For years managers have been encouraged to candidly praise and criticize just about everything workers do. But it turns out that feedback does not help employees thrive. First, research shows that people can't reliably rate the performance of others: More than 50% of your rating of someone reflects your characteristics, not hers. Second, neuroscience reveals that criticism provokes the brain's "fight or flight" response and inhibits learning. Last, excellence looks different for each individual, so it can't be defined in advance and transferred from one person to another. It's also not the opposite of failure. Managers will never produce great performance by identifying what they think is failure and telling people how to correct it. Instead, when managers see a great outcome, they should turn to the person who created it, say, "Yes! That!," and share their impression of why it was a success. Neuroscience shows that we grow most when people focus on our strengths. Learning rests on our grasp of what we're doing well, not what we're doing poorly, and certainly not on someone else's sense of what we're doing poorly.

Like many other companies, Deloitte realized that its system for evaluating the work of employees--and then training them, promoting them, and paying them accordingly--was increasingly out of step with its objectives. It searched for something nimbler, real-time, and more individualized--something squarely focused on fueling performance in the future rather than assessing it in the past. The new system will have no cascading objectives, no once-a-year reviews, and no 360-degree-feedback tools. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, all underpinned by a new way of collecting reliable performance data. To arrive at this design, Deloitte drew on three pieces of evidence: a simple counting of hours, a review of research in the science of ratings, and a carefully controlled study of its own organization. It discovered that the organization was spending close to 2 million hours a year on performance management, and that "idiosyncratic rater effects" led to ratings that revealed more about team leaders than about the people they were rating. From an empirical study of its own high-performing teams, the company learned that three items correlated best with high performance for a team: "My coworkers are committed to doing quality work," "The mission of our company inspires me," and "I have the chance to use my strengths every day." Of these, the third was the most powerful across the organization. With all this evidence in hand, the company set about designing a radical new performance management system, which the authors describe in this article.