3/24/24, 6:38 PM Replacing performance ratings… How Amazon, Deloitte and Google do it - ETS

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Replacing performance
ratings… How Amazon,
Deloitte and Google do it
Performance ratings and performance appraisals remain a source of
frustration. To provide some inspiration, we look here at case studies from
six big companies who’ve moved away from ratings.

Performance ratings and, more generally, the performance

management process has long been a source of frustration for
all concerned. We’ve seen a number of big companies lead the
way in ditching traditional appraisals and performance ratings in
favour of a variety of different processes.If you organisation is
considering a similar transition in how to measure employee
performance, it is well worth doing some research first. However,
while asking "how do others run employee appraisals?" may
provide some inspiration, ultimately you’ll need an approach that
fits your business and culture.

First, the problem with

traditional appraisals
How long have you got? There are many – both from managers
and employees. These include having lengthy appraisal forms to
complete, no easy way of tracking milestones, and perceptions
that the appraisal meeting is a simply a checkbox exercise. Not
to mention the struggles for managers using performance
ratings and the perceived unfairness of these, for employees.

So, who’s doing what?

To provide some ideas and possible inspiration, we look here at
case study examples from six big companies who’ve moved
away from relying solely on performance ratings.

ACCENTURE
Accenture completely scrapped their ratings system several
years ago. Instead, they’ve opted for a “more fluid system, in
which employees receive timely feedback from their managers
on an ongoing basis following assignments”.Pierre Nanterme,
CEO of Accenture, has brought in a new focus on leadership
and, in the process, initiated a move away from
micromanagement. His fundamental belief here is that, if a
business hires the right people into the right roles, then a

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3/24/24, 6:38 PM Replacing performance ratings… How Amazon, Deloitte and Google do it - ETS
rigorous performance management process shouldn’t be
needed. He explains:
“The art of leadership is not to spend your time
measuring, evaluating… It’s all about selecting the person.
And if you believe you selected the right person, then you
give that person the freedom, the authority, the delegation
to innovate and to lead with some very simple measure.”

ADOBE
Adobe discarded performance management forms and
questionnaires and now doesn’t have a formal rating or ranking
system. They expect managers and employees to undertake a
continuous process of feedback and improvement (known as
‘Check-In’). The process isn’t documented or recorded in any
way, and there is no formal written review.Their approach is
shaped by three underlying principles:1) Managers are to convey
clearly what is expected of each team member2) Everyone is
expected to give and receive feedback in a constructive way3)
Check-In should provide opportunities for professional AND
personal feedback

AMAZON
Amazon has a reputation as a high performance, high challenge
organisation. It’s no surprise then that this extends to how they
evaluate employees’ contribution. The feedback system at
Amazon, which they designed themselves, is intended to push
the limits of each employee. They hold weekly or monthly
business reviews, where each employee is held accountable for
an array of metrics. There are even reports, including in the New
York Times, that employees receive this data in print form of 50
to 60 pages!Furthermore, and in line with their more data-driven
approach, Amazon organizes Organization Level Reviews, where
top and bottom performers are presented to the board of
managers to inform bonus and firing decisions. This has strong
parallels with the traditional ‘rank and yank’ bell-curve.Amazon
also uses their ‘Anytime Feedback Tool’ for enabling feedback
available between employees. Using this, employees can
directly send praise or criticism about their co-workers.
Feedback is sent directly to the manager of the person
receiving the feedback and the identity of the feedback
provider is only revealed to them (never to the feedback
recipient).

DELOITTE
Deloitte has focused on simplifying its performance
management process. All managers answer four future-focused
statements about every team member, at the end of every
project (or once per quarter for long-term projects).These four
statements, together known as a ‘Performance Snapshot’, are as
follows:1) Given what I know of this person’s performance, and if
it were my money, I would award this person the highest
possible compensation increase and bonus. This features a five-
point scale from “strongly agree” to “strongly disagree” and
measures overall performance and a person’s unique value to
the organization.2) Given what I know of this person’s
performance, I would always want him or her on my teamThis
uses the same five-point scale and measures ones’ ability to
work well with others.3) This person is at risk for low
performance. Using a yes/no responses, this identifies problems
that might harm the customer or the team.4) This person is
ready for promotion today. This asks for a yes/no response,

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3/24/24, 6:38 PM Replacing performance ratings… How Amazon, Deloitte and Google do it - ETS
measuring potential.The Performance Snapshot is
complemented by regular ‘check in’ conversations between
managers and staff.Deloitte steers clear of using the term
‘rating’, citing the fallibility of rating systems – principally those
giving ratings. Their own research in this area has undoubtedly
influenced Deloitte’s approach. Their aim is to make it as easy
for managers as possible to assess performance. A further
business driver was to save time and money since their previous
approach reportedly saw around two million hours spent on
form filling, meetings and arguing back and forth over ratings.

GOOGLE
Google abolished its purely numerical performance rating
system in 2014. This has been replaced by a peer review system,
which is all geared around objectives and key results or
(OKRs).Carried out semi-annually, peer reviewers are asked to
state one thing the reviewee should do more of and one thing
that they could do in a different way.After the feedback cycle,
managers meet to look at these peer reviews. They then decide
on where a person sits on their five-point scale where five is
“superb” through to one “needs improvement”. The aim of this
collaborative, committee style approach is to prevent feedback
bias by asking managers to justify their decisions to one
other.Managers at Google are informed about potential
obstacles to objective feedback. And, keeping these obstacles
in mind, they decide on the final evaluation of an employee.
Assessment summaries are shared half-yearly and compared to
a set of examples to justify the evaluation.

NETFLIX
Netflix don't use performance reviews per se. They have yearly
360 reviews, where everyone in the company can provide
feedback to anyone else. As a minimum, the company likes
people in a team to give feedback to their team co-workers,
manager, and - if they have people reporting to them - their
direct reports.Reviews are ultra-simple with just one text box
where people can write anything they want. While there are no
metrics or guidelines, most people use a start/stop/continue
format (start doing X, stop doing Y, continue doing
Z).Interestingly, and in line with the ‘grown up’ culture Netflix
adopts, any review submitted will have the reviewer’s name
attached to it – nothing is anonymised. Reviews are also
automatically shared with the manager of the person being
reviewed, as well as their HR partner. This is intended to
encourage a learning and feedback culture. These 360 reviews
are treated as entirely separate from compensation reviews.In
addition, Netflix managers use a ‘keeper test’ to evaluate
employees. This simply poses the question:
“If one of your employees told you he or she was leaving
for a job at a peer company, would you fight hard to keep
that employee at Netflix?”

If the answer is “no,” then Netflix will exit that person. Or, as it’s
put in the company’s now famous ‘Culture Deck’:
“Sustained B-level performance, despite ‘A for effort’,
generates a generous severance package, with respect.”

Pretty brutal, no doubt. But it seems to have worked for them.

A note of caution...
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3/24/24, 6:38 PM Replacing performance ratings… How Amazon, Deloitte and Google do it - ETS
I think we call all agree that traditional appraisals no longer work
for many organisations, and that there are a number of better
ways to 'do' appraisals and measure employee performance.
However, given the fundamental importance of this process it's
crucial that you ensure that your people are prepared for any
radical changes. Here are a few things for HR teams and
management to consider:

Do managers and employees have the skills (i.e. giving and

receiving feedback) needed to make the proposed new
process a success?

Are senior leaders 'bought it' and will they role model the new
approach from the top?

Do you have/need new systems and/or processes to enable

the change of approach?

Have you considered how you'll explain the reason for the
change to your people?

As with any business change initiative, good and open

communication with internal stakeholder groups is a must. Doing
this will help you to shape the new approach to ensure it is fit-
for-purpose, which should result in increased buy in when it is
eventually rolled out.ReferencesMichael Mount, Steven Scullen
and Maynard Goff, published in Journal of Applied Psychology
(2000)http://www.rc.usf.edu/~jdorio/Performance%20App/Scullen,%20S.%20E.,%20Mount,%20M.%

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