The World beyond Performance Reviews. The Forum applies the 70:20:10 Lens.


Performance reviews are part of life in almost all organisations.  Those that don’t already have all their employees within the annual performance review and development objectives cycle aspire to get them there. HR spends lots of its time, resource and energy on annual performance reviews – creating the processes, preparing managers and the workforce, and following up miscreants.
 
We all accept that our objectives will change during any 12 month cycle.  In fact they need to change if our organisations are to react effectively and ‘keep the show on the road’. But most of our organisations still march to the annual performance cycle. Despite the fact it’s been reported that nearly 60% of HR executives grade their own performance systems at C or below, according to a survey by Sibson Consulting and the professional association WorldatWork.
 
However some organisations have decided that this once-a-year process doesn’t work in a world where the rate of change is increasing and agility is a prime driver. Atlassian and Adobe are examples. Both companies have taken a new path.
 
Atlassian is an Australian tech company that ranked second in the 2013 BRW Best Places to Work in Australia list. It’s a small but growing company of just 700 employees, but its engineering-graduate founders Scott Farquhar and Mike Cannon-Brookes understand not just what makes a workforce tick, but what makes it ‘hum’. Joris Luijke, the VP of Talent and HR at Atlassian until recently, worked with Farquhar and Cannon-Brookes to make the HR function ‘a point of difference with competitors’ and create the kind of working environment that is so appealing that ‘its employees would not countenance working anywhere else’. Atlassian is a shining example in a country where, by its own admission, organisations ‘tend to the conservative in their people practices’ (as Fiona Smith reports, writing in the Australian business magazine BRW).
 
In 2011 Atlassian took the decision to get rid of its traditional twice-yearly five-point rater scale performance review process. Analysis showed that these reviews, rather than being focused on development and performance improvement actually ‘caused disruptions, anxiety and demotivated team members and managers’.  In place of the reviews managers and their reports were asked to discuss performance and goals on a weekly basis as part of existing one-to-one meetings.
 
Being a tech company, Atlassian also provided an online app to support capture of questions such as ‘how often have you stretched yourself during the week’ in a simple and concise way.
 
At the same time Atlassian also changed its bonus structure, removing the individual performance bonus structure and replacing it with an across-the-board salary increase.  In his book ‘Drive’ Daniel Pink explains the problems with individual bonuses.  His short RSA video is here. Pink also cites Atlassian for its innovative culture and ways it drives personal creativity.  There is certainly a link here between the introduction of weekly ‘mini-reviews’ and innovations.
 
Adobe is another high tech company headquartered in San Jose, California. It employees around 11,000 people and has been around since 1982.
Adobe also came to the view that annual performance reviews were not delivering what the company required.  In 2012 Adobe abolished its performance reviews and replaced them with ongoing “check-ins” in a similar way to Atlassian. Adobe pondered that if performance reviews were supposed to provide employees with feedback and help managers build more effective teams, then ‘why were they distracting these managers for weeks at a time?’
 
Adobe’s own business processes had reduced from 12 to 18-month cycles of boxed software production to weekly, daily and real-time cloud based products and services. Donna Morris, SVP of people resources (the HRD), said that the company wasn’t seeing positive results from the annual performance approach and took the leap to the “check-ins”.
 
Adobe’s new approach is based on clear expectations, frequent feedback, and no ratings or rankings. Morris reports that “it’s liberating”. Voluntary attrition has decreased substantially and managers make their own decisions about salary increases. They are trained in the most effective ways make those decisions.
 
Lessons and Take-Aways
One of the recurring themes in the research is that line managers are critical factors in both the development and the performance of their people, and anything that can be done to help managers in this task is likely to reap rewards. 
 
Adobe and Atlassian’s move to turn what is for many is an annual process-focused activity into genuine tool to grow and support a high performing workforce that is focused on continuous development is one that I suspect many other organisations will follow.
 

Links to Articles

Atlassian: Performance Reviews Lose Steam 

Adobe: The Dreaded Performance Review? Not at Adobe