There is a small smug group in HR circles that treats the death of the annual appraisal as the moral arc of progress. They celebrate the end of ratings and the dawn of constant coaching as if removing a form will automatically rewire human attention. I watched one mid sized tech firm try this experiment and it did not go well. Within months the numbers sagged and the patterns that keep organizations honest began to fray.
What the company actually did and why it seemed brave
The leadership team announced that traditional performance reviews and numeric ratings were abolished. The public rationale was progressive. More coaching. Less judgment. Less paperwork. There were weekly check ins suggested in one slide deck and a new feedback app half launched. The company called it liberating. Employees cheered at first. Managers were relieved. The executive narrative promised higher morale and more innovation.
The fine print that no one read
In practice the ratings vanished but the accountability did not get redesigned. The heavy lifting that ratings force managers to do was quietly assumed to happen in hallways and casual chats. Time that had been scheduled for formal calibration meetings evaporated. Compensation committees lost a shared metric. High performers who had once been visibly recognized found themselves drifting into a fog of ambiguous expectations.
How productivity fell and why this was more than numbers
Productivity did not crash because people stopped working. It crumbled because incentives and signals that reinforce exceptional performance became blurred. The best employees scale their effort to feedback and recognition. When those signals falter the act of excelling loses its social reward. Teams began to miss deadlines. Cross functional work slowed. Managers told me they were suddenly unable to explain raises in a way that satisfied reports.
These expectations about removing ratings make sense, and employees might initially respond positively, but that positivity tends to fade after the first performance review cycle. Jeanine Prime VP and Team Manager Gartner.
That line from Gartner is not academic hair splitting. It is exactly the arc I observed. The honeymoon lasted. Then ambiguity settled in, and with ambiguity came lower discretionary effort and a rise in quiet resignation. High performers did the math. If effort was not reliably translated into recognition or career movement they reallocated their energy elsewhere.
Managers went missing in action
One operational truth is easy to ignore. Removing a formal structure does not cause managers to magically become better at coaching. Many managers are promoted for delivery skills not coaching craft. When the scaffolding of ratings disappears they do not necessarily fill the vacuum with richer conversations. They reduce the time spent on development talk because there was no clear structure telling them to spend that time.
Without the tangible symbol of a rating employees do not understand the processes or the philosophies behind their organisation’s performance which causes them to put forth less effort at work and become disengaged. Brian Kropp HR practice leader CEB now Gartner.
That quote explains why the collapse looked like a slow leak. It was not dramatic at first. Then team after team had fewer promotion ready candidates. The bench thinned. Leaders began to notice a pattern of mediocre consistency rather than periodic brilliance.
Three underrated dynamics that made the experiment fail
First there is social calibration. Ratings are ugly but they create a shared language. Remove them and managers lose an important lever for aligning perceptions about who is pulling the heaviest weight. Second there is psychological accounting. Humans track input against recognition. When that ledger becomes fuzzy people cut back. Third is the institutional memory of performance. Formal reviews create a trace. Without trace the story of each employee becomes ephemeral.
These are not the usual talking points. They are relational mechanics that operate beneath spreadsheets. You can redesign a process in a vacuum but you cannot rebuild the cultural wiring without deliberate practices that reproduce the functions the process used to perform.
Where the pundits missed the nuance
Commentators often conflate abolishing ratings with adopting continuous feedback. Those are orthogonal choices. Continuous feedback succeeds when it is reliable and when it produces the same outcomes that good reviews did which are fair differentiation compensation clarity and developmental records. The firm I watched had the rhetoric without the follow through. The app was half configured and the training budget for managers was small. It is possible to eliminate ratings and succeed. It is also possible to eliminate them and destroy what little structure existed for measuring contribution.
An honest assessment about what to do next
If you are tempted to remove your own ratings pause and ask two blunt questions. Do your managers know how to have sustained development conversations and are there durable signals that connect contribution to reward. If either answer is no you are borrowing trouble. You cannot outsource calibration to luck.
I have sympathy for the impulse to fix performance management. Annual reviews feel stale and clunky. But replacing paperwork with aspiration is not a transformation. It is a bet that everyone will fix themselves. Real transformation requires training incentives tools and most of all a governance loop that ensures the new system performs the old system’s useful work and then adds new value.
What success actually looks like
Success is not the absence of ratings. Success is clear expectations, frequent useful feedback, transparent links between contribution and reward and a record that lets you look back and make consistent decisions. If you can design that you can drop ratings and perhaps improve engagement. If you cannot you will discover that productivity is a fragile ecosystem not a policy variable to toggle at will.
Summary table
| Issue | What happened | Core takeaway |
|---|---|---|
| Removal of ratings | Lower manager conversation quality and blurred pay signals | Ratings are proxies for alignment not punishments. |
| Manager capability | Insufficient coaching skills and time | Train managers before changing systems. |
| High performer reaction | Discretionary effort declined | Top talent needs clear recognition and mobility. |
| Institutional memory | Records and traces disappeared | Maintain reliable documentation of performance. |
FAQ
Did eliminating ratings always reduce productivity?
Not always. There are documented cases where organizations replaced ratings with robust continuous feedback and strong calibration practices and saw improvements. The difference is intentional design. Studies like the CEB research that Gartner now references show average declines when ratings are removed without a systemic replacement. The key variable is what you put in place to do the job ratings used to do.
Can my company switch to continuous feedback without ratings?
Yes but only if you commit to concrete shifts. That means training managers in coaching, creating transparent rules for pay and promotion that do not rely on ad hoc judgment and investing in tools that capture evidence of contribution. You also need governance that reviews whether the new approach preserves merit differentiation.
What about teams that truly hate ratings?
Take their frustration seriously but translate it into a redesign agenda. Replace numeric scales with descriptive calibrated anchors. Introduce frequent brief touch points and keep a year end synthesis that documents outcomes. Hate for the form can be an engine for improvement but it should not mean removing all structure.
How do we prevent top performers from leaving if we change reviews?
Make promotion paths visible and make rewards predictable. High performers need to see correlation between output and opportunity. Build milestone reviews and celebrate contribution publicly. If you cannot articulate how top work is rewarded you will lose your best talent.
Is there a quick fix if productivity starts to fall after removing reviews?
Yes and no. Quick steps include reinstating temporary calibration meetings reintroducing simple documented feedback cycles and launching manager training bootcamps. Those stop the bleeding. The fuller fix is organizational and takes intentional design and time.
Change is possible. But the lesson here is stubborn. Processes are messier than ideas. If you remove something useful you must replace its functions not its forms.
