2017: The Year Performance Reviews Get the Axe
It’s January and we should all be fired up and ready to make an impact. But for too many companies, the New Year means the start of the performance review season. Managers are burning the midnight oil writing, researching, rating employees and planning review discussions, while employees are worrying about what’s in store for them. Performance reviews are like getting a grade on a test that you couldn’t study for, and where you aren’t sure what the right answers even are.
We thought it was time to do a review of sorts of the performance review process, so we surveyed 1,500 office workers in the United States about what they thought about this common HR practice. I wish I could say I was surprised by people’s reactions, but we heard similar feedback to when we had the process in place. Here are some of the key takeaways from the study:
- Reviews are time consuming with little perceived benefit. On average managers we surveyed were spending 17 hours per review. Yet, more than half of office workers said that performance reviews have no impact on how they do their job and are a needless HR requirement.
- Ratings and reviews are stress-inducing. Nearly six in 10 say performance reviews are stressful, having their performance ranked against peers is upsetting, and their managers play favorites.
- People vote with their feet. As a result of reviews, many people said they cried (22%), looked for another job (37%) or quit (20%). The emerging workforce (Millennials) was even more likely to look for another job (47%) or quit (30%). In fact, close to two thirds of Millennials would switch to a company that didn’t have reviews even if pay and job level were the same.
- It’s time for a change. More than half of office workers and two-thirds of managers wish that their companies would get rid of or change its structured performance review process – for Millennials that was even higher. When it comes to the ideal process, most people want feedback in the moment and qualitative feedback.
There’s a better way
When we abolished our annual performance review nearly five years ago, people were surprised. Yes, it was a risk, but it was one I was willing to accept to provide our employees a better experience and to improve our company performance. We dropped the heavy process and focused on getting managers and employees to simply talk more often about what matters most: clear expectations, performance feedback, and career growth. We call it “Check-in” and since putting it in place, we haven’t looked back.
Risks bring rewards
In a time when agility, teamwork and innovation matter most, you can’t afford to breed competition, wait a year to tell people how they are doing, and then have them leave because they were disillusioned with how they ranked against their peers.
We saw big business benefits as a result of getting rid of our reviews. We estimate we’re saving more than 100,000 hours of our managers’ precious time previously spent on the formal performance review process, and at the same time we’ve decreased our voluntary attrition. Some wonder how we’re able to manage lower performing employees without a heavy process, but actually we’re doing better. We’ve seen an increase in involuntary attrition, which means we’re doing a better job of identifying and communicating when people aren’t meeting expectations. From a business point of view, Adobe has made a huge business model transformation and has grown exceptionally well over the past five years. I believe our more agile approach contributed to that.
Let’s innovate together
One of the things that was scary about getting rid of our performance reviews was that there was no vetted alternative. HR leaders have always been trained that performance reviews are THE way to manage and motivate employees. It was hard to imagine what it would be like to simply not do them anymore.
That’s why we’re open sourcing all our Check-in materials to show leaders and HR professionals a different approach. It may not be the perfect process for every company and there may be a better way, but we are strong believers that we innovate better together. Take our playbook, build on it and share it with us!
Make a commitment to write your last review in 2017 and find a better way to Check-in on performance.