If you’re finding end-of-year reviews stressful – both as employer or employee – you’re not alone. New studies show that using regular and meaningful conversations to appraise performance could revolutionise your business.

If you manage a team, regardless of its size, it’s important to have your finger on the pulse so that you can understand and address problems with underperformance. While traditional employee appraisals involved just a few tense meetings each year, many businesses are switching to a model that encourages regular check-ins and continuous feedback.

Performance is about more than completing tasks: it’s also about day-to-day enthusiasm, cooperation and how people influence your organisational culture – factors that affect your customers and your business bottom line. It’s important to understand the contribution of each person, from brokers through to support staff. That means talking to your team.

Deloitte’s 2017 Global Human Capital Trends report revealed that re-designing performance management was a high priority for 79 per cent of executives. More agile approaches to performance management made a difference: 90 per cent saw improvements in engagement, 96 per cent said the processes were simpler and 83 per cent said it improved the quality of conversations between employees and managers.

From evaluation to conversation

Writing about the shift in performance management for the Harvard Business Review, Peter Cappelli and Anna Tavis provide an overview of how appraising performance has evolved.

They describe a past business environment where merit-rating systems and forced rankings were widely adopted. These involved intense evaluation of yearly results, person-to-person comparisons and identifying the ‘best and worst’ performers as a way to determine bonuses, promotions and dismissals. 

Capelli and Tavis point out that these systems were often hated by both employees and managers. As companies began to put more emphasis on teamwork and developing talent, performance management also needed to change.

“With their heavy emphasis on financial rewards and punishments and their end-of-year structure, they hold people accountable for past behaviour at the expense of improving current performance and grooming talent for the future - both of which are critical for an organisation's long-term survival.

“In contrast, regular conversations about performance and development change the focus to building the workforce your organisation needs to be competitive both today and years from now.”

They argue that performance management guided via day-to-day conversations supports both immediate and long-term improvement.

“Ideally, conversations between managers and employees occur when projects finish, milestones are reached, challenges pop up, and so forth – allowing people to solve problems in current performance while also developing skills for the future.”

Authentic conversations deliver value

Author, speaker and consultant on performance management Dr Tim Baker believes conversations are effective because great leadership is essentially about building relationships.

“If leadership is a relationship, then my question is – how do you have a relationship? And the answer is, one conversation at a time. At the end of the day it’s as simple as bringing the human being back to work,” Dr Baker said.

“I know that most leaders are shirking the conversation. They would argue that they don’t have enough time for conversations, which is ridiculous. Or they will argue that it doesn’t make any difference, or that if people are getting the sales, that’s all that’s important.

“At the end of the day, your business is a bunch of people working towards a common goal. As soon as you’ve lost sight of that, you’ve lost sight of the main thrust in your business, which is essentially about getting the best out of people,” he said.

Dr Baker said that while some team members may have hard KPIs to meet, which require a discussion, other team members like your support staff don’t – and talking about targets can’t be the only conversations, otherwise managers won’t get a complete picture of performance.

He advises managers and business owners to be themselves and strive to have authentic conversations – so that even though a check-in may be scheduled, it isn’t contrived.

“My advice would be for them to schedule 15-minute conversations once a fortnight, forever, no matter what happens, and to use those forums as opportunities to get away from their desk and actually connect with people.”

He said regular check-ins should be a casual, two-way conversation and could cover topics such as learning and development (both formal and informal), performance, and career goals.

“I’m not convinced that there’s some great skill – I think it’s just connecting with people and the conversation is the vehicle to do that.”

Making talk work for your team

Dr Baker said using ‘critical incidents’ was an effective way to give employees specific feedback on potential issues impacting individual or organisational performance.

“For example you could say, ‘In the last three meetings, I noticed that you were quick to criticise three people’s ideas without giving them a chance to elaborate on those,’ then you talk about that, rather than the broader issue of whether they are a ‘team player’.”

He said many business owners are self-motivated and intrinsically driven and need to remember that employees may not be ‘wired the same way’.

“So they have to have encouraging conversations with people. They have to actually let people know they believe in them, that they will support them, that they wouldn’t be delegating if they didn’t think they could do it.”

“I admit that there are some difficult conversations, but I would argue that people aren’t having the pleasant conversations, let alone the difficult ones!

“One of the things I’d say to somebody who wanted to try and do this, is simply this: go to work today and find three good things happening, and give some genuine, positive feedback.”