The document discusses alternatives to traditional annual performance reviews, which are criticized as demotivating employees, arbitrary, and not effective. Several large companies like Deloitte, SAP, Adobe, and GE have eliminated annual reviews. Instead, the document advocates for continuous feedback focused on improvement, detaching compensation from reviews, collaborative goal-setting, and making the process ongoing rather than annual. The key is focusing on improvement and engagement rather than measurement and fear-based evaluations.

1. Performance Reviews Are
Dead
Long Live Performance Reviews

2. Angel Medinilla
angel.medinilla@proyectalis.com
www.proyectalis.com/en/AngelMedinilla
(Slides, Videos, Newsletter, Books, Blog, LinkedIn, Sketchnotes, Twitter...)
Twitter: @angel_m
(pictures, followers & feedback welcome)
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www.improvement21.com
facebook.com/improvement21
@improvement_21
We help people and companies create
continuous improvement habits

4. My
Pleasure!
(All drawings by yours trully)
</vanity>

5. More at http://Slideshare.net/proyectalis
Thesis:
Performance Reviews Are Evil
They punish, humilliate and
demotivate employees
They are actually arbitrary
They trigger zero-sum games
They cost a lot
They don’t work!!

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Fact: We Hate Them!
Maybe just a little bit less than yearly budgets and
firing people...

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Fact: we’re getting rid of them
Not only “fancy” companies:
Deloitte, SAP, Adobe, Accenture, GE...

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Fact: SAP
The annual review was dreaded.
Managers have anxiety about
communicating annual rating decisions.
The company figures it spent two and a
half hours of management time
prepping for each review -- 200,000
hours a year -- for "conversation that
were very past-focused and layered with
the anxiety associated with the rating."
Jewell Parkinson, human resources
chief at SAP North America
http://www.philly.com/philly/blogs/inq-phillydeals/-SAP-plans-to-end-yearly-
performance-reviews.html

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Fact: Accenture
We’re done with the famous annual
performance review, where once a year
I’m going to share with you what I think
about you. That doesn’t make any sense.
[...] We are getting rid of all this
comparison with other people.
Pierre Nanterme, CEO Accenture
https://www.accenture.com/ma-en/company-accenture-ceo-performance-review

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Fact: Deloitte
Deloitte long knew that their old performance
management approach neither boosted employee
engagement nor high performance.
Deloitte conducted a public survey to find out
what managers thought of performance reviews,
and 58 percent of managers stated that traditional
performance reviews did not serve its purpose.
[...]
It was discovered that the whole performance
review cycle – filling in forms, holding meetings
and doing the actual ratings – consumed around 2
million hours a year. Most of this time was
apparently spent discussing ratings instead of
actually talking to employees about their
performance.
http://blog.impraise.com/360-feedback/deloitte-joins-adobe-and-accenture-in-dumping-
performance-reviews-360-feedback

11. More at http://Slideshare.net/proyectalis
Thesis:
My findings were that bad managers
needed a strict formal review process
in order to consider import
performance aspects and discuss them
with staff. But this did not improve
their managing or motivational
skills, ... it was a weak band-aid. Worse
yet, ... Great Managers were wasting
time filling out review forms to
document what was already clear to all
parties
Robert Newman, CEO at MiTeGen
https://www.linkedin.com/pulse/why-ge-giving-up-employee-ratings-
abandoning-annual-reviews-immelt

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Why do we conduct appraisals?
Increase Performance?
Increase Engagement / motivation?
Salary / Compensation?
Feedback?
“Paper Trail”?

13. Is it working?

14. What’s the case study?

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Why do they fail?
Command and Control Culture
Implicit subjectivity / Bias

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Why do they fail?
Complexity & Measuring “performance”
Non linearities (ej. “Annual Profit”)
Annual - goal change
Transfer problem

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Why do they fail?
Fear of Feedback
Evaluation against others

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Why do they fail?
Zero Sum Games
If -> Then rewards

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Why do they fail?
According to Stanford
University Professors
Jeffrey Pfeffer and Robert
Sutton, compensation for
performance are generally
ineffective when tasks are
complex or require
collaboration.
http://blog.impraise.com/360-feedback/deloitte-joins-
adobe-and-accenture-in-dumping-performance-
reviews-360-feedback

20. More at http://Slideshare.net/proyectalis
Why do they fail?
According to Stanford
University Professors
Jeffrey Pfeffer and Robert
Sutton, compensation for
performance are generally
ineffective when tasks are
complex or require
collaboration.
http://blog.impraise.com/360-feedback/deloitte-joins-
adobe-and-accenture-in-dumping-performance-
reviews-360-feedback

21. By the way...
Management by numerical goals is
an attempt to manage without
knowledge of what to do, and in
fact is usually managementby fear
[...]
Eliminate numerical quotas,
including management by
Objectives
W. Edwards Deming
“Out of the Crisis” - 1986

22. What can we do different?
Command and Control Problem
Measurement Problem
Feedback / Evaluation Problem
Salary / Bonus Problem

23. Let’s look at great companies!

35. What are they doing differently?

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The Compensation Problem
Study science and research!
Detach Improvement from money - SERIOUSLY:
get rid of bonuses and incentives
Semco 5 salary factors
Netflix Salary Policy
Buffer Open Salaries / Open Equity
Jurgen Appelo’s Salary Formula

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The C&C Problem
Make it Collaborative
(only when money is out of the table!)
Google OKR’s
Appszoom Peer Review Process
Happy Force Employee / Company retrospectives +
Endorsement system (Kudos)

38. More at http://Slideshare.net/proyectalis
The Measurement problem
“Not everything that counts can be counted”
Use the Marriage Counseling Metaphor
Jurgen Appelo’s Metrics Ecosystem & Complexity rules
Google OKR’s

39. More at http://Slideshare.net/proyectalis
The Feedback Problem
Eliminate Fear
Focus on Improvement
Give feedback
Receive feedback
Ask for feedback
Make it public

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As a summary...
1) Focus on improvement!
2) Do not mix improvement, feedback and
engagement with compensation
3) Teach people to give, receive and ask for feedback
4) Set goals together, bring everyone into the
conversation
5) Make the process continuous

41. Watch for this!
@lgoncalves1979

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And remember:
It's not extra work...
...IT’S YOUR ACTUAL JOB!

43. Thank you and... Share it!
http://www.proyectalis.com/en/AngelMedinilla
www.improvement21.com

44. http://creativecommons.org/licenses/by-nc-nd/3.0/
This presentation is based upon the ideas and
work of many people. And while I’ve tried to
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angel.medinilla@proyectalis.com
All drawings and materials in this presentation
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