A Soul Crushing Exercise
This morning I saw a post on LinkedIn by Bob Sutton who is a Stanford Professor and Co-author of Scaling up Excellence. He discusses Adobe's move to abolish it's employee stack ranking system. After the system was eliminated, one Adobe employee noted that a feeling of relief spread throughout the company because the old annual review system was “a soul-less and soul crushing exercise.”
Stack-ranking was popularized by Jack Welch at General Electric (which has since ended the practice). GE felt the discussions forced honesty. Stack ranking forces the discussion betweenn manager and employee to address at least one key question: "Tell me where I rank and tell me why." Some organizations go even further - terminating employees who fall into the bottom 5-10% each year.
My personal experience with systems like these is they force employees to play "Game of Thrones" at work. It doesn't drive teamwork, instead employees hoard information and act on their best interests. It also creates a culture where people are afraid to be innovative and take risks (because what if they fail?). The worst aspects may be the politics that arise, or the behaviors where people highlight failure and mistakes in others in order to make themselves look better.
I think W. Edwards Deming characterized stack ranking better than I ever could:
“It nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics. It leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.”
— W. Edwards Deming - Out of the Crisis (1986)
Adobe's Changes:
- No more annual reviews, but managers are expected to have frequent “check-ins” with employees to provide targeted coaching and advice. There is no prescribed format or frequency for these conversations, and managers don’t complete any forms or use any technologies to guide or document what happens during such conversations.
- One of the main goals was to subtract technology* from the feedback process. Adobe didn’t want managers to hide behind forms and computers. Instead, managers should focus on having candid and open conversations with the people they lead.
- Once a year, managers make adjustments in employee compensation. Managers have far more discretion over such decisions than in the past: they have nearly complete authority to allocate their budget among their charges as they see fit.
- Employees are compensated based on how well they have met their goals - not on the "bell curve".
Adobe's Results:
- Voluntary attrition at Adobe has dropped 30% - much of which used to happen right after annual reviews.
- Involuntary departures have increased by 50%. because the new system requires executives and managers to have regular “tough discussions” with employees who are struggling with performance issues — rather than putting them off until the next review cycle.
- 78% of employees report that their manager is open to feedback from them, a sizeable improvement over past surveys.
- Eliminated the cost of employee review tracking and management system.
- Saved an estimated 80,000 hours of time from the 2000 managers at Adobe each year, the equivalent of 40 full-time employees. (although I feel this is suspect assuming managers spend at least as much, and hopefully more, time giving employees informal feedback instead)
Takeways
Companies who claim they want all "A" players and then force a bell curve on them are doing themselves a disservice. This is not an internally consistent approach, and demotivates groups of employees who really are all top performers. If you really want all top performers you need an approach that allows everyone to excel.
In addition you need a culture that top performers find enticing:
- A sense of purpose - what is the mission of the company?
- Clear goals - What am I expected to contribute? What are the "the rules"?
- Linkage of company success to personal success - "A" players are competive and want to be on a winning team. They also want to be recognized for their contribution.
- Positive feedback - "A" players are used to positive feedback loops. They don't respond well to negative feedback loops. Make sure you tell them how important they are and exactly where and how they are doing well, then you can share how they can improve.
- "Listened to" and respected - By definition "A" players are smart - listen to them! If an "A" player shares a great idea to improve the company and it is seriously considered and/or implemented they will feel great (and probably will come up with many more ideas).
Surprise - a culture like this works for everyone!
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