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Why is Everyone Ditching the Annual Review? Or, Waterfall is Dead.

Why is Everyone Ditching the Annual Review? Or, Waterfall is Dead.

Free Resource

GE is thinking about doing it. Accenture made headlines when they did it. Deloitte beat them both to it. And Adobe was years ahead. This summer our news feeds are filled with one corporate giant after the next either ditching or radically altering their annual review process.

“Insanity!”, some cry. “Finally!”, others exalt. While we can, and will, continue to debate whether or not we should eliminate the annual review, the important question to understand is why? And why now?

If you’ve read the articles and associated research leading these businesses to decide it’s time for an overhaul, you’ll find many reasons among them: people are biased, ratings are biased, the process reduces morale, the process is a time-sink, etc, etc.

But the most compelling reason (to me anyway), and the one squarely addressed by each new solution these forward-looking companies are now deploying, is that an annual timescale only makes sense for birthdays and taxes.

The annual review was born in an era when time was measured differently. Then, we used paper calendars to mark project milestones months, sometimes years, in advance. Today, we live in near real-time. Almost every core business process has become agile. Whether it be procurement, product development, or customer success, we operate on ultra-short timescales, communicate with zero-latency, and encourage each other to fail fast.

The annual review is a waterfall process living in an agile world. This is not the kind of world where we can wait a year to provide feedback to our teams, particularly when we can only expect our younger team members to stick around for two years and change.

Argue whichever side of the debate you will. Annual reviews provide a reverent, thoughtful measure of prior performance. Or annual reviews are a useless, demotivating, culture-killer.

Either way, the important lesson from all of this is that it’s time we become agile in how we manage our people. And rather than allow continual feedback, coaching, and mentoring to be something that only the naturally talented managers know how to do, we need to systematize these activities and integrate them into our corporate cultures. That’s the true realization of these companies.