Annual performance appraisals often left Bill Morris with that queasy feeling familiar to so many working Canadians – and he wasn't even at the receiving end; he's the boss.
This fall, however, in a radical departure from past practice, global consulting firm Accenture LLP moved to scrap the backward-looking annual appraisals for its 358,000 employees worldwide in favour of more regular, real-time feedback that can be acted on immediately.
"You can imagine how great all of us feel getting away from … the old system where we force-ranked our people once a year into very rigid performance buckets," Mr. Morris, president of Accenture Canada, said in an interview.
Employees were impatient with a process that informed them months after the fact that they should have done something differently or better, Mr. Morris said.
The conventional annual performance appraisal was also an exercise in frustration for managers who were forced to rank employees in relation to their colleagues – "slotting them into a … bell curve" rather than evaluating them on their individual merits, he said. Some of the most valuable contributions cannot be captured in a "performance box" on a form.
"You just feel in your gut that you are not doing the right thing when you reflect on individuals you know are doing something unique for the organization that, in the old [appraisal] system, we couldn't quite value," said Toronto-based Mr. Morris, who oversees a staff of 4,000 across Canada. It put the firm at risk of losing top talent.
Accenture chief executive officer Pierre Nanterme announced in July that the Chicago-based management consulting and technology services firm was scrapping annual performance appraisals.
"Performance is an ongoing activity. It's every day, after any client interaction or business interaction or corporate interaction," Mr. Nanterme said in an interview with The Washington Post at the time. "It's much more fluid. 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."
Professional services firm Deloitte is also redesigning its approach to performance management, citing a growing feeling in head offices that the current time-consuming and costly annual appraisal process does not achieve the desired effect of higher organizational performance.
"We are in need of something nimbler, real-time and more individualized – something squarely focused on fuelling performance in the future rather than assessing it in the past," Deloitte said in a guest article published in the Harvard Business Review earlier this year.
This emerging trend has been described as "HR at the speed of business" and it's attracting considerable attention in corporate circles, said organizational psychologist Guy Beaudin, a Toronto-based senior partner at RHR International, a global firm of psychologists and management consultants.
"I think it's about to hit a tipping point," Dr. Beaudin said in an interview.
"It [performance evaluation] is much better done at the rhythm of work – at the end of a project or whatever – because that's the point where you can more accurately see … what worked, what didn't and what might be improved upon next time," Dr. Beaudin said. Done properly, it's a more natural and collaborative conversation than the traditional year-end review.
"By putting this more on an ongoing basis, you are actually forcing these conversations to happen. … It's shocking to me how seldom some people actually spend time face to face with their boss," he said.
At Accenture, the hope is that the new approach will result in a much greater focus on talent development and performance improvement.
The old-style annual performance review has outlived its purpose, Accenture said. Like many companies, it adopted the annual review because it wanted to set objectives for its employees, but the process became bogged down in bureaucracy. What started as a list of five objectives rapidly expanded to 10, 15 or 20 objectives and employees were overloaded.
Instead of motivating people, these annual reviews had the unintended effect of stifling the creativity and initiative that led Accenture to recruit them in the first place, Mr. Morris said.
Already under the new process, which started in September, the discussions between managers and employees are less tense, more candid and more productive.
"It's two-way. It's much more about talking with the individual as opposed to talking about the individual," Mr. Morris said.
It's about employee aspirations as well as corporate objectives, and what both employees and the organization's managers have to do to get where they want to go.