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Key Topics
Requirement
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Why did Adobe abandon traditional performance reviews?
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What does “stack ranking” for performance reviews refer to? Identify the positive and negative impacts of stack ranking for employees and firms/organizations.
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What approach did Adobe adopt to replace traditional performance reviews? What was the effect of this new approach to performance reviews for employees and managers?
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Are there particular firms or industries where Adobe’s alternative approach to performance management may not work? Explain your team’s case.
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Increasingly teams are pivotal for innovation, creativity, and productivity. How can firms and organizations reconcile tensions between the need to build strong teams with the need to improve the productivity and performance of individual employees?
Solution
Question 1. Why did Adobe abandon traditional performance reviews?
Answer. Adobe management was highly agile, had increased collaboration and speed but it was clearly seen to neglect the advance itself for managing as well as leading the people. Adobe Management realized that their previous annual review process was not able to deliver the expected results. The following problems were seen in the traditional performance review:
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With the stack ranking, the employees were seen to feel compelled to make sure that they are among the top 15% performed. Due to which every employee aimed to maximize his own personal success, at the expense of the team. This led to decreased team efforts, creating issues for the company. The employees were forcefully evaluated their employees in four categories namely: high performer, strong performer, solid performer and low performer. This evaluation took place on an annual basis resulting in increased employee frustration and demotivation.
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The performance reviews were highly infrequent and problematic as they did not help in identifying the issues. The reviews were usually seen to be based on the past performance and did not focus on future aspects, therefore, impacting the employee aspects adversely. The review process was dreaded by employees because the feedback was unexpected.
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The performance labels were highly dreaded by the employees and the performance reviews are not even aligned with the organizational realities of the business operations.
Therefore the traditional performance review system was seen to have high voluntary attrition after the reviews and was seen to be highly consuming for the managers. The whole performance review system made the employees feel scared and frustrated as they were not having clue of their performance until that particular time of the year. This way the performance review gave no opportunity for the employees to improve. With all the employees being rated against their own team members, the organization lacked team management and no employee was able to determine their financial worth to the organization. The traditional approach was highly demotivating and frustrating for the employees leading to inclination in the attrition and involuntary departure of the employees. Therefore, Adobe realized that the best way is to abolish forced ranking for determining the compensation for their employees. (Why Adobe Abolished The Annual Performance Review And You Should, Too, 2014).
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Question 2. What does “stack ranking” for performance reviews refer to? Identify the positive and negative impacts of stack ranking for employees and firms/organizations.
Answer. Stack Ranking or Forced ranking is a performance review system that ranks its employees against each other. In simple words, the manager is directed towards evaluating the performance of the employees against their own team members rather than in a common measure of evaluation against the standards which are pre-determined. And the results of these types of performance reviews are seen to be highly blunt where the top 15 percent of the performers are rewarded amply and the bottom ones are straightway shown the door (Forbes Welcome, 2016). The organizations are seen to believe that the implementation of the forced ranking procedure will help in differentiating talent and as a tool for stimulating the employees falling under the assigned category.
Benefits
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The stack ranking helps in differentiating the productive and unproductive employees. This ranking method helps in preventing the managers to assign average or related rating across the board. This type of ranking helps to compare the performances of the employees and thereby helps in identifying the high and low performers.
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With the identification of the high performers, the organization can take proactive measures for retaining their best employees. The organization can organize various programs and workshops for retaining their best talents.
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The stack ranking can easily identify their low performers and thereby provides an organization to motivate these employees and increase productivity by monitoring and coaching these employees towards giving better performance. By addressing the low performers, the organization can motivate and engage other employees also (What is Stacked Ranking? Should You Use It? 2016).
Challenges
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The stack system prevents the real evaluation of the employees. A certain share of workers is seen to have their rating altered for creating a mere accurate distribution of score leading to suspecting of the whole performance management process in the employee’s eyes.
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It created an individual culture in the organization promoting individual competitiveness which is directly detrimental to the team dynamics and the essence of teamwork. This leads to decreased team ethics in the organization and therefore decreased productivity.
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The performance review process is turned into a demotivation among the employee thereby obstructing the cultivation of growth and improvement in the working environment.
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The sharing and coaching are discouraged and the low performers do not get a chance of improvement.
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.This type of performance review manifests intense competition among the team members leading to disruptive goals and objectives of the company.
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With increasing attrition, the organization faces difficulty in retaining their corporate knowledge. This leads to decreased productivity and performance of the organization.
Question 3. What approach did Adobe adopt to replace traditional performance reviews? What was the effect of this new approach to performance reviews for employees and managers?
Answer. Adobe replaced their traditional performance reviews with their New Process called the Check-in Approach. The prime purpose of the Check-in was to ensure that all the employees get proper and frequent feedback. This process was introduced as a means of monitoring the performance where the expectations were set clearly and it was a norm to provide effective feedback. In this performance review, the employee expectations were proposed directly to their managers. The minimum frequency was set on a yearly basis however, the check-ins were encouraged for a monthly or quarterly basis which solely depended on the nature of their work. The expectations were asked to be recorded as well as understood between the employee and his manager. According to this system, it would be managers’ responsibility to discuss these expectations and further to find an equilibrium between challenging and achievable expectations.
Further, the employees were given feedback on an ongoing basis as per the expectations of the employees. The employees were also encouraged to provide their feedback. This approach of performance reviews provided a quick reminder to the employees to review their own expectations and then to discuss with their managers. This enabled an increased communication between the manager and the employees. Therefore, this approach helped in providing equal opportunity to their employees and considered the growth and development of their employees.
Once the transition was over, the employees were motivated as they could tell their families how good they were performing at their workplace providing their total insights on the areas to be improved and the course to be changed. The feedback was not a gift for the employees who were once demotivated and frustrated with the stack approach. With constant communication among the employees and the managers, the performance was seen to be improved. Within two years, the rate of attrition was seen to decline and the elements of accuracy and fairness were embedded in the performance evaluation system of the company.
The check-in approach helps in fueling the sense of ownership among the management. They were provided with a budget and gained high knowledge and information related to competitiveness in the market places. This helped the managers to create their own performance curves and the employees were seen to be rewarded with greater differentiation and value as compared by the traditional system. Additionally, the toll of memorizing the information also declined and they were encouraged to share actionable feedback resulting in an inclined application impact for the employees. The whole organization earned considerable cost and resource savings and the voluntary attrition and involuntary departures were seen to be dropped by a significant margin. The system is less cumbersome and highly effective in increased employee motivation along with increasing the communication level among the employees and managers.
Question 4. Are there particular firms or industries where Adobe’s alternative approach to performance management may not work? Explain your team’s case.
Answer. There might be industries that focus only on the yearly feedback and thereby these types of industries and companies would be more comfortable with an annual performance review system. As regular check-ins and evaluations of the employees will result in an increased and unnecessary workforce.
My team faced similar issues with the annual performance reviews which lead to increased conflicts and tension among the managers and the employee. Therefore, the organization thought of adopting to 1:1 meeting at a regular time interval where every individual employee would get a chance of interacting with their managers. This has helped to redefine the traditional approach towards achieving the goals and objectives of the employees and the organization. Every employee interacts with his managers on a monthly basis where his previous week's performance along with the next objectives and goals are discussed thoroughly. He is also coached regarding his behavior and participation in the team dynamics. The whole process is time-consuming but it’s highly effective for our organization.
This approach has helped out an organization to understand the difference between the individual, organizational and team performance and the employee is able to dedicate his work to his team and to the organization in a clear manner.
Question 5. Increasingly teams are pivotal for innovation, creativity, and productivity. How can firms and organizations reconcile tensions between the need to build strong teams with the need to improve the productivity and performance of individual employees?
Answer. The managers have to recommend an effective performance management practice in the organization in order to manage the individual and team performance. The various recommended performance management practices are:
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Providing the teams and the individuals with clear and constructive feedback: The teams and the individual team members must be provided with the constructive and clear feedback so as to identify the shortcomings of the team dynamics along with evaluating the individual performance. This will ensure that the employees understand the essence of teamwork as well as being able to critically analyze their respective roles in the team.
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Defining and communicating clear performance objectives and standards: It is the responsibility of the manager to communicate and define detailed and thorough instructions to the employees. The clear performance objectives and standard will help the employees to understand their role as an individual and as a team member. In this manner, the employee is able to understand what is expected of him by his manager and the organization.
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Aligning individual employees' day-to-day actions with strategic business objectives: the employees should be given a specific task or objective apart from the team objectives. On aligning these day-to-day actions with the strategic business objectives, the employees are motivated further and focus on their individual performance apart from attaining the team objectives.
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Documenting individual performance to support compensation and career planning decisions: The organization must keep a record of the individual performance of the employee for supporting compensation along with career planning decisions. An effective goal setting system must be implemented which should be linked with a process related to tracking the progression, thereby contributing directly to the individual, team as well as organizational performance.
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Establishing focus for skill development and learning activity choices: The managers must evaluate and measure the team and individual performance for optimizing the performance and productivity. When the managers are able to focus on the development of skills and learning of the employees, they are able to depict that in their team dynamics thereby enhancing the team and individual performance.
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What is Stacked Ranking? Should You Use It?. (2016). Blog.clearcompany.com. Retrieved 29 October 2016, from http://blog.clearcompany.com/what-is-stacked-ranking-should-you-use-it
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Forbes Welcome. (2016). Forbes.com. Retrieved 29 October 2016, from http://www.forbes.com/sites/robertsher/2012/07/10/the-case-for-stack-ranking-of-employees/#599c398f7bdc
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Forbes Welcome. (2016). Forbes.com. Retrieved 29 October 2016, from http://www.forbes.com/sites/davidburkus/2016/06/01/how-adobe-scrapped-its-performance-review-system-and-why-it-worked/#33be355d44d4
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Why Adobe Abolished The Annual Performance Review And You Should, Too. (2014). Business Insider. Retrieved 29 October 2016, from http://www.businessinsider.in/Why-Adobe-Abolished-The-Annual-Performance-Review-And-You-Should-Too/articleshow/33570770.cms
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