Why is Deloitte Ditching the Annual Review?

2 million hours a year. That’s how much time was being spent on performance reviews at Deloitte when the organization realized that not only was the process time-intensive, but also that it was failing to yield worthwhile results. Like many other organizations, Deloitte’s annual review process was out of step with the current dynamics of the workplace: only after a project is completed do managers evaluate the performance of the team as well if the project objectives were met. At the end of the year, a compilation of these evaluations are discussed in “consensus meetings” that lead to the consolidation of thousands of hours of work from various team members into a single year-end rating.

Instead, Deloitte has designed a new system that focuses on gathering data and taking action on it through better performance intelligence and improvement processes. According to Deloitte: “We’ve arrived at a very different and much simpler design for managing people’s performance. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, and it’s underpinned by a new way of collecting reliable performance data.”

Performance Intelligence: Gathering Actionable Data

Being able to reward performance effectively relies on the ability of an organization to gather reliable, accurate, and timely information about the performance of an employee. As Deloitte says, “We now have the technology to go from a small data version of our people to a big data version of them.”

A major step in the process of gathering not just any data, but the correct data was for Deloitte to refine what they were asking leaders. Shifting from asking about what leaders think about employees to what they would do with employees, Deloitte now aggregates data points throughout the year, weighting each according to the duration of a given project. By consistently gathering real-time feedback from managers about employees, Deloitte can then conduct a rich performance-pattern analysis that aggregates snapshots of performance at various moments in time.

Performance Improvement: Real-Time, Data-Driven Feedback

What good is data if it isn’t actionable? Deloitte has developed a system to translate insights from performance intelligence into actual performance improvement plans. Based on their research, it became clear that the best teams had leaders who conducted check-ins with each team member about work they were doing as they were doing it — not just at the end. In these check-ins, leaders are able to set expectations for the upcoming week, review priorities, comment on recent work, and provide course correction, coaching, or important new information real-time.

By giving feedback on expectations and ways employees could improve, leaders were directly contributing to fuel ongoing performance improvement. Deloitte’s testing showed a direct and measurable correlation between the frequency of check-ins with engagement of team members.

Armed with data and a new agile process, Deloitte has transformed its review and feedback systems to better understand, assess, and engage their workforce.