Not that long ago, performance management was all about scheduling, planning, and conducting reviews once a year.
Today, that’s changing.
More than a third of U.S. companies are ditching the annual review, with companies like Microsoft, Adobe, and Deloitte leading the way.
As a result of the changes they have made to their process, these are the companies with the best performance management practices.
You can bet that companies aren’t ditching the annual review for no reason. Each one realized that something wasn’t working, they made a plan to fix it, and they have seen positive impacts on their business after the change.
Listed below are seven companies with the best performance management practices. Each section includes a link to learn more about each company’s performance management system.
Companies with recently improved performance management systems that have recently include:
Deloitte is an audit, consulting, tax, and advisory service that works with some of the world's most well-known brands. They made the change to a new performance management system back in 2015.
The original process
The original Deloitte performance management process included annual objectives. Managers used evaluations to give employees one rating for the whole year.
Deloitte conducted a survey to see how managers felt about the process. 58 percent of executives said they didn’t think the performance management approach worked. Managers said it didn’t drive employee engagement or high performance. That’s when Deloitte decided to make some changes.
Deloitte's performance management is one of the simplest out there. The form has only prompts. It takes a lot less time, and managers can conduct performance reviews a lot more often. Managers fill out answers to these four questions after every project or every quarter, depending on which one is more frequent.
With this new system, leaders are better able to recognize, see, and fuel performance. The system allows team members to understand and explore their strengths with a self-assessment tool. Not to mention, they save a lot of time. Their previous rating system consumed more than two million hours a year. Their new system without ratings takes a lot less time, but it still enables workers to get feedback more often.
To learn more about Deloitte performance management, click here.
Adobe is a software company that creates multimedia and creative products, like Photoshop. The company faced an increased pace of updates and innovations in 2012. They soon realized their time-consuming annual review process needed an update.
The original process
The original Adobe performance management process was labor-intensive and time-consuming. Each employee had to provide feedback to several people. Managers wrote a performance summary as well. In all, employees spent 80,000 working hours a year on reviews. Plus, some employees received critical feedback that they weren't expecting.
Adobe switched to a Check-in system where managers meet with employees every quarter, or more often. Managers outline expectations with each employee, but no formal or specific format is needed.
Donna Morris was the Senior Vice President for Customer and Employee Experience at the time. She said, "70% to 80% of employees are aligned on expectations, receive regular feedback regarding their development, and feel that their managers are open to feedback as well."
Adobe has continued to climb the ranks of Interbrand Top Global Brands. Now, eight out of ten new hires discuss the Check-In process as a key tenet of Adobe culture.
To learn more about Adobe performance management, click here.
Accenture is a professional services company that helps organizations optimize operations. They felt that their original performance management process was slowing everybody down. It was not helping employees perform their best. Accenture began the process of changing how they do performance management in 2015.
The original process
The old approach ranked employee performance on a bell curve, with only so many "top performers". They attempted to adjust the process by identifying objectives and goals for each employee. As the list expanded to 20, they realized the process was more of a hindrance than a help.
Adobe scrapped the annual review. Now, they conduct more frequent reviews that focus on providing real-time feedback. As then-CEO Pierre Nanterme explained, "People want to know on an ongoing basis, am I doing right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. It’s all about instant performance management.”
They scrapped the bell curve and cumbersome objectives to measure employees on a more accurate, individual basis.
With the help of technology, feedback can be shared on a continuous basis. This makes their new system much more agile and immediate than the old one. The system focuses on the individual instead of the group. Now, employees receive specific feedback they can use to improve. They no longer feel demoralized by being ranked against other employees.
To learn more about Accenture performance management, click here.
As one of the biggest companies in the world, Microsoft is expected to dominate performance management. Unfortunately, it became clear in the early 2010s that Microsoft’s system of annual reviews wasn't working. They set out to create a more effective, less time-consuming review process.
The original process
Annual reviews were becoming another thing management had to check off their to-do list. Employees were doing whatever they could to get through the meeting. They were then returned to their roles without internalizing any of the information given during the review.
Feedback was too general, one-sided, and too formal. Microsoft realized its performance management process should focus on the employee's future.
Microsoft's new process includes setting goals and conducting flexible performance reviews.
It also includes the use of performance journals that employees use to send and collect feedback on the performance of others, as well as their own. It is a tool to support employee performance, with no expectation for it to be shared during performance reviews.
A nimble platform is used by employees that enables everyone to manage and track goals. However, goals are not required ahead of a performance review. That way reviews can be conducted frequently and at a time that's convenient for management and employees.
Microsoft uses a stacked system of reviews with check-ins, semi-annual, and annual reviews. As a result, employees are better able to understand and exhibit the values of the company. Employees also gain clarity on their performance and how they can improve.
In addition, the stress of being rated is gone, so employees are more focused on genuine growth rather than hitting an arbitrary number on a scale.
To learn more about Microsoft performance management, click here.
At one time, Netflix struggled to build its dream team of employees. Patty McCord and Reed Hasting made a PowerPoint deck about how to motivate performance at Netflix moving forward. It would end up influencing many other businesses to do the same.
The original process
Netflix was facing a few challenges, one of which was the delayed feedback that is associated with annual reviews. They also had a vision of creating a "dream team" of employees. These employees would demonstrate company values. They would think independently and make decisions on their own. The annual performance review just wasn’t cutting it.
Netflix started by scrapping the annual review. Instead, they used a 360-degree review process. Employees learned from colleagues what they do well and what needs improvement. Netflix conducts these reviews frequently and informally. Employees can receive timely feedback that they can act on quickly.
Other changes were made too. Reviews evolved from being anonymous to face-to-face with the belief that employees deserve to be told the truth.
They also support the autonomy of employees. Patty McCord said, “The best managers figure out how to get great outcomes by setting the appropriate context, rather than by trying to control their people."
Due to these changes, Netflix has been able to retain prime talent and achieve a high-performance culture. That said, Netflix’s approach of talking simply and honestly about performance does have some drawbacks.
Managers are encouraged to build their perfect team, and many employees admit that being fired is always a thought in the back of their minds. The competitive environment can also make it difficult to achieve a work-life balance.
To learn more about Netflix performance management, click here.
Google regularly ranks highly as one of the world’s best places to work. That’s in part thanks to their ever-evolving performance management process.
The original process
As many traditional performance review processes do, they put the power in the hands of management. Google’s previous review format focused on the feedback itself and not the person receiving the feedback. Google wanted to be a leader in company culture and performance management, so it needed a change.
Google has been progressive in putting workers first with its "People Operations Practice." Laszlo Bock, Google's former Senior Vice President of People Operations, said, "All it takes is a belief that people are fundamentally good—and enough courage to treat your people like owners instead of machines."
The new process is ever-evolving and includes different aspects from different types of review styles. For example, they were using a two-part performance review, but they have recently dropped the mid-year review. Now they only conduct an end-of-the-year review. Their review process also includes self-assessment, 360-degree feedback, and monthly check-ins. Timely feedback is still prioritized.
The outcome is that employees have more control over the process and their role in the company. In a survey, nearly half of Google employees reported that twice-annual reviews were not time well-spent. That’s why they were scrapped recently. Google can retain top talent because employees are put first. The company has a strong merit-based incentive program. It encourages everyone to reach their fullest potential.
To learn more about Google performance management, click here.
Uber is a unique example because they have two groups of employees to manage. They have to maintain a review process for drivers, as well as their full-time employees. They have managed to do both well with immediate feedback for drivers and a new process that focuses on employees.
The original process
The previous system for internal employees included the use of standard ranks and ratings. This process was top-heavy, with managers wielding all the power, while employees were left feeling powerless.
The system forced employees and their managers to spend more time focusing on past behavior than future possibilities. Also, managers were leaning into their biases. The subjective process and minimal feedback resulted in a simple score. This score provided no value to employees.
Instead, Uber created a new strategy that they call the "T3 B3 process." It asks employees to list their top three strengths and three areas where they can improve. Goals are created based on this information, which comes directly from the employee and not managers.
Managers are still allowed to share positive reinforcement and constructive advice, but they check their feedback ratios to make sure each type of feedback is balanced.
The changes have had a positive impact on the company. Employees say things like "the culture at Uber is excellent." They say it has a "fast-paced environment and very low-stress levels." Celebrating people has allowed Uber to foster a collaborative atmosphere with constructive feedback.
To learn more about Uber performance management, including how their system impacts drivers, click here.
What Do These Companies Have in Common?
Let’s step back from focusing on how a single company does performance management. It can be helpful to take a big-picture look at all the companies with the best performance management practices. By uncovering what they all have in common, you can craft a performance management system that’s right for your company.
All the companies listed above have fairly flexible performance management systems . They expand and contract with the needs of the business. Google's recent drop in their mid-year performance review and Adobe's system of Check-ins illustrate this point well.
These flexible systems also enable each of the companies on this list to tailor their process to their unique needs. These companies don't have to conforming to a straight-out-of-the-box approach.
Whether the company does annual reviews or not, they all feature a system of check-ins that enable employers to receive feedback on time. Employees don't have to wait until a formal annual review to get feedback. The ultimate goal is that employees, managers, and the company highlight future possibilities instead of dwelling on past performance.