Reference no: EM132237816

As we explained in the chapter, an increasing number of companies are no longer conducting formal performance reviews. However, most still do. In a recent survey of 1,500 U.S. office workers, 88 percent of them reported receiving formal written reviews—often with rankings—usually on an annual basis.

The survey, which was conducted by Adobe Systems, the maker of Acrobat, Photoshop, and Flash software, also revealed the following bad news about formal performance reviews:

More than half of office workers feel that formal performance reviews have no impact on how they do their jobs (59 percent) and are a needless HR requirement (58 percent).

Eighty percent of office workers would prefer feedback in the moment rather than a progress review after a certain number of months.

Performance reviews are extremely stressful for both managers and employees. Rankings and ratings create competition among employees and result in even more stress.

A surprisingly large number of workers, both male and female, reported actually crying after a performance review and either looked for another job or quit their jobs shortly afterward.

Nearly two-thirds of millennials (61 percent) would switch jobs to a company with no formal performance reviews even if the pay and job level were the same.

For reasons such as these, Adobe stopped doing formal reviews in 2012. The effort to ditch them began somewhat haphazardly: Donna Morris, then a senior vice-president of human resources for Adobe, believed the firm’s 360 employee reviews and ranking process was too complex, bureaucratic, and ate up massive amounts of time for which the company saw little or no return. She also believed they created barriers to teamwork and innovation because being ranked for compensation seemed to pit employees against one another.

The problem was something Morris had been thinking about at Adobe’s offices in India while being interviewed for a major business publication in the country. The reporter conducting the interview asked Morris what new cutting-edge HR practices Adobe was implementing. Suffering from jetlag, offhandedly she responded: “We plan to abolish the annual performance review format.”

Quickly Morris’s announcement made headlines. There was just one problem with it: She had only been contemplating ending formal performance reviews. She hadn’t actually cleared the idea with her CEO. Needless to say, when she got back to Adobe’s office in the United States, she had some explaining to do.

Morris wrote her case for ending performance reviews and posted it on the company’s intranet. She encouraged employees and managers to examine Adobe’s current review practice to figure out how to improve it, which they subsequently did. What they discovered was troubling. Adobe’s managers were spending in excess of 80,000 hours annually on the reviews. Worse yet, feeling demoralized by their reviews and rankings, a high number of Adobe employees quit after having them. That was making it hard for Adobe to retain talent, especially because it’s located in Silicon Valley, where the demand for tech employees is high.

Instead of formal performance reviews, today Adobe employees have periodic “check-ins” with their managers who offer them feedback, help with on-the-job problems, and ideas for their growth and development. No written review is required.

So does the new check-in system work? Yes. In surveys, employees say the check-ins make performance conversations easier, and less stressful, and that they get better feedback. Voluntary turnover has dropped dramatically.

In fact, Adobe believes its check-in system works so well it is helping other companies adopt it—for free. No software purchase necessary. The company has posted information about the system and all of its associated documents available on its pubic website. Among the items posted are worksheets and discussion guides for managers and employees and FAQs (frequently asked questions) about how the check-in process works and how to implement it.

“We love talking to other companies who are considering a move away from structured performance reviews, and many have adopted some form of check-in already,” says Morris. “Now we want to make it easier to share our experience with people who are exploring a model like this—whether they’re in technology or a totally different industry.”

Questions

Why did Adobe need a new performance management system? What drawbacks might there be to the company’s check-ins?

Are formal performance reviews always bad? Why or why not?