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As Companies Shed Annual Reviews, Should Government Follow Suit?

The point is not to reduce the focus on performance, but to reinforce it.

According to an announcement reported in The Washington Post, Accenture is eliminating annual performance reviews. Earlier Deloitte changed its policy. A few other companies have made a similar decision but the numbers are small. Surveys suggest roughly 5 percent of companies have eliminated performance reviews.

It was reported because these reviews are the most hated HR practice. Managers comply, but many spend as little time as possible on the exercise. Accenture’s goal, however, is to change the way employees receive feedback, not eliminate it.

But government’s situation is different. Currently annual reviews have little value. The ratings are clearly inflated -- no organization has that many high performers or such a small number of poor performers. Ratings do not play a role in salary increases or in promotions. The consistently low (below 40 percent) positive responses on related Federal Employee Viewpoint Survey questions are added evidence that performance management practices are broken. Change is badly needed.

Should Accenture Be the New Model?

The Accenture announcement actually covers two changes, and it sounds like other companies -- Microsoft is one -- have made similar decisions.  

First, Accenture is eliminating forced ranking -- a policy that limits the top ratings to 20 percent and requires 10 percent of the workforce to be rated as unacceptable and terminated. That idea was first adopted by GE and subsequently adopted by several prominent companies. But most have now ended the practice. The policy is important today only because it clearly shows how much emphasis companies place on driving performance to the highest levels. The policy cannot be defended.

The second change is the elimination of annual performance reviews -- but the company is not ending reviews. The new policy calls for multiple, less formal performance discussions throughout the year. In professional service firms, employees move from one client assignment to another; they work on several clients at the same time. Performance discussions are now to take place at the end of assignments.

Accenture and Deloitte are no doubt convinced the change will result in better, more frequent feedback. Accenture is not downplaying the importance of performance feedback. Managers may spend less time on each review but employees will be reviewed more frequently and by different managers.

As in sports, feedback is most valuable soon after a game -- or project -- and focused on the most recent experience. The end-of-year review is a practice that goes back more than half a century and was adopted for manual jobs. Professional service firms like Accenture are committed to developing employee capabilities -- that enhances their value to clients.

It’s also relevant that firms like Accenture are committed to pay-for-performance. In consulting, those policies are often managed aggressively. In contrast to government, they reward their best performers. Individual ratings and rewards are confidential, which makes it easier to manage than in government.

If Accenture is like its competitors, employee performance is measured by the number of hours they charge to clients. That’s effectively universal in professional service firms. They are also likely to rely on goal-setting to manage team and individual performance. Those measures facilitate performance discussions.

Managers in those firms are also rewarded for results and client satisfaction. That makes it important for them to focus on team performance. Performance is tracked and rewarded at all levels.

The metrics provide a shared focus on results. Managers then can focus on an individual’s behavior -- the softer skills -- on current assignments. The manager can be a coach, providing constructive feedback. When managers emphasize coaching, it’s far more satisfying for everyone.

Accenture’s decision will not reduce the focus on performance. There are other policies and practices that highlight and reinforce the importance of performance. In consulting, every firm wants to be the best and that’s communicated in many ways. People love to work for successful companies, they want to feel they are contributing to that success, and they want their value recognized. Firms like Accenture have a strong performance culture.

Government Could Develop a Performance Culture

Accenture is one of several technology firms that work closely with agencies. They have similar talent needs. But the culture and work environment in government are very different. There is also a difference in the support for employee development and opportunities for advancement. Technology firms are prominent on “best places to work” lists.

Government could adopt similar practices. The cultural differences are attributable to the way performance is planned and managed at senior levels, the way results are communicated, the emphasis on skill development, and the way employees are supervised. Accenture almost certainly invests more in developing managers. Change is needed.

Every employer should commit to identifying its stars along with its unacceptable performers. Accenture will continue to do that. Employees want to grow in their jobs and will welcome constructive feedback when it’s job-relevant. Think sports coaching. Accenture and Deloitte both are working to enhance the way performance is managed. Government has no insurmountable barriers.

Employees know what needs to change. Tomorrow’s government depends on the commitment of millennials. The technology firms could be models. Instead the federal work experience has been allowed to deteriorate. Everyone loses.

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