Performance Management: It’s all About Conversations

In a recent blog, I strongly advocated for the eradication of outdated performance management (PM) practices as a business imperative. According to recent research, 88% of organizations have a performance management strategy in place, yet an overwhelming 71% expressed that their current approach needed significant change to become an effective tool in achieving business results. [1]

From our work with clients, we’ve uncovered that one of the main success factors for reforming performance management lies in abandoning the annual performance appraisal in favor of creating a fluid, ongoing, coaching conversation culture. While creating a coaching culture might strike many as a “well, duh” insight, we’ve found that what appears to be common sense is far from common practice. Indeed, 64% of those in a study indicated “. . . developing managers to be effective performance coaches” [2] as a common and significant roadblock. Two issues surfaced as contributing hindrances.

The first hindrance organizations find are leaders operating from an outmoded and ineffective definition of coaching and feedback. They see a coach as being the expert who dispenses knowledge and wisdom. We call this an Outside-In™ coaching mentality—the coaching mindset being “they won’t figure it out without me.”

The second hindrance is fear of reprisals from others for providing performance feedback and coaching. The irony is that if feedback and coaching are not frequent and timely, the fear becomes a self-fulfilling prophecy as performers react emotionally—and rightly so—to messages that are ineffectively delivered and/or delivered too late (or worse, not delivered at all) to be of consequence.

But there is good news. There are many organizations that have cracked the code for creating an organization-wide coaching culture—reaping major benefits in the process. What have these organizations done?

Two key things. First, provide leadership development in an InsideOut™ Coaching approach to overcome Outside-In tendencies. InsideOut™ coaches have a mindset that “people are smart,” and the coach’s role is to remove interference to unlock potential that is already there.

The second thing these organizations do is engage senior leadership and executives to own accountability for establishing a coaching culture.

The dividends of building a culture rife with coaching conversations are many and not inconsequential:

• 79% of research respondents indicate that increasing the frequency of conversations have demonstrated a positive impact on performance improvement [2]

Organizations with effective coaching conversations report:

• Higher customer retention [3]
• Increased top-line revenue [2]
• Business goals met faster and in their entirety [2]
• Employees speak less often about leaving the organization/finding another job [3]
• Employees are more satisfied with the decisions that impact their work [3]
• Employees express more satisfaction and commitment about their work, the company, and their team/boss [3]
• Employees put forth more discretionary effort [3]
• Employees rate their manager’s performance much more highly [3]

1 Research conducted with 233 executives, business leaders, and HR executives and professionals across 12 industries, in 15 countries in global regions. Brandan Hall Group, 2015.

2 In comparison with control group organizations with traditional annual appraisal PM approaches. Brandan Hall Group, 2015.

3 Zenger Folkman, 2010.