Abolish Performance Reviews

I recieved in my inbox an article on Adobe’s experience on abolishing their annual appraisal process. One reason was cost, they calculated it took the equivalent of 40 FTEs to run the process which illustrates the distraction of management time. The article quotes quality guru W. Edwards Deming who says,

It nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics.”

They replaced their previous stack ranking system with a more flexible and empowered system, divorcing formal performance from salary/bonus decisions.

It proved to be more popular with managers and staff, with one employee reporting

… that a feeling of relief has spread throughout the company because the old annual review system was “a soul-less and soul crushing exercise.”

One side effect was that involuntary terminations increased but voluntary terminations reduced, It ought to be a happier place to work. …

Stack Ranking

Many company’s, particularly US owned, staff evaluation schemes are based on ranking their staff, and additionally rewarding the top 20% and firing the bottom 10%. (This idea comes from the US, probably from GE; firing people because they are not as good as someone else is illegal in the UK and much of Europe.) Basically it is not about continuous improvement, it’s based on a world view that thinks people are lazy and need fear to make them work hard. Fear of not getting a bonus, or fear of dismissal. This cynicism and hate will never build a successful firm. …