Dive Brief:

• Add HR and business software giant SAP to the list of name brand employers who have dumped the traditional annual performance review, according to Reuters.
• Calling its current process "too expensive, time-consuming and often demotivating," SAP follows in the footsteps of employers such as IBM, Gap, GE and others who have decided that annual performance reviews just don't cut it any more.
• SAP, which has an American CEO and employs almost a third of its staff in the U.S., is one of the first major European companies to join the trend of abandoning a process that is "widely disliked" by employees, according to Reuters.

Dive Insight:

SAP's HR head for Germany, Wolfgang Fassnacht, told Reuters that the company's annual review process, with its focus on dividing "over- from under-performers," was often "counter-productive to the goal of constructive dialogue."

SAP, which paid $3.4 billion to acquire U.S. cloud-computing company successfactors.com in 2012, got the idea that its current system wasn't working from customers, Fassnacht told Reuters. He said that the "topic is on everyone's mind at the moment. This is actually one of the hottest topics discussed in the HR area." 

As far as the performance assessment software it sells, SAP had already said it would be changing it to a more continuous performance management product.

HR leaders may be interested to hear Fassnacht's comments about how making over the performance process is a hot topic in HR. Even more than the traditional annual review being slow and ineffective, it also can actually be harmful to a worker's mental health, according to some experts.