Talent Development – from the performance review to the performance conversation

At the heart of most performance management systems there is the performance review, a once-a year or twice-a-year formal conversation in which metrics are explained and feedback is given.

Our experience (and wider survey results – see below) make it clear that this rarely works either for the individual or for the organisation.

The formal performance review:

• looks backward not forward, focussing too much on performance ratings and not enough on performance development
• politicises relationships and stops people talking openly
• postpones and batches feedback so that it loses impact and relevance

Aware of their shortcomings, an increasing number of companies are abolishing performance reviews completely. Our view is that performance conversations need to happen but that annual appraisals are very bad examples of them. Good performance conversations need to be authentic and frequent, and to deliver growth for both the individual and for the organisation. To do that they should always include two key elements – the context (an understanding of what the company is trying to do and why), and the person (recognising and developing individual motivators and strengths). That is not something that can happen in an annual conversation – it is something that requires an ongoing, frequent conversation – a relationship, not an event. An effective performance conversation recognises the individual and their contribution to company goals and focuses forward on future growth. It is ongoing, frequent, and accessible.

Our experience has made us understand that talent and performance do not need to be ‘managed’ in the way that companies often think. Talent needs to be identified in line with the identity and purpose of the organisation and performance needs to be recognised, encouraged and developed by all. For this to work everyone needs to be involved and engaged in building a performance culture which:

1. encourages and develops collective and individual strengths and links them to company ambition
2. recognises and develops individual performance and contribution in natural conversations that are a frequent part of everyone’s working life

We help companies make these conversations happen: conversations that deliver both for the company and for the individual. Performance conversations that have clear guidelines and structure, that are genuinely interactive and that come out of the company culture. Conversations not only between manager and employee, but which involve the whole team in providing challenge, support and feedback.

Natural performance conversations should be future-focused, positive- focused, and action-focused.

Focus on the future. Focusing on future challenge and development is much more effective than running an autopsy on the past six months,

Focus on strengths. The most powerful common ground between the highest performing teams is the belief that “I have the chance to use my strengths every day.” This is much more effective than gap analysis.

Focus on actions. To get real feedback on someone’s performance, you need to ask team managers what they would do with their team members (or without them) in an ideal world. This is much more effective than a rating system.

We can help companies build an engaging approach to performance, one that delivers on both organisational and personal ambitions. This approach can turn performance management from an obstacle to an asset. To do that, we believe that it is important to engage everyone in the organisation in creating the criteria and structure for the performance conversation, to crowd-source the performance process internally. This makes intuitive sense, but there is also empirical evidence that it works: a recent survey finds that of the 12% of companies who crowd source their performance management systems, 76% of respondents find it leads to a positive perception of the system. Given that most people are dissatisfied with their existing performance management systems, it would seem that the remaining 88% of companies could make a real difference by adopting a crowd-sourcing approach.

THE RESEARCH

Our experience in the companies we know well is reflected in wider survey results in other organisations. A 2016 Deloitte report finds 82% of respondent companies unhappy with their performance management systems. Another Deloitte survey from the year before finds that less than 20% of people really feel that their performance management systems are helping them implement their strategy. A major HDC survey finds that most companies find their systems to be ‘ineffective.’ A CIPD survey from 2015 finds that less than 50% of employees believe their company’s performance management system to be fair:

The picture is clear: companies don’t get what they want from management performance systems and individuals dislike and distrust them. From an organisation perspective, performance management should be a key engagement tool, useful in a situation where 67% of companies see their engagement survey analysis failing to translate into change initiatives. From an individual perspective, conversations about personal stories, strengths and impact should engage and strengthen the link between the individual and the organisation. Somehow, the real goals of performance management have been lost, and ineffective performance management systems are failing both company and individuals.

THE IMPLICATIONS FOR YOUR COMPANY

• How good is your ranking system at engaging future performance and responding quickly to changes in company direction?
• You probably do engagement surveys – do you do anything with them?
• How agile is your performance management process? How frequent and accessible is the performance conversation?