Chapter 5

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.”

Sum­ma­ry

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.