The Endless Conversation

Many employers are adopting real-time dialogues in place of traditional performance-management approaches. But are they really working? And what's the best approach?

Monday, December 7, 2015
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When Ellyn Shook assumed her post as chief human resources officer in the Minneapolis office of Accenture in March 2014, she was intent on shaking things up at the global management-consulting, technology services and outsourcing firm. Long opposed to the concept of performance management -- which she says is counterintuitive to the "holy grail" of unlocking human potential -- Shook dove deep into the firm's talent strategy, challenging conventional wisdom. She determined Accenture had long embraced a performance-management process that focused on looking backwards, the exact opposite of the direction she wanted to take the future-oriented company.

"If you look at how dynamic the context is in which we are working, how quickly our clients' businesses are changing, how the whole digital revolution is changing the way people work and live, it was those drivers that made us realize we needed something that was much more dynamic," says Shook. "Instead of trying to fix something we weren't happy with, we decided to recreate our own future."

Seeking to learn what Accenture employees -- and the public at large -- would like to see in an employer, Shook and her team set out to "crowdsource the employee experience," as she puts it. Reaching out to Accenture employees and people who follow the company on social media, they learned individuals want to work for "an organization that helps them achieve their expectations" and they crave real-time feedback. Shook and her team delved into what that meant, researching what practices, if any, were already being used in the marketplace. They then took those insights and went about revolutionizing the way the firm assesses and develops its 336,000 employees.

At the heart of the revolution was a seismic shift from performance management to what Shook calls performance achievement.

"Performance achievement is about putting our people front and center," says Shook. "It's about giving people the opportunity to set priorities on a real-time basis and get feedback on-demand, which not only entails telling them how they are doing as it relates to their priorities, but also how to move forward."

Under the new approach, which just rolled out in September, Accenture is focusing on performance conversations -- frequent, informal, real-time coaching discussions -- instead of formal performance reviews or rankings. These conversations are intended to occur naturally, whenever a suitable occasion arises. Managers can initiate such a discussion following completion of a project or whenever they want to commend an employee for a job well-done or make suggestions for ways to improve his or her performance. Likewise, employees are encouraged to ask for feedback to ensure they are progressing in the right direction.

According to Ravin Jesuthasan, global leader of talent management and managing director in the Chicago office of Towers Watson, companies would be wise to incorporate more real-time conversations into their performance-management processes.

"If you look at all the HR programs and processes, performance management is the one where there is the most hope and expectation, but the one that consistently fails to deliver," says Jesuthasan. "Companies are saying, 'We want performance management to be about improving the performance of the individual.' Waiting for year-end to have such critical conversations won't do much towards accomplishing that goal."

The specific composition of a performance conversation varies from company to company, but the general premise is that managers and employees engage in a continuous dialogue about the employee's performance -- whether positive or negative -- rather than waiting for a regularly scheduled review.

Whether a company abandons traditional reviews in favor of performance conversations or adopts a hybrid approach that melds ongoing, informal dialogue with a formal review process, HR has a key role to play in preparing managers and employees for this bold new approach to performance management.

Defining the Dialogue

Proponents of performance conversations argue that a process centered around ongoing, informal, in-the-moment dialogues eliminates the challenge of recalling an entire year's worth of accomplishments, developmental activities and shortcomings for an annual -- or even a biannual -- review.

"Who can remember what they did on the weekend, let alone six or eight or 10 months ago?" says Liam Ackland, president of North America for Acendre, an Arlington, Va.-based provider of cloud-based talent-management software. "It becomes really challenging come review time."

Traditional reviews are also often criticized for leaving employees in the dark for months on end with no indication of how their efforts are being perceived. That was the case for employees of New York-based PwC, says Lauren Sandor, the firm's managing director of human capital performance. They typically received evaluations at the end of each client engagement. With each engagement averaging four months, employees forged ahead with the work, not knowing how their efforts were being perceived until the job was complete. If there were areas in which they could have done better, they found themselves blindsided because they had no idea their work was not up to par. This approach is not only demoralizing for employees, it doesn't allow them to make any changes in their performance because the feedback arrived after the fact.

"[An employee] would sit at the end of that four months and [his or her manager would] say, 'It would have been so good if you had done X instead of Y,'" says Sandor. "It was obvious the periodic, episodic mind-set wasn't adequately developing our people."

That led PwC to embark on an initiative to encourage more real-time dialogue with development at the forefront. Rather than waiting until the end of an engagement -- or worse, the end of the year -- managers are encouraged to share feedback with employees "every day in the course of work because that's where we learn," says Sandor. How frequently managers engage in these developmental dialogues is left to their discretion.

"The expectation is that it's ongoing and constant, but there's no formal target," she says. "It could be daily, once a week or anything in between."

This new approach not only "eliminates any kind of surprise," according to Sandor, it also presents employees with the incredibly valuable opportunity to "course-correct," a concept that lies at the very heart of the performance-conversation movement. It's also the facet of PwC's new approach that has led to widespread acceptance from the moment it was rolled out organization-wide in September 2014.

"The idea of learning on the job is something people appreciate because it accelerates their development," says Sandor. "They like the reinforcement of the positive, along with the corrective actions they can take and apply to their next engagement. It changes the conversation into a much more developmental one they can feel invested in."

Building the Vocabulary

Clearly, there is much to be gained from managers engaging in regular performance-focused conversations with employees. However, some would argue effective managers already take it upon themselves to provide feedback to their reports on an as-needed basis.

"The good managers are already doing these things and they don't need to be told what to do," says Kris Duggan, CEO of BetterWorks, a Palo Alto, Calif.-based provider of goal-setting software. "They are doing them because they are biased to work that way -- clear expectations, frequent check-ins, clear feedback. That's just how they are wired."

For those managers, an organization-wide initiative geared toward performance conversations is unnecessary. But not everyone possesses the skill or the natural inclination to pull an employee aside and chat about what they are doing well or where they could stand some improvement.

"There are many folks who really struggle with giving -- and getting -- feedback, particularly if it's done in the spirit of improving performance," says Jesuthasan. "It takes a lot of organizational maturity to get to this place, and there's a lot of remedial work that needs to be done to build manager capability and transform the culture of the organization around the subject of performance improvement."

The task of preparing managers to hold on-the-spot, real-time, developmental-focused performance conversations falls to HR. According to Marc Effron, president of The Talent Strategy Group, based in New York, the secret lies in making it "embarrassingly easy for the average manager to have the conversation" -- so easy, in fact, that "any manager who can't do it shouldn't be a manager in the first place."

Over the past two years, Glenview, Ill.-based Combined Insurance/ACE Group has relied on a series of performance-management-training "road shows" to prepare its workforce of more than 5,000 to engage in "a continuous conversation throughout the year," says Melanie Lundberg, assistant vice president of talent management and corporate communications. Managers participated in leadership-development sessions in which they were taught how to have an effective performance discussion. Meanwhile, employees participated in a session on "owning your career" in which they were taught that they, too, should initiate coaching conversations. According to Lundberg, including both constituencies in the training was key to the company accomplishing its goal of driving a "high-performance culture."

"You need to have feedback to be able to know where to improve and how to improve," says Lundberg. "If you are not getting it, you need to solicit it by proactively asking things like, 'What did you think of that meeting I facilitated? Any reaction? Any tips?' "

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At PwC, the entire human capital community was trained as performance-conversation specialists to prepare employees and managers to engage in more real-time dialogue. They relied on information garnered from a four-month pilot of 3,000 employees to determine how best to teach the rest of the workforce. The result was a "multi-tiered plan," consisting of formal training and on-demand training, workshops, and lunch-and-learn sessions.

"The skills you need to have can take some time to develop, so we've invested heavily in training," says Sandor. "We've been training our people on techniques such as guided inquiry, open-ended questions and helping people understand how to arrive at their own insights, and not just telling them the answer. The idea is not to just get something off your to-do list, but to give somebody an opportunity to grow as they are learning."

Framing the Feedback

Adopting a process of continuous dialogue is one thing. Eliminating the traditional review -- and possibly the formal ratings or rankings that often go with it -- is an entirely different thing. Experts argue a formal performance-review process is necessary to determine compensation, fire substandard employees or identify which employees may be C-suite bound.

"It's advisable to spread the feedback conversation across the year, but there still needs to be a time when you determine how this person is doing and how [his or her] performance compares to others," says Effron. "This is particularly critical when it comes to pay decisions. If you're going to link bonuses to performance, there has to be a formal time when overall performance during that period is assessed."

While some companies have abandoned formal reviews and rankings altogether, many organizations have discovered that a hybrid approach, combining performance conversations with traditional performance-management practices, better serves their needs. Informal, real-time dialogues take place throughout the year, but annual, biannual or even quarterly reviews are still held to formally assess each employee's performance.

"We are seeing a lot of organizations keeping the annual year-in-review event, because it's a good chance to review the past year and talk about the year coming up," says Dominique Jones, vice president of human resources for Halogen Software Inc., an Ottawa, Canada-based provider of cloud-based software solutions for performance management and other key HR disciplines. "They use it in conjunction with ongoing feedback mechanisms, so it becomes a summary of the conversations they've had throughout the year."

Employees appreciate the opportunity to gain real-time feedback they can use to help improve their performance and advance their careers, but without a formal check-in or rating, Jones says, they lack a firm understanding of where exactly they stand. That's one of the reasons the hybrid approach is particularly effective.

"When you take the scores away, many employees will tell you there's no frame of reference for them as to how they are performing," says Jones. "Without scores, you are relying on the sophistication of your leaders to be able to identify various degrees of performance and articulate that to the employee in a meaningful way."

That's exactly the strategy employed by PwC, which has kept its traditional performance-review process, even while "in-the-moment feedback" has set the stage for a "real-time development culture," says Sandor. Each year, leadership teams hold "career roundtables" to discuss their people's leadership attributes, progression and future growth. PwC also uses a system of "performance tiers," which Sandor defines as "a one-time categorization of where [an employee's] impact fell for the year." Employees are tracked in the system for the purpose of determining compensation and helping them understand where they stand relative to their peer group, she says, but this categorization "doesn't follow you around the same way a rating used to."

For Combined Insurance, performance-rating definitions have replaced a numerical-ratings scale. Rather than being told they are a 1, 2, 3 or 4, employees are now told their performance has been deemed as exceeding, meeting or falling below expectations. According to Lundberg, it's been necessary for the company to continue using ratings despite its push for continuous conversations.

"As our leaders are in the process of becoming better at having honest performance-feedback conversations, we continue to use . . . ratings to give employees a clear understanding of how they measure up against performance standards and established goals and behaviors," says Lundberg. "Until you are completely secure that your leader population is having great, candid, crucial conversations about performance -- unless you can confidently say that is happening across the board -- I wouldn't stop having some type of performance rating or performance definition."

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Documenting the Dialogue

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