If you’re Accenture CEO Pierre Nanterme, you do. Beginning with FY 2016, there will be no more annual performance reviews at Accenture. Not surprisingly, this is a decision employees wholeheartedly support, according to their responses on Facebook, and the Washington Post, which broke the story.
This wasn’t the first time the rank and yank annual review system was given the boot. Earlier this year, GE and Deloitte largely eliminated their annual review programs. And this follows Adobe, which paved the way by being the first such story to be covered in the media, in March 2012.
But turning the clock back 50 years, it was Dr. W. Edwards Deming who first suggested eliminating the annual performance review. Calling it then “a disease that annihilates long-term planning,” he said it demolishes teamwork, and leaves people crushed, bruised, despondent and unable to comprehend why they are inferior.”
And today, with research constantly reporting that fewer and fewer employees are meaningfully engaged, can we disagree? Probably not. But there are real considerations to take into account before you and ‘Yank and Rank’ sit down for an exit interview. Here are the goods, the bads, and the uglies of that discussion.
1. Change is brutally hard. While I have a tremendous dislike for the words, “We’ve always done it this way,” we indeed, HAVE always done it this way––and any change is hard for people to accept, especially big change. Removing the merit rating system is very big change. So if you feel it’s time, do it slowly, and over a long period of time.
2. How will you reward people going forward? How will you reward people for good work, yet inspire everyone to do better? Money isn’t everything, but it’s what employees have gotten used to in today’s extrinsically valued culture.
3. Consider both individual and team-based merit. When employees are a top-tier performer one year and a slug the next, they will be happy to see old rank and yank disappear. But some won’t, especially consistently high performers who live for their own value, not necessarily the company’s or the teams’. While this is precisely why many companies are getting rid of rank and yank, any new system you implement must take into consideration the impact to your current culture—especially if yours is highly individualistic, and not necessarily team focused.
4. Use your merit system to bring people together for a common goal. Don’t use your new system to cut future raises, use it to increase teamwork and improve operating efficiency by giving immediate feedback, not rehashing something that happened a year ago. If you’ve been on a continuous improvement journey, this is a time to do more of it, not less. It’s time to bring people together. Kaizen events can be just that opportunity––where employees’ intrinsic value and creativity are regularly brought forth. And kaizen has been known to increase self esteem, cooperation, and people’s yearning for learning.
If you are the beginning of your journey, don’t give Yank and Rank a pink slip just yet. Make it wait as you make your changes slowly, so employees’ minds can get used to the new improvements you implement.