Read Application 14.2 regarding Adobe Systems and answer the following questions at the bottom of the case:

"Adobe Systems is a large and diversified software company with 2016 revenues of $5.8 billion. Employing about 15,700 employees globally, Adobe sells tools and services that enable customers to create graphic content, such as documents, photos, and other materials, deploy it across different media and platforms, and measure and optimize its use over time.

Donna Morris, Adobe's senior vice president for customer and employee experience, decided that Adobe's old performance management process-and especially the annual performance review-had to change. Adobe managers were spending 80,000 hours, roughly equivalent to about 40 full-time employees, on the process. It was time well spent if it produced results, but it did not. Adobe's appraisal process was time consuming, slow, and ill-fit to the business. It was routinely among the top problems mentioned in the firm's organizational surveys.

The existing review process was straightforward and similar to other appraisal processes. Once a year, managers asked people who had worked with their employees for feedback. Many people had to respond to more than 10 requests. Based on that feedback, managers participated in a rating and ranking session where each employee received a score-high, strong, solid or low-and a ranking relative to other employees across the organization. These results were written up, shared, and discussed with the employee in a face-to-face meeting. These conversations were sometimes difficult, because it was not easy to justify a score or ranking and sometimes employees were surprised at critical feedback. Salary and stock option recommendations depended on the employee's level, score, and ranking.

Adobe's human resources department, the People Resources team, spent much of its time ensuring that the review process was being carried out and addressing concerns from unhappy managers and employees. Complaints about the appraisal process were strongly related to changes taking place in the business. Under Adobe's original business model, products were sold as desktop applications and updated over 18- to 24-month product cycles. Customers would upgrade their software when they wanted, often waiting several years. Adobe's employees worked diligently under these long development cycles that generally mapped well to an annual goal-setting and review process. However, consistent with competitive trends and shareholder expectations, Adobe was moving to a "cloud-based subscription" model called Adobe Creative Cloud and began selling its new software through ongoing subscriptions. The company announced that it would no longer develop creative tools for its desktop programs. This move created major internal pressure to adapt the company's organization design away from a very structured way of working and toward a more agile product-development process that featured frequent product updates and innovations. Morris knew that the annual performance review was an obvious candidate for reinvention. However, in an odd twist of fate, the process got put on the fast track.

During an interview in Bangalore with one of India's leading business magazines, the combination of an aggressive interviewer and jet lag fueled Morris' frustration. She noted that the annual performance review was a thing of the past and that Adobe was thinking about eliminating it. In due course, the journalist alerted the marketing team that the magazine was planning to run an article the next week titled "Adobe Set to Junk Annual Performance Appraisals." It was not the way Morris wanted to start the re-design process, especially since she had not cleared it with the executive team.

Over the next few days, Morris alerted her colleagues and began writing an internal blog about rethinking the annual performance review. She noted the problems that had been raised, the changes in the business model, and wondered whether something better could be implemented. A large majority of the comments were positive and expressed support for the change.

Morris put together a design team comprised of multiple management levels, functions, and geographies. Over the course of several months, it developed a new appraisal process that was branded the "Check-in." It was described as a fluid two-way dialogue between a manager and employee. It was grounded in a statement of expectations for each employee written at the beginning of each year and reviewed frequently. Those reviews, the "Check ins," were expected to occur quarterly but managers and teams were given the flexibility to find a rhythm that matched the work. There were no requirements for written documentation, for how long the Check-in lasted, or how it should occur (face-to-face or virtually). The increased frequency and flexibility of feedback were expected to lower the number of review disagreements as well as the number of employees on a performance improvement plan.

Professional development was a core part of the Check-in conversation and supported the idea that employees were expected to manage their careers actively. Long-term goals, development needs and progress, stretch assignments, rotations, and other development opportunities could be raised by either the manager or the employee at any time.

The design team also revised the process for salary and equity adjustments. At the end of a year, managers were given a budget within which they were free to determine the amount of the reward. Senior leaders would review those awards and recommend stock grants to the best performers. For a manager, this process took less than an hour.

Finally, the design team adjusted the role of the People Resources team to support managers and employees and develop their ability to give and receive feedback. It was clear that the largest and most critical investment would be during the first year of program implementation. The People Resources team developed example templates for goals and expectations, a tool for planning and conducting a Check-in, videos showing effective Check-in conversations; and tips for making the Check-in more effective. A robust training program for both managers and employees built stronger skills in providing constructive feedback and utilizing it as a development tool.

Global implementation of the new performance review process began when Adobe provided the tools and training to replace the existing annual review process. Several parts of the process had to be adapted to countries with work councils or other legal regulations that required specific performance processes. The largest change-management challenge involved the People Resources department. Some of its roles, such as the business partners and the talent development teams, became more critical while other roles related to the old annual performance reviews were discontinued. Much greater focus was needed to ensure that managers were equipped to set expectations, conduct effective Check-ins, and recognize and reward performance. Thanks to the People Resources' training and support, the first year of the new review process went very smoothly.

Since then, there has been a concerted effort at continuous assessment and improvement. For example, People Resources assesses progress of the new review process through a combination of annual employee surveys and direct employee feedback. Its leadership team holds quarterly "Check-in on the Check-in" sessions to analyze employee attrition and leadership performance metrics.

Adobe's annual surveys suggest that most employees are aligned on expectations, receive regular feedback regarding their development and believe that their managers are open to feedback as well. Moreover, managers are taking more ownership of the rewards process. They have shown more differentiation at the high and low ends of performance than in the past. With Check-in, managers are more actively managing poor performers and making appropriate termination recommendations.

Finally, Adobe's employer brand has also become stronger. A higher percentage of former employees state that they would recommend Adobe to a friend. Adobe's recent exit survey, given to employees leaving the company, shows 75 percent as stating 'I would recommend Adobe as a great place to work.'"

1.)Why did Adobe change the performance appraisal process? What the change for the better or did it cause additional issues?

2.)What is one thing that was not featured in the new performance appraisal process?

3.)How did the People Resources Team support the implementation of the new appraisal process?