Ditching annual performance reviews has paid unexpected dividends.
If there’s one thing almost everyone in corporate America can agree on, it’s that traditional once-a-year evaluations are a waste of time. Managers and employees dread the discussions, and plenty of evidence shows they don’t produce anything but a pile of extra paperwork.
“I looked at this whole process, back in 2011, and thought, ‘Is this really doing anything useful for us? Why are we doing it?’” recalls Donna Morris, Adobe’s global senior vice president of people and places.
Especially troublesome was that the company’s “rank and yank” system, which forced managers to identify and fire their least productive team members, caused so much infighting and resentment that, each year, it was making some of the software maker’s best people flee to competitors.
So, based in part on ideas crowdsourced from employees, Morris and her team scrapped annual evaluations and replaced them with a system called Check In. At the start of each fiscal year, employees and managers set specific goals. Then, at least every eight weeks but usually much more often, people “check in” with their bosses for a real-time discussion of how things are going. At an annual “rewards check-in,” managers give out raises and bonuses according to how well each employee has met or exceeded his or her targets. “Managers are empowered to make those decisions,” says Morris. “There is no ‘matrix.’ HR isn’t involved.”
The new approach has required extra training for managers, who have had to adjust their schedules to “allow for setting expectations and giving feedback in real time,” Morris notes. Getting used to the new system has taken longer in some countries than in others, she adds. Adobe’s employees in India, for instance, “were anxious at first about not having the old written ‘report card’ every year, until they realized that, by having these conversations much more often, they would always know exactly where they stand.”
Morris says that transparency has paid unexpected dividends. For one thing, fewer valued staffers are leaving, despite the ferociously competitive Silicon Valley market for tech talent. “People who have turned down other offers tell us it’s partly because Check In makes them feel like we’re helping them succeed,” says Morris.
Not only that, but more frequent talks between managers and underperforming staffers have led to a marked increase in what Morris calls “involuntary, non-regrettable attrition, because team leaders are no longer putting off having tough conversations with people who aren’t cutting it,” she says. “It’s not just about retaining talent. It’s about retaining the right talent.”
It’s also about boosting Adobe’s ADBE stock price. Getting feedback in real time, so everyone stays on track and is pulling in the same direction, has helped make Adobe’s 13,000 employees far more productive, Morris says. Adobe’s stock price has increased from about $30 to over $80 since Check In began.
Read more about Adobe, which ranks No. 90 on Fortune’s 2015 list of the 100 Best Companies to Work For.