisations have shaken up their existing processes and have reaped significant benefits in terms of productivity, employee engagement, morale and performance.
1. Adobe Introduced Continuous performance Management in Place of Performance Appraisals
Adobe was the forerunner of change when they abandoned annual performance appraisals back in 2012. They felt that while they were forging ahead and evolving as a company, their performance management system was archaic and ineffective. It was a waste of time and had, ultimately become a box-ticking exercise. Adobe estimated annual appraisals consumed 80,000 management hours each year. This was the equivalent of nearly forty full-time employees working year-round. Clearly, a change was needed.
Adobe replaced annual appraisals with regular one-on-one check-ins, supported by frequent feedback — both positive and constructive. There are no performance ratings or rankings and they allow different parts of the organisation to determine how frequently they should hold check-in conversations, based on their work cycles. Now that forced ranking has been abolished, employees at Adobe are assessed based on how well they meet their goals. Managers are also trained on the nuances of giving and receiving feedback.
The result has been a marked increase in employee engagement, with voluntary turnover decreasing by 30% since check-ins were introduced. This makes Adobe a performance management case study we should all be aware of.
2. Deloitte Saved 2 Million Working Hours per Year with Weekly Employee Check-Ins
In 2015, Deloitte was the first big name to announce it was scrapping once-a-year performance reviews, 360-degree feedback and objective cascading. This change occurred after the company calculated these processes were consuming a remarkable two million hours a year across the organisation.
Deloitte’s new performance management process requires every team leader to check in with each team member once a week to discuss near-term SMART goals and priorities, comment on recent work and provide coaching. The check-ins are initiated by the team members, rather than the team leaders to ensure these check-ins take place frequently. This also serves to give employees a sense of ownership over their work, role and time.
These weekly employee check-ins are supported by quarterly reviews when team leaders are asked to respond to four future-focused statements about each team member. Rather than asking team leaders what they think of the team member — which is what traditional performance ratings do — they ask what the team leader would do with the team member.
3. General Electric (GE) Put an End toForced Ranking performance Management
Under the reign of its former CEO, Jack Welsh, General Electric was the most well-known proponent of annual performance ratings and forced distribution curves.
For decades, GE operated a “rank and yank” system, whereby employees were appraised and rated once a year. Afterwards, the bottom 10% were fired. Not exactly a recipe for employee engagement! Such an environment is a breeding ground for unhealthy competition, reduced teamwork and employee burnout.
In 2015, under CEO Jeff Immelt, GE announced it was replacing this approach with frequent feedback and regular conversations called ”touchpoints” to review progress against agreed near-term goals. This new approach was supported by an online and mobile app, similar to our own Advanced Clear Review performance management tool, which enables employees to capture progress against their goals, give their peers feedback and also request feedback.
Managers will still have an annual summary with employees, looking back at the year and setting goals. But this conversation is more about standing back and discussing achievements and learnings, and much less fraught than annual reviews.
4. Accenture Abandoned Ratings for performance Development
As of September 2015, Accenture, one of the largest companies in the world, disbanded its former ranking and once-a-year evaluation process. Like GE, Accenture has decided to put frequent feedback and conversations at the heart of its new process and focus on performance development, rather than performance rating.
As Accenture’s CEO, Pierre Nanterme, stated at the time “It’s huge, we’re going to get rid of probably 90 per cent of what we did in the past.”
As Ellyn Shook, Chief HR Officer at Accenture, stated:“Rather than taking a retrospective view, our people will engage in future-focused conversations about their aspirations, leading to actions to help them grow and progress their careers.”
5. Cargill Introduced Coaching Conversations in Place of Annual Appraisals
Like Adobe, Cargill, the US food producer and distributor, started to transform its traditional performance management processes back in 2012, when it introduced “Everyday Performance Management”.
Cargill removed performance ratings and annual review forms and instead focused on managers having frequent, on-the-job conversations and giving regular, constructive feedback. They have made this work by:
- Regularly rewarding and recognising managers who demonstrate good day-to-day performance management practices.
- Sharing the experiences and tips of their successful managers.
- Holding teams accountable for practising day-to-day performance management.
- Building the skills needed to succeed at Everyday Performance Management, including effective two-way communication, giving feedback, and coaching.
The outcome has been impressive, with 70% of Cargill employees now saying they feel valued as a result of their ongoing performance discussions with their manager.
Performance Management Lessons to Be Learned from These Performance Management Case Studies
When we look at what these five organisations have implemented, we can see some evident trends emerging, which are likely to form the basis of performance management for the years to come. These trends are:
- Regular one-to-one performance conversations, or “check-ins”, initiated by the employee.
- Frequent, in-the-moment, positive and constructive feedback from peers and managers Near-term objectives rather than annual objectives. Setting and reviewing objectives regularly, rather than once a year.
- Forward-looking performance reviews, focusing more on development and coaching and less on assessment.
- Dropping performance ratings.
- Performance processes supported by mobile-friendly, online performance management software.
Move away from annual appraisals to continuous performance management
Find out how our simple, effective performance management software can help you move away from annual performance appraisals towards a more agile, intuitive performance management system. Book a free demo of Advanced Clear Review where our expert team will take you through the platform.