How Can Companies Make Effective Performance Conversations Happen?

At the September 2017 CRF Masterclass on Organisational Performance Improvement, Mike Haffenden was struck by the complementarity of our perspectives on performance management, and requested that we co-author an article for CRF.  Because we highly regarded each other’s presentations and appreciated the chance to write together, we agreed.  This article is the result of that collaboration.

We agreed to focus on the topic of how companies can make good performance conversations happen.  Both of us consider this to be one of the most important issues in performance management, but one that has been relatively neglected.

We have a similar view of what constitutes good performance conversations between managers and employees; we believe that good performance conversations are the essence of good performance management; and we have complementary ideas about how to make good conversations happen consistently.  Here we address each of these issues, with special emphasis on practical ways to make good conversations happen.

1. What is a good performance conversation?

We agree that a good performance conversation is largely focused on employee development.  Employees want to know what is expected of them, how they are doing, and especially what they have to do to increase their performance. Without this developmental action, all the effort on goal setting and feedback won’t make much difference.  We agree on the tone of good conversations:  they are open, honest, two-way dialogue about past performance, future goals and expectations, and ways of achieving future goals.  They entail mutual problem solving.

Gerry’s perspective reflects prior research that has identified manager behaviours that are associated with useful performance feedback.  These include goal setting, coaching, providing consequences for the level of performance, and effective communication.  Each of these behaviours require knowledge and skill.  For example, goal setting is a powerful tool, but effective goal setting requires real dialogue about achievable performance targets and what levels of performance should be associated with meaningful rewards.

Wendy’s perspective emphasises that good performance conversations are highly contextual.  That is, they address issues relevant to the situation an employee is in.  Think for example about the differences between conversations you really need with:

  • Someone fairly new in role: their progress and what skills or knowledge to work on next.
  • A persistently poor performer: are they trying to improve and if not, what will happen?
  • An employee nearly ready for promotion: what kinds of opportunities at the next level up might suit them best, and what do they need to become a credible candidate for such roles?
  • An experienced good performer: giving recognition and identifying any development needed to keep pace with change or to develop increased flexibility.

The central message about context is that a conversation that does not feel it is about you will not lead to useful action and will certainly not make you feel motivated to improve.

2. Why do performance conversations matter?

Performance conversations are the central event in performance management.  The core goals of performance management – increasing performance and development – do not result from the mechanical application of performance management techniques, such as delivering performance ratings, using technology to complete forms, collecting performance data from peers and others, and so on.  Actual improvement happens through honest, mutual discussion and problem solving between manager and employee.

The STAIR graphic below (albeit with initial letters not quite in this order!) summarises five important characteristics of effective performance conversations for managers and individual employees to remember.

Starting at the far end, performance conversations need to lead to action. In order to do this, they need to bring fresh insights to the employee, the manager or both.  Such insights are more likely if performance conversations are relevant and timely with genuinely shared ownership. Two consenting adults are a minimum requirement – not one reluctant manager and a stressed employee.  Semi-formal conversations, like regular one-to-one meetings, are amenable to mutual agenda-setting and can be flexible in addressing a range of issues and actions over time.

3. How do we make good performance conversations happen?

For at least 70 years, practice and research on performance has focused on techniques – how many points on the rating scale (or whether to have one), how to rate performance, how many people should rate performance, how to avoid bias in performance ratings, how to set goals, what technology to use, and so on.  It’s not that techniques don’t matter, but they don’t matter nearly as much as managers and researchers would like to believe.  The reason is that most of them do not have a positive effect on performance conversations, the central events of performance management. Indeed they often lead to defensive conversations in which the employee is largely focused on trying to getting a good rating and the manager on filling in the form.  What is the alternative?

We think that the place to start should be the performance culture of the organisation.  Organisations with a strong performance feedback culture instil in managers the belief that providing frequent, high quality performance feedback is a critical part of their jobs.  We have seen organisations that have an effective performance feedback culture make performance management work effectively even when the use relatively primitive techniques and technology.  Conversely, we have seen organisations that perennially fail at performance management, even though they always adopt the hottest fads and systems.

Culture is built through organisational practices that reinforce patterns of behaviour.  Six types of culture-building practices that are relevant:  communication, training, monitoring, rewarding, assessing for hiring and promotion, and modeling by senior executives.  Our research indicates that companies use a wide range of specific practices in each category that are tailored to specific organisational needs, and there is no simple checklist of practices that guarantees success.  It takes the hard work to get it right.

Communicating and Training.  The most common culture-building practices are communication and training.  Communication and training provide managers and employees with information about the behaviours that are part of high quality conversations and the skills to conduct them.  Note that we say “managers and employees” because employees are often omitted from the process, but they are at least as likely to need the right skills as managers.

Monitoring.  Monitoring is important because it is impossible to sustain a performance management culture if no one knows whether managers are providing high quality feedback.  Most companies collect minimal data about this, but the data usually are not specific enough to be actionable.  For example, most companies use general survey questions about satisfaction with performance management.  However, it is often impossible to know which managers the data references and the data are too general to be useful for diagnostic or problem solving purposes.  More actionable data are needed.  For example, specific managers need to be identified and specific questions about manager feedback behaviour are needed.

Rewarding.  Reinforcing good feedback behaviours with salary increases, promotions, and bonuses is the most controversial type of practice.  Many companies assume that good feedback is just part of the job, not deserving of a reward.  However, managers pay attention to and give more energy toward behaviours that are rewarded.  Taking into account manager feedback behaviour in rewards sends strong messages.

Assessing for Selection/ Promotion.  Selection for managerial roles, either by promotion or outside hiring, should be based in part on an assessment of manager feedback style and skills.  The choices in hiring and promotion sends strong signals about what matters to senior executives.  Note that promoting based partly on performance feedback behaviour requires some method of assessing and monitoring that behaviour.

Modeling.  Finally, perhaps the most important signals of all are the degree to which the most senior executives of the organisation themselves model providing quality performance feedback.  Managers discern what behaviours are most appropriate for their role by the way they are managed.  Unless executives display the kinds of behaviour that is outlined in communication and training materials, exhortations will be seen has hypocrisy.

Conclusion

We think it is high time that practitioners and researchers stop focusing most of their attention on the latest fashions in a once a year ritual of formal performance reviews.  Instead focus on meaningful performance and development conversations.  HR professionals are already saying this is what they need to do, but most communication from HR is still about filling in the online forms on time.  Effective conversations require a repertoire of behaviours that are reinforced by a strong performance feedback culture, which in turn is created by an array of organisational practices.  We have some doubt that this shift in focus will happen. However, it does seem necessary if we want to make real progress in managing performance at work.

About the authors

Gerry Ledford
Senior Research Scientist at the Center for Effective Organizations at USC
Gerry Ledford is Senior Research Scientist at the Center for Effective Organizations at USC. He is a recognised authority on aligning human capital practices to business strategy. Areas of interest include total rewards, employee engagement and involvement, talent management, design of work, large-scale organisational change, and HR technology. Gerry is leading several projects on performance management practices, including ratingless appraisal, continuous feedback, and crowd-sourced feedback.
gledford@marshall.usc.edu

Wendy Hirsh
Researcher & Consultant
Dr. Wendy Hirsh is an independent researcher and consultant in employment issues, especially in how organisations develop people to meet their future business needs. She has a long-standing interest in succession planning and its links with strategic workforce planning, leadership development and individual career planning. Much of her work concerns how employees, line managers and HR/L&D professionals work together.
wh@wendyhirsh.com

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