Why Accenture is saying goodbye to annual performance reviews
ACCENTURE CEO EXPLAINS WHY HE’S OVERHAULING PERFORMANCE REVIEWS
By Lillian Cunningham
The Washington Post
Pierre Nanterme has spent 32 years working for Accenture, culminating in his current role as CEO of the global professional services firm. And yet, that longevity has done little to make him fixed in his ways. Maintaining the status quo, he says, drives him “nuts” and “reasonably mad,” and he describes his own generation as “quite boring and simple” compared to today’s new hires.
Proof of his appetite for change is Accenture’s decision to eliminate rankings and annual performance reviews for its more than 300,000 employees starting this fall, which Nanterme broke the news of in this interview. The conversation, which has been lightly edited for length and clarity, explores how Accenture came to that decision and how else Nanterme thinks businesses need to transform to stay relevant—both for their workers and in the marketplace.
Q. What are the biggest challenges of leading a firm in the in the consulting industry today?
A. The industry of professional services is in the midst of a massive revolution. Massive. When you think about consulting, you typically think about advisory services. You think about delivering papers, PowerPoints, ideas. I think the revolution is that consulting is shifting from ideas to outcomes. More and more, our clients expect not only relevant advice, not only setting a road map or helping them plan, but being committed to business results.
Q. What then needs to change about how you lead an organization like Accenture? Do you need to hire different types of people?
A. Exactly right. It’s all about different talent and a different economic model. The challenge and the opportunity for the leader is to run a highly diverse, multidisciplinary organization. We have five different businesses at Accenture—strategy, consulting, digital, technology and operations. You need in your mind to understand what it takes to be relatively differentiated and competitive in each and every one, then you need to integrate them.
Q. Is that your biggest leadership challenge as CEO?
A. One would indeed be how you are staying relevant to your clients. The second challenge relates to the size of the company. We are 330,000 people operating in 120 countries and covering 19 different industries. So managing the size is an issue. I am personally working a lot on building more organizational agility into the giant. That’s probably the No. 1 challenge.
Q. How do you make an organization that size more agile?
A. This is the big question, and it’s an everyday challenge. You need to avoid, if you will, the big D-Day when you’re going to drive the “Big Transformation.” That’s very hard given the size, it is very risky, and it might be very disruptive and quite dangerous for the organization. Rather than waiting for the big day, let’s change every day. Delegate authority to the people on the ground. It’s not going to come from me or from the top.
Q. You served as Accenture’s chief leadership officer at one point. What’s your philosophy on the best way to train employees to be better leaders?
A. I learned a lot through that role, which frankly I had to figure out a bit, because it was quite new. My background is around economics and finance; yet of course, in professional services, talent is key. And for many of our clients, whatever the industry, they all are coming to me saying their No. 1 challenge is getting the right talent. So first, I figured out that leadership and talent is the name of the game. Second, it’s all about how you motivate people, how you’re making sure they’re going to stretch their own boundaries.
It’s about selecting, hiring the best people, but that’s not enough. Performance management is extraordinarily important to get people to their very best. Do you feel good in your role? If yes, that’s the perfect time for you to experiment with something new, to get out of your comfort zone. This willingness to learn is probably the most important thing for leaders of today and tomorrow.
Q. When you looked across your leadership training programs or other such investments, was there anything you cut because you weren’t really seeing the results?
A. Oh, yes. Many. Like many companies, we wanted to set the right objectives for our people, but very rapidly we got to a list of 5, 10, 15, 20 objectives, which started to be extraordinarily conflicting, confusing and difficult to evaluate. They created a maximum bureaucracy and, at the end of the day, blocked people. Instead of motivating or evaluating people, it just became piling tons of metrics and objectives on them.
What I learned is that leadership is about letting it go. Trust people. 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.
Q. So has that translated into simplifying the performance evaluation process?
A.Yes, so if you are to scoop from me—we’re going to get rid of it. Not 100 percent, but we’re going to get rid of probably 90 percent of what we did in the past. It’s not what we need. We are not sure that spending all that time on performance management has been yielding a great outcome.
And for the millennium generation, it’s not the way they want to be recognized, the way they want to be measured. If you put this new generation in the box of the performance management we’ve used the last 30 years, you lose them. We’re done with the famous annual performance review, where once a year I’m going to share with you what I think about you. That doesn’t make any sense.
Performance is an ongoing activity. It’s every day, after any client interaction or business interaction or corporate interaction. It’s much more fluid. People want to know on an ongoing basis, am I doing right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. Now it’s all about instant performance management.
Q. When will you change to the new system?
A. Our fiscal cycle is September to September. So we’re going to put in place this new performance management process for fiscal year ‘16, which for us is going to start at the end of ‘15. It’s a massive revolution. Imagine, for a company of 330,000 people, changing the performance management process—it’s huge. All the credit goes to Ellyn Shook, our HR officer.
Q. So will there still be ratings or will there just be feedback?
A. At the end of the day, you need to give some evaluation. You need to give a compensation increase. But all this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that. We’ve totally done too much effort for a limited outcome.
We’re going to evaluate you in your role, not vis a vis someone else who might work in Washington, who might work in Bengaluru. It’s irrelevant. It should be about you. How are you performing now, and do we believe you are prepared to move to another role? We are getting rid of all this comparison with other people.
Q. Deloitte is likely also getting rid of such rankings. Do you expect these moves will have a ripple effect among other global companies, given many of them take cues from consulting firms?
A. Yes, I hope so. The process is too heavy, too costly for the outcome. And the outcome is not great. My philosophy has always been very simple: You need to be relevant to your clients, not the other way around. It’s the same thing with your people. You need to be relevant to them. I’m not going to impose on the millennial generation something that is not the environment in which they want to develop and grow.
Q. Speaking of younger generations, what are some of the standout traits that Accenture is most interested in these days when hiring? Is the profile changing?
A. Yes, certainly the profiles we are looking for are changing. The generation we’re talking about is just great, is just fascinating. I mean, my generation—when I was applying 32 years ago—was quite boring and simple. You wanted to have a good job. You did your best, you were recognized, you worked hard, you moved up, you were pleased.
That’s gone. The generation we’re talking about, they are prepared to work hard, but at the same time they want to have the authority and ability to organize their work. This is a very interesting generation. They are more forward-looking. They are extremely innovative. They are more digitally native. And to answer your question: I like them. I like them much more than I like me. I wouldn’t love to find another Pierre with 32-years background. I’m working hard, but is that going to be enough? Thank you, Pierre. Go! I like these people who are going to be more multifaceted and truly innovative, very global citizens.
Q. What’s something in the world of leadership and management that you don’t care for, that you think is bogus?
A. If there is something I am fighting against everyday, it’s conservatism. Status quo. When I ask the question, “Why are we doing what we are doing?” If I receive the answer, “This is the way we’ve always been doing it,” it drives me nuts. This is what as leaders we need to fight against, especially in large organizations. I’m a fighter, and I might be brutal when I discover part of the organization has that kind of DNA. It can drive me reasonably mad.
Q. In your role, you get to interact with many other global CEOs. What’s something you have learned from observing them?
A. I think the best leaders I have worked with have this unique ability to master the complexity of their environment, and then shape a very clear and reasonably simple, straightforward, compelling strategy that everybody can understand, starting with their own people.
Q. Does that ultimately come down to an ability to prioritize?
A. That’s the big challenge for large organizations—the lack of focus, the fragmentation, too many initiatives. When a CEO tells me, “Pierre, we have a great change plan, and I have 30 programs I am launching,” I say: “If you have 30 programs, you have no vision, Mr. CEO. You have no vision.”
Tell me five things you want to do, and you’ll transform your organization. But if you have 30 extraordinary detailed programs across the world, you don’t know exactly what you’re going to stand for and where you’re going to make a difference.
The name of the game today is to be famous for something, to scale rapidly, to focus a lot and to take a leadership position. If you fragment yourself, you’re dead.
Q. What was a professional challenge you personally faced in your career?
A. Learning to be personally truly global. If you are French in Japan, you’re not making an impact. You need to be Japanese in Japan, not bringing your own culture. You need to be multifaceted—and probably multi-personality—and extraordinarily keen to understand the countries you are operating in. It requires a very significant effort not to come with your own set of beliefs, or what you learned at school or in the business world, and try to apply those to different countries. For me, it’s probably now becoming a more natural act, but I had to learn a lot.
Q. What’s the best piece of advice someone ever gave you?
A. The best advice would be one I received from my mother. It was always very simple: Do your best every day and don’t have any regret. Never come back home and say, “I should have done this or that instead.”