It's that time of year again: Many workers and managers are preparing for the dreaded performance review.
But some companies are deciding not to do them.
While most continue to perform the awkward rite of passage once or twice a year, a few companies—about 1%—are scrapping the formality altogether, according to the Corporate Executive Board. The thinking is that performance reviews are angst-provoking and even ineffective in actually motivating workers.
Enlarge Image






Eric WestbrookSome experts say scrapped performance reviews must be replaced with some form of feedback.



Performance reviews have long received poor grades, even from those who conduct them. Nearly 60% of human-resources executives graded their own performance-management systems a C or below, according to a 2010 survey by Sibson Consulting Inc. and WorldatWork, a professional association. And one academic review of more than 600 employee-feedback studies found that two-thirds of appraisals had zero or even negative effects on employee performance after the feedback was given.
Last year, Atlassian Inc., a software company based in Sydney, Australia, embarked on a publicly blogged experiment, still in place today, in which it got rid of traditional performance reviews for its 450 workers.
Previously, employees were reviewed twice a year on a five-point scale, plotted on a distribution curve, which determined workers' bonuses. But "instead of discussion about how to enhance people's performance, the reviews caused disruptions, anxiety and demotivated team members and managers," says Joris Luijke, the company's vice president of talent.
In place of reviews, the company asked managers and subordinates to discuss performance and goals at pre-existing weekly one-on-one meetings. Feedback now goes both ways.
As a springboard for discussion, participants, using an online app, are asked to drag a dot along an axis to answer questions like, "How often have you stretched yourself?" Instead of writing up lengthy assessments, they note a few pointers on why they...