Learn How Adobe Abandoned the Yearly Performance Appraisals

April 23, 2014 - 7 minute read - Posted by

In this past year, 7Geese has helped many organizations such as IOD, Medivo, and Guidespark to move away from the yearly traditional performance appraisal. These innovative companies have realized that the annual appraisal process was not working for them anymore. Worse, it was demotivating for their employees, which eventually affected their bottom line. Many experts such as Tom Coens and Mary Jenkins, authors of “Abolishing Performance Appraisal”  have been pushing leaders to demolish this archaic technique.

Adobe made headlines in 2012 when Donna Morris, Senior VP of Global People Resources, abandoned the yearly performance rankings to adopt frequent “check-ins” where the focus is on managers and employees to discuss coaching and feedback. At the same time, Adobe decided to stop using forced ranking to determine compensation for each employee. Forced ranking ensures that a specific percentage of employees, based on their ratings, will receive different tiers of compensation level. For example, only 10% of the highest performing employees will get 5% raise, the next 20% will get 3% raise etc. Your performance as an employee is measured against your coworkers to determine where you fall along the spectrum.

What Led to Adobe to Abandon Yearly Performance Reviews

Their Global People Resources team noticed that their annual review process was not delivering the results they wanted. Two problems arose from the process:

  1. High voluntary attrition in the months after the reviews
  2. Very time consuming for managers

According to Ellie Gates, Director of Management Effectiveness at Adobe, their goal “should be to inspire people to do their best work.” Their complex infrastructure required approximately 80,000 hours of time from the 2000 managers at Adobe each time. Employees became frustrated and scared of the process as they would not know how they performed until that time of the year and not have an opportunity to improve. Even worse is when the employees are rated against their teammates to determine what they are worth financially to the organization. Adobe wanted to be true to itself as a company. After months of brainstorming, the team landed on the solution of check-ins.

 Adobe’s New Process

Adobe’s check-in has 3 components:

1. Expectations

Employees propose expectations to their managers. Expectations are the goals they want to achieve for the year. The minimum frequency is once a year, but check-ins are encouraged to take place on a quarterly or monthly basis depending on the nature of the work. Expectations are recorded and understood between the manager and the employee. Managers are encouraged to discuss the expectations to find the right balance between achievable and challenging. Therefore, it is a collaborative process.

2. Feedback

Employees are given ongoing feedback on the progress of their expectations from their managers to provide the adequate level of support. Employees are encouraged to give feedback as well. At the end of every quarter, the employees will get a quick reminder to review their expectations and discuss with their managers on where they are at, and with the feedback received, adjust their expectations.

3. Growth and Development

Adobe is one of the many companies who genuinely invest in their people. Each employee owns his or her career and development plan. Employees have the opportunity to share how they can grow in their current role and where they want to be career wise in the future.

Adobe’s Compensation Process

Since Adobe has stopped implementing forced ranking through ratings, they needed a new way to compensate their employees. Once a year, managers make adjustments in employee compensation. They are given a budget and have discretion over how they want to allocate it. Managers use market rates and also take into consideration how well each employee has met their goals in order to determine compensation. As managers have more accountability in terms of checking in with their employees and deciding their compensation, the old excuse “you deserve a bigger raise, but HR would not let me” does not work anymore.

Results from Moving Towards “Check-ins”

Adobe has experienced positive results from moving away from the traditional performance reviews for more continuous feedback and coaching check-ins. They have seen that the voluntary attrition has dropped 30%. Involuntary departures have increased by 50% only because check-ins have required managers to talk to employees who were struggling performance wise instead of waiting until the next performance review cycle. An employee survey revealed that managers and employees find system less cumbersome and more effective. Employees also reported that managers are more open to feedback as they have learned how to talk to their reports in a more inclusive manner.

Adobe is being a leader in adopting innovative processes for their performance management. One important point that Donna Morris raised was not every organization can and should abolish performance reviews. There is no one-size-fit-all solution on how to help all of your employees perform at the highest level.  Adobe spent months brainstorming on how to develop a system that works for the employees. Therefore, it is important for HR people to understand that such change management will require time and resources. HR people should start getting out of their comfort zone and find ways to revolutionize their performance management process.

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