Why Businesses Should Rethink The Annual Performance Review

For many business leaders, managers, and employees, the annual performance review season is as painful as tax season. And while taking time to review and reflect on performance is a valuable part of growing and stretching professionally, the traditional annual performance review can actually sabotage professional growth. According to Mercer’s 2013 Global Performance Management Survey, only 3% of organizations say their performance management system delivers exceptional value, while almost half (48%) say their overall approach to performance management needs work. This process needs to be reinvented in order to propel people and business forward.

Starting at the end of 2011 the Adobe business was transforming to provide cloud-based software, real-time services and innovative digital marketing solutions, but the changes in our business model were not reflected in how we evaluated performance, supported employee growth, and cultivated a team environment. People are our most important asset, yet the way we were fostering their growth had become antiquated and not aligned to our new business model –we were stuck in a time warp. There were three things that needed to be disrupted:

1. The annual process
2. Evaluating past performance
3. Comparing employees against each other

The yearly process took an inordinate amount of time, was viewed as a dreaded dental appointment by managers and employees alike, and resulted in a spike in voluntary attrition in the months after review time. It focused on past performance, looking in the rearview mirror, rather than focusing on a person’s progress forward. Finally, the ranking and rating system -- where employees are put in competition with each other for rewards (salary increases, bonuses, equity) – was antithetical to Adobe’s collaborative, team oriented and creative environment.

We needed an approach that would inspire our people to do their best work. In 2012, after months of brainstorming and soliciting feedback from employees, we made the decision to abolish the annual performance review and introduce what we call Check-in at Adobe. Our new Check-in approach revolves around setting clear expectations and goals between the manager and employee and facilitating frequent feedback based on the expectations. Check-in provides a disciplined framework for managers and employees to continuously share genuine feedback, while being flexible so people can tailor it based on their style. We have effectively eliminated obstacles – like rigorous process and forms – that inhibit continuous feedback.

With this approach, feedback and recognition are given in real-time, which we believe shapes people’s success. Employees are evaluated on the basis of what they achieved against their goals, not compared to their peers. Managers make their own decisions about salary increases and are trained on the most effective ways to make those decisions. And we are empowering managers and employees to be successful with Check-in through training, resources and tools.

While making the decision to abolish the annual performance review was bold, it was the right decision for Adobe, where our people are our greatest asset. Our managers are now having on-going, genuine conversations with their team members; employees are engaged in feedback; we are saving approximately 80,000 hours of our manager’s time in the annual review process; and our voluntary attrition continues to trend downward suggesting that employees feel valued.

Introducing Check-in was an iterative approach with many key insights along the way. What started out as a progressive initiative in 2012, has evolved today into a performance management approach that is embraced across the company globally and has piqued interest from other industry leaders. As business leaders we need to constantly re-evaluate our processes and have the courage to disrupt a process that might no longer provide our people or the company with value.