Real-time feedback is gaining in popularity and annual review is slowly disappearing. The annual assessment often takes place at the end of the year, but does not appear to be representative and does not increase motivation. The employee is assessed on the last period and does not agree with the assessment. A number of large companies have recently moved away from the annual assessment. Why do they do that and why is it that the old system is still used by others?
Read more: Performance Reviews time? Or not?
Accenture is changing its HR procedure
Accenture, one of the largest consultancy companies in the world, has changed its HR procedure. The company, which consists of hundreds of thousands of employees around the world, has stopped the annual assessment. Accenture was fed up with the time-consuming paperwork, forced ranking, and frustration of managers and employees. They have exchanged this for giving and receiving short and frequent feedback.
Deloitte is switching to a renewed feedback system
In addition to Accenture, deloitte, one of the largest international organizations in the field of financial and business services, has also switched to a new feedback system. They too found that the old evaluation system had no positive effect on employee commitment and performance. When Deloitte investigated the process, they found that managers and employees spend about 2 million hours a year on reviews. Deloitte has traded its annual review for frequent feedback. Not only from manager to employees, but also from employee to employee.
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Facebook opts for real-time feedback
Facebook has about 12,000 employees around the world and now uses real-time feedback. For example, they can receive feedback, but also give it to employees and receive the necessary assistance. “It’s a process designed to recognize, acknowledge and show appreciation for the people who have done a great job,” said Lori Golder (Facebook’s VP of people).
Netflix: HR must be innovative
Netflix, an American company that now offers monthly subscriptions worldwide for streaming video on demand via the internet, believes that HR should be innovative. In recent years they have therefore paid a lot of attention to this. Instead of using a formal system, they went in the opposite direction: Managers and employees were asked to work together.
But why are these big companies changing their strategy?
Why are these big companies changing their strategy? According to Psychology Today, there are four reasons for this.
1. Change of work.
Many management systems do not take into account how work is done. Employees are often involved in multiple teams and projects, which are often spread around the world. Few managers know their team members well and often the manager does not see the work the employees do. As a result, standard performance ratings can be seen as unreliable. These are often once a year and are not relevant to the way we work.
2. The demand for better cooperation.
A clear trend is visible: The old systems of valuation prevent collaboration and make a company less customer-oriented. Research shows that when Microsoft stopped valuing, employee collaboration skyrocketed.
3. The need to attract and retain talent.
Another reason companies are changing how they judge is to get managers to talk about employee developments more than once a year. Millennials, also called the people born between 1980 and 2000, yearn for learning and career growth. More frequent communication increases employee engagement, development and fair pay as managers now better understand how employees are doing.
4. The need to develop people faster.
By eliminating ratings, companies have been shown to develop people faster across the board. This is due to getting frequent feedback, which is also more honest and open. Nobody has to worry about the year-end assessment.
Then why are we still using the old system?
The question then naturally arises: why do we still have annual reviews? This is largely due to tradition. It was a way for companies to get rid of the employees who performed below par and to reward the best with a promotion, among other things. In practice, however, this method of assessment is ineffective and increases costs. Employees long for feedback and want to know how they are performing and where they stand in the organization. Psychologists from Kansan State University, Eastern Kentucky University, and Texas A&M recently examined the effect of annual interviews on performance. Instead of motivating and improving employees, they found the opposite effect. So it is more effective, as an employer, to provide feedback on a regular basis, instead of once or twice a year.