For supervisors and their reports, the requirement for conducting performance reviews has been an annual rite that both sides have endured at sufferance. The quality of the process and its purpose is rarely evaluated or questioned. However, this is increasingly not true as businesses are beginning to cast aside formal employee reviews in favor of less structured, more flexible evaluations.
Accenture, one of the world’s largest employers, recently announced that it would no longer require its 330,000 employees to undergo annual performance reviews. In addition, the company is also abandoning its forced ranking system in favor of a system in which workers receive regular feedback from their supervisors.
“All this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that,” Accenture CEO Pierre Nanterme told The Washington Post. “We’re going to evaluate you in your role, not vis-a-vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you.”
This decision reflects a growing employment law trend. Six percent of Fortune 500 companies have eliminated rankings, according to the management research firm CEB. Other notable companies that have made similar changes to their performance evaluation procedures include Deloitte, Gap, Adobe and Medtronic.
Understandably, many New York and New Jersey businesses are beginning to question if they should follow this example. Is there a happy medium between forced rankings and random performance conversations?
Why you should re-vamp your performance reviews
In lieu of total abandonment, it makes sense for employers to at least re-tool their performance review process. This is because reviews are almost always performed by supervisors with no training for the job and with no attempt at obtaining quality control over the results. The supervisors charged with the task typically judge the job performance assignment to be an unwanted, thankless task that gets in the way of the mission of making money.
The reviews are often slapped together with little or no careful or structured thought. This then results, at times, with an employee being terminated for alleged lack of performance or incompetence but whose formal reviews provide glowing (and glaring) contradictions undermining the stated reason(s) for the negative employment action.
Furthermore, there are often gross discrepancies and disparate assessments among the persons conducting the reviews. For one reviewer, a 5 (out of 10) is a failing grade while the next reviewer regards this as a high mark.
Things to keep in mind for performance reviews
If employee reviews are to be performed, it is very important that the employer:
- Take the process seriously and devote sufficient resources to do the job “right;”
- Choose the criteria that are to be the measures of performance carefully; question whether such criteria are really relevant to performance;
- Train the reviewers to help them understand their role and the expectation to include attempting to achieve a more uniform application of the stated criteria;
- Review the results on a preliminary basis to spot negative trends and anomalies in the scoring;
- Curve the scores so that there is some consistency of the results from one reviewer to another; and
- Define the purposes and consequences for the reviews, and appropriately apply the approved use(s) for the results (retention, promotion, raises).
Generally, most employers have been unwilling to devote the time and resources to these efforts. The consequence can be the assertion of an employment or discrimination claim that will be difficult to defend. Rather than being unduly exposed to such claims, the defendant-employer would be better off with no review than one that has been poorly executed.
Concentrating his practice on ERISA, employee benefits, and executive compensation, Gary S. Young is a member of Scarinci Hollenbeck’s Corporate Transaction and Business Law Group. With over 40 years of experience, Mr. Young has worked as a traditional labor lawyer and who continues to provide employment law advice to private sector employers on such as wage & hour compliance, workplace harassment and FMLA.