Proving the Theory: 3 Case Studies
In Part 3 of this eBook we laid out a practical framework for Continuous Performance Management. In this section we’ll look at how three different sized organisations have implemented such a framework and the results they have achieved.
Adobe – the early innovators
Adobe were the first well-known company to abandon appraisals in favour of a continuous approach to performance management back in 2012.
Prior to the change, Adobe’s performance management approach was pretty standard – once a year, managers would collect examples of past performance, conduct 360-degree evaluations for each employee, and complete a written document summarising each employee’s performance for the year. Then the manager would assign an overall rating to each employee from four categories: high performer, strong performer, solid performer or low performer. Following this, the ratings were moderated into a forced distribution, so no more than 15% of a manager’s team could be a “high performer”.
The process was incredibly time consuming, taking an estimated 80,000 hours of managers’ time each year. Additionally, they noticed that they had a spike in resignations each year in the months following the annual review, which was attributed to disappointed employees leaving after receiving ratings below their expectations.
So they completely redesigned their performance management system to eliminate the annual performance review and ratings, and replaced it with more frequent and less formal check-ins. Each employee must check-in with their manager at least once a quarter to discuss expectations, feedback, growth and development.
To support the transition Adobe ran training sessions for their managers and created a resource centre with guidance and one-pagers on how to have good quality check-in conversations.
The results have been impressive and Adobe has seen a 30% decrease in the number of employees leaving voluntarily and a 50% increase in involuntary leavers (as it is now able to deal with under-performers more quickly and effectively). Donna Morris, SVP of HR at Adobe says that having regular check-ins:
“…completely changes how employees feel about their jobs and opportunities. It has really helped to create teamwork instead of individualism, which is critical in a creative company. Feedback is now viewed as a gift.”
General Electric (GE) – the global giant
General Electric is one of the largest companies in the world, employing over 300,000 people globally across numerous business sectors. Under the reign of its former CEO, Jack Welch, GE was the most well-known proponent of annual performance ratings and forced distribution curves. For decades, GE operated a ‘rank and yank’ system, whereby employees were appraised and rated once a year, following which the bottom 10% were fired. Not exactly a recipe for employee engagement.
So when they announced in 2015 that they were abandoning formal annual reviews and ratings, it came as a surprise to both the business and HR worlds.
Under GE’s new process, employees and their supervisors have regular check-ins (which they call ‘touchpoints’) throughout the year. These are forward-looking discussions that focus on priorities, personal development and coaching. Staff can give or request feedback at any point. Feedback can be given to any employee in the organisation, so it’s not limited to managers giving downward feedback to their team members. At the end of the year, managers summarise the impact each of their team members has had during the year which then informs decisions about pay.
The whole process is supported by an online app, similar to our Clear Review software, which was developed by their own software team.
Since adopting continuous performance management, some teams have seen a five-fold increase in productivity. Staff surveys have revealed that employee satisfaction with the new process is higher than it was with annual appraisals and ratings. Additionally, 77% of managers have said they are better able to differentiate performance for pay purposes.
Star – the SME
Star is an award-winning outsourcing and resourcing company focusing on the pharmaceutical and healthcare sectors. Star was acquired by Uniphar, a leading provider of outsourced services to the pharmaco-medial sector in Ireland and the UK, who invested heavily in Star’s infrastructure and people. The business experienced rapid growth and the priority throughout was making sure they attract, retain and develop great people.
Traditional performance measures were no longer fit for purpose and Star was looking for something with greater structure and efficiency that could scale with the business.
In response, Star implemented our Clear Review Software in 2016 and has already seen significant benefits. Employees now take more ownership over their objectives and their check-in meetings, and automated email reminders have increased adoption rates, helped to build new habits and have freed up HR to focus on other initiatives. The system has increased visibility of performance data, both for HR and for managers, which is particularly important as many of Star’s employees work remotely. Kirstie Difford, HR Business Partner at Star adds:
“People are more engaged and motivated. We’ve seen a huge increase in proactive feedback across functions. The system’s efficiency has also enabled our HR team to devote more time to other tasks.”
In this section, we have looked at three very different organisations who have successfully transitioned away from annual appraisals to year-round performance management, and we have seen the tangible benefits they have achieved. It’s important to note that all three of these companies used specialist continuous performance management technology to realise those benefits. So in the next part of this eBook, we’ll be looking in more detail at why software is essential in order to successfully embed Continuous Performance Management.