For employees and managers alike, the annual performance review is one of the most dreaded processes. Conducted once a year with the often-failed goal of providing useful feedback to employees, this process is highly ineffective and does more harm than good regarding overall team morale and performance. That’s why Adobe, the global leader in digital marketing and digital media solutions, decided to stop using performance reviews for good.
Donna Morris, the Senior Vice President of People and Places at Adobe, was frustrated with the performance review system conducted at Adobe. Although the company delivered cutting edge technology and services to its customers in the creative industry, Adobe still relied on outdated performance reviews for gauging employee performance.
Besides the maintenance of the complex infrastructure, research revealed that annual performance reviews required 80,000 hours of time from 2000 managers, which equals the full-time work of 40 employees. Internal surveys found out that all this effort was in vain. Every year in February, Morris would witness the turnover of numbers of valuable employees who were frustrated with its competitive ranking system. Morris says:
But what if there is no bottom 10 percent to let go and everybody is performing well, or if everyone just needs more opportunities to improve? Traditional HR practices encourage managers to determine a bottom 10 percent who would be let go each year in an attempt to promote better performance within the team. Called stack ranking, the system is designed to assign employees to different slots according to their performance. Apart from a bottom 10 percent, the system also identifies a top 20 percent and a middle 70 percent. While the top 20 percent would receive bonuses, the bottom 10 percent would be fired in an attempt to motivate the remaining 70 percent into performing better.
Popularized by GE CEO Jack Welch in the 1980s, stack ranking gained widespread popularity over the years. However, according to Stanford Business Management Professor Bob Sutton, employee ranking creates an environment that "feeds unethical competition and kills morale." Stack ranking brought to essentially asking each employee to perform better than the person sitting next to them, ingraining a competitive culture that prevents knowledge sharing and collaboration.
Troubled with these questions, Morris and her team decided to quit performance reviews completely and replace them with a solution which would actually help their employees rather than demotivate them.
After researching for a few months and asking employees for feedback, Morris and her team found a solution: Regular Performance Check-Ins. Instead of having their managers sit behind computer screens and fill out forms, check-ins encourage managers to have actual conversations with each employee about their performance, professional goals and concerns.
Eliminating complex forms and questionnaires meant more time for managers to actually get to know their team members. The new system requires managers to set clear expectations, give and receive feedback, and provide employees with opportunities for personal and professional development. The form and the frequency of these check-ins is left completely in the hands of managers. Although Check In conversations are required once every quarter, some managers prefer to have them more often, and some chose to implement it into their regular one-on-one conversations, Morris said.
Adobe also organized organization-wide leadership workshops where managers were trained on how to deliver constructive feedback, and how to receive feedback about their own performance as team leads.
In addition, the abolition of rankings meant that employees were compensated against how well they accomplished their developmental goals. Instead of providing each manager with guidelines on how to compensate their employees, each manager is given a certain budget and left to decide on the best way to distribute it.
Morris explained that the new system required managers to have tough conversations with their employees right away, instead of waiting for the next round of performance reviews. Adobe reports that voluntary attrition decreased by 30 percent and involuntary departures increased by 50 percent.
Employees who were performing at the top of their game reported feeling valued, and employees who have more room to improve are supported and encouraged with the new system. Managers are now able to make their own decisions about salary increases and are trained on the most effective ways to coach their teams.
The new check-in system enabled managers to hone their communication and leadership skills by interacting with their employees more frequently, and forced managers to improve their communication skills. Since implemnting the new system, 78 percent of employees have stated that their managers are open to feedback from them.
On the other hand, the check-in system and the growth of employee engagement promoted a culture of ownership, where every employee feels they have a stake in Adobe’s overall success story.
WHAT CAN IMPRAISE DO TO HELP?
Impraise helps managers quickly and easily set up 360-degree, upward or individual feedback sessions. The data and insights gathered by the system empowers each manager to take ownership over their team's professional development. The data can also be used for 1-on-1s, which promotes better team communication.
This simplified process takes away the fear behind the whole performance review process, enabling team members to focus more on the feedback rather than filling in forms.