A good performance management approach is the building block of a well-run organization. However, many organizations do not do a great job on performance management. There are five vital conversations managers need to have with their employees to create a strong performance management foundation:

  1. The “What do I need to do?” conversation.
  2. The “How am I doing?” conversation.
  3. The “How did I do?” conversation.
  4. The “How do I need to grow/develop?” conversation.
  5. The “Money” conversation.

Managers need to develop a high level of competence having each of these conversations to meet the needs of employees. The crux of the issue with performance management is not the form, the template, the process or the technology – it is the manager.

Building Effective Managers

Businesses are in a management and leadership crisis. There are few leaders in place with the appropriate skill set to manage and lead. A strong approach to performance management can set a manager up to fulfill many of the needs of the employee base.

Great performance management …

  • Builds Alignment: A well-aligned workplace culture can improve productivity by as much as 25%.
  • Creates Positive Employee Engagement: Leadership accounts for 70% of the variance in employee engagement.
  • Helps with Manager Selection: Organizations choose the wrong manager 82% of the time.
  • Helps New Managers: 60% of managers underperform in their first two years, with negative consequences for both new manager and direct reports.
  • Creates a Focus on Development: 74% of employees surveyed felt that they were not achieving their full potential at work due to a lack of development opportunities. (Middlesex University for Work-Based Learning)
  • Creates a Strong Focus on Coaching: 65% of employees in a strong coaching culture are “highly-engaged” and 80% of those who received coaching report positive impacts in areas such as work performance, communication skills, productivity, well-being, and business management strategies. (ATD, 2017)
  • Enables Effective Communication: 98% of employers view communication skills as being important or very important when hiring for entry-level positions. (Schawbel, 2021)
  • Helps with Retention: 94% of employees said investment in training and development is one of the major reasons they would decide to stay in a role longer, and 94% of employees would stay at a company longer if it invested in their career. (LinkedIn, 2018)
  • Helps Promote Diversity: Gen Zers say they need direct and constructive performance feedback (50%), hands-on training (44%), managers who listen and value their opinions (44%), and freedom to work independently (39%).
  • Solves Organizational Issues: 45% of HR leaders struggle to develop effective midlevel leaders and more than one-third struggle to develop effective senior leaders.

So, how do learning and development (L&D) professionals create lasting change? According to research conducted by LinkedIn, more than half of L&D professionals surveyed indicated that the two top areas of focus for this year are to build programs that focus on upskilling and reskilling (59%) and leadership and management (53%). These areas are the greatest opportunities to create transformation.

Guiding Management to Success

Many managers do not truly understand performance management. L&D professionals should work with managers to understand the goals and objectives of the business. Everything cascades from that destination. Then, clarify which goals and steps should be met to enact this vision. That operating plan then needs to be divided up across the organization to be achieved. It should be divided up in a way that people have an integrated and cross-functional perspective so they can be informed about how their decisions and performance impact others. L&D folks can be a very strong catalyst of these conversations.

Taking these steps can localize people’s focus and create clarity for what is expected of individuals. This is the “What do I need to do?” conversation from earlier in this article. All too often, people claim they are unclear on expectations. It can help to coach both the manager and the employee to ask clarifying questions or to test for understanding.

Employing Conversation Strategies

The most important component in performance management is coaching. This is the “How am I doing?” conversation. Organizations that are skilled in coaching and have a culture of coaching win. L&D professionals can add value by becoming stellar coaches themselves, developing coaching capabilities in others and ensuring coaching is happening continuously.

The “What do I need to develop?” conversation is another area in which L&D professionals can excel and add value to the business. Managers typically do not have the background to know how to develop employees, so they rely on learning leaders to share their learning and development knowledge. Leaders are a catalyst for employee effectiveness. Helping managers develop the skills to play an active role in their employees’ development is a game-changer for organizations.

If you do the rest of the work well, the “How did I do?” conversation should be the easiest. Managers should document these conversations, so that it is fair and transparent and done in a timely manner. For those who don’t have competence in performance management, the focus on this conversation often becomes tremendous. In many cases, this becomes the biggest focus for managers when it should be the period at the end of the sentence.

The “Money” conversation is vital to be competent at as well. Knowing what motivates employees and creating a fair trade of work for a wage is an important component of a strong relationship. Many times, managers are not comfortable having these types of conversations, so L&D professionals can add value by practicing and helping managers build confidence in having these types of conversations.

Keeping Expertise Relevant

With performance management being such a pivotal component to a company’s success, there is a tremendous onus on L&D professionals to truly be experts in this space. However, the underlying assumption in all of this is that the L&D professionals have deep business acumen. All of what was mentioned in this article is predicated on the idea that L&D professionals know the business, the markets, the financials and how the company will grow. The challenge that often surfaces around performance management is that training and development is not grounded in the realities of the business. Being an expert on the business and how to generate reliable performance through good performance management practices are both essential competencies that L&D professionals need to have to truly be a cherished advisor and partner to the business.

The good news is that all of this can be learned. Each facet requires learning, reading, practicing, taking risk and perfecting. The best L&D professionals do this and then synthesize these individual areas of competence to form good judgment. Not only is this recommended, but it is vital to the organization’s success.