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Corporations Move Away from Dreaded Annual Performance Review


Major firms are edging away from the Annual Performance Review, with more frequent and up-to-the-moment collaboration between manager and worker

The corporate world took notice when in July 2015, Accenture announced it would be dispensing with yearly performance reviews. What is increasingly seen as a stress-filled, counterproductive grading ritual would be replaced by a "more fluid" system, in which workers would receive feedback on a more frequent, looser, ad-hoc basis; commentary as you go along (presumably, without micromanaging).

General Electric's Head of Human Resources noted that millenials are used to, and want, regular assessments of how they are doing. The company now provides employees with more frequent feedback by means of an app.

Practices have evolved a long way from the days when GE assigned each employee a performance ranking number, and the bottom 10% were terminated. Not only does that kind of system demoralize, it creates an adversarial and alienating work environment. In fact, at least 10% of Fortune 500 companies have abandoned the annual inspection/review, concluding it hurts more than it helps.

Samuel Culbert, a professor at the UCLA Anderson School of Management, and author of Get Rid of Performance Review: How Companies Can Stop Intimidating, Start Managing--and Focus on What Really Matters, maintains that performance reviews mostly intimidate employees and become performances themselves, in which the manager reminds the worker of the dominance hierarchy, and the worker shields against getting hurt. 

Reviews can actually do damage:

Surely it was time for a change when in 2005, a national survey showed that 87% of employees and managers felt performance ratings were not useful or effective. A large study-of-studies showed that at least 30% of performance reviews downright hurt employees' job productivity. Also, built-in biases can affect ratings; one study showed that managers gave higher appraisals to employees they had chosen to hire.

Recent findings in neuroscience have established that the human brain is built to defend itself, first and foremost. Therapists see this natural instinct at work in treating such disorders as PTSD and other anxiety disorders: in the human operating system, safety/security come before thinking or emotional processing.

Dr. Daniel Goleman, discoverer of Emotional Intelligence, has maintained that threats to a person's self-esteem, including performance reviews, can be interpreted by the mind as actual threats to survival. In the Annual Evaluation, the worker's guard is up, the body's tense, and some research shows the self then gets busy changing, not absorbing, the information ("he doesn't see the bigger picture...she's biased against me...someone else made me look bad..."). People may not stay calm, carefully digesting the criticism, and emerging wiser.

Innovative Trends:

One practice gaining in popularity is called performance previewing. Here, boss and employee confer ahead of time about how a task is to be completed, including what supports from the boss the employee will need along the way; each party becomes accountable to the other.

Another recent innovation involves crowdsourcing other employees' comments on a person's ongoing project, with the caveat that rather than raining down critiques, their feedback stresses the positive. The person's performance is shaped, not just by one manager's opinions, but by a group of knowledgeable people who may be wiser than just one or two.

From a coaching perspective, these adjustments to the evaluation process make much sense, if they're done right. A manager turns into something closer to a coach, though his/her attention will be more on project completion than on developing the individual in more personal, larger-focus areas like Emotional Intelligence, strengths-finding, and values exploration. For topics like that, individual coaching cannot be replaced; in coaching as in psychotherapy, the coach-client relationship is the most powerful ingredient.  You have an intimate relationship, in which trust is paramount, and goals and strategies can be reviewed, up close and in detail.


Caplan, Gerald. The theory and practice of mental health consultation. New York: Basic Books, 1970.