Why 70% of Multinational Companies are scrapping annual performance reviews

When less than half (45%) of employers believe that performance management programs are effective and numerical ranking appraisals are ‘loathed’ by employees, you know it’s time to take a hard look at your traditional processes.

The Harvard Business Review recently remarked that the biggest limitation of annual reviews is this: “With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behaviour at the expense of improving current performance and grooming talent for the future, both of which are critical for organisations’ long-term survival. In contrast, regular conversations about performance and development change the focus to building the workforce your organisation needs to be competitive both today and years from now.”

It is estimated that 70% of multinational companies are moving towards this model.

At Pivot we understand the needs of HR professionals in changing times. That performance review processes need to be as effective, efficient and relevant for the business needs and for their stakeholders. Most of all, we appreciate that performance means different things to different organisations. More so, performance means different things to different people within an organisation. As a supplier of performance management, we get that everyone’s needs have to be catered for and HR’s desire is to help employees grow, develop and improve not only for themselves, but for the company too. Flexibility is paramount.

With this newer, more fluid model of performance management becoming increasingly prominent, there are many opportunities to redesign the structure of performance reviews to be tailored to the specific needs of your company.

We keep up with current research, trends and market demand on how performance management is evolving. Below we’ve created an infographic to summarise how performance management is changing, the opportunities for improvement and some performance review essential element.