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Why have some of the best companies killed the performance review?

We’ve all read about it. In 2012 Adobe started a revolution by removing its annual performance review process.

Others have followed: IBM, GE, Amazon, Accenture, Deloitte, Microsoft and many more. At a recent count, more than 30 of the US Fortune 500 companies have followed suit, not to mention many more not included in this group.

So, what have they done instead? What has replaced the traditional annual performance review? And should you be taking similar action?

From Review to Dialogue

In response to the need for a more flexible, encouraging performance management model, leading companies are moving from the periodic and highly structured performance review to a series of frequent and relatively free-form conversations. Adobe calls them “check-ins,” GE refers to them as “touchpoints” and Microsoft as “connects.” The main emphasis in all cases is the free flow of dialogue.

At Adobe, the annual cycle begins in January with what it calls a “rewards check-in.” Initiated by managers, compensation increases are given to employees based on performance against goals. It’s also where employees are set up with new expectations for the year to come. Follow-up check-ins take place throughout the year on a weekly, fortnightly or monthly basis.

For Deloitte, the time interval for check-ins can be the same – but no longer than monthly. Initiated by the employee, they last between 10 and 15 minutes. The emphasis is on strengths rather than shortcomings, and provides an opportunity for a manager to inquire about ways they can assist an employee build on strengths or fix issues. No results from the interaction are recorded centrally.  Nevertheless, Deloitte has reported positive results, and improved employee engagement that correlates with a higher frequency of check-ins.

GE’s approach shares many similarities. However, their program also features “insights.” These can be initiated at any time by employees and their bosses and are designed to address a specific topic. For example, the focus might be on how someone participated in a conference, or how a conversation was carried out.

Deloitte has its own twist on the performance review replacement: the “performance snapshot.” This requires a team leader to provide answers to four questions on a quarterly basis to team members. The questions, which are based around an  individual’s performance and readiness for advancement are converted into  data and used to make  promotion, reward and remuneration decisions.

Another feature of the new approach to performance management is the pulse survey, conducted for all employees. Adobe and Deloitte conduct theirs every quarter.  It involves its global workforce completing ratings on 10 to 15 questions, with each question providing the opportunity for a more detailed response.

Driving Your Business to a Bright Future

Each of these companies has concluded that the old lock-step, backward-looking performance review system was driving their business in the wrong direction. The traditional once-a-year model was not synchronous with the ever-changing and highly unpredictable nature of their industries. And the return on investment of the time and effort expended was simply no longer there.

Is it time to ask the same questions of your company? Is it time you reviewed your reviews?

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