Learning to Love Performance Conversations: A Key to Success in 2024

Welcome to The Fixer Focus, where we share insights and retail industry updates from our Fixer team of experts. In this issue of The Fixer Focus, our COO & Executive Advisor, Brooke Bulan, partners with Melissa Wallace, seasoned retail-industry Human Resources executive and founder of The Wallace Group, to share insights on the importance and complexities of performance management - a hot topic every new year.

With each new year comes the dreaded performance management process - inducing groans and procrastination from business leaders and employees alike. However, a well-designed performance management process can drive employee focus and satisfaction, loyalty and retention, and overall organizational success. Let’s dig into this.

Why Are Many Leaders Resistant to Performance Management?

Although we can assume that all leaders and managers universally want high-performing employees, many of them are resistant to the performance management process. Some typical (and relatable!) reasons include:

• It’s too time consuming

• It’s an administrative burden

• They are conflict-avoidant or they don’t want to rock the boat

• They may feel ill-equipped to assess performance based on lack of their own training on the process

• They believe they are already engaging in performance management in day-to-day discussions with their team 

• They worry it will be demotivating or lead to competitiveness amongst their team 

We get it, and we’ve helped leaders and managers overcome each of these hurdles.  So let’s take a look at how performance management can be embraced, rather than avoided.

Why Should Leaders Embrace Performance Management?

Fortune analyzed two years of performance reviews for 13,000 workers and found low quality feedback is why employees are fleeing companies.  According to the survey, about 61 % of respondents who plan to stay within their organizations say they understand what their manager expects; among people planning to leave their organizations, only 21% feel that way.  “Insufficient feedback” was named by 17% of respondents as the primary reason they’re looking for new roles, and many other respondents cited related reasons, including “feeling underappreciated” and “lack of growth opportunities.” You might assume that these individuals were low performers and that it wasn’t the performance management process itself leading to their dissatisfaction - however, Fortune’s study, conducted over a two-year period, found that individuals that received low-quality feedback (not to be confused with negative feedback) were 63% more likely to leave their companies than those who received more actionable feedback - whether high, average or low performers.

Given the challenges that so many brands and organizations are having with employee retention, these findings make it clear that prioritizing high-quality performance management is not just about assessing employees; it's a strategic imperative for retaining top talent and cultivating a workplace where individuals thrive. 

What Makes an Effective Performance Management Process?

Although the importance of having an effective performance management process is clear, the path to designing one isn’t as straightforward.  Questions that leaders often grapple with:

• What performance management process style should we adopt?  (The options are many - traditional appraisal approach, MBO (Management by Objectives) approach, SMART goal-setting, 360-degree feedback approach,  developmental performance approach…just to name a few).

• How often should performance discussions occur - once a year, once a quarter, bi-annually?

• How formal does performance feedback have to be?  Does it have to be documented or can it be discussed organically and in the moment?  

• What criteria should be used to assess performance?  Should it be the same for all employees, or differ based on department or function?

• Is performance feedback one-way or two-way?  Should there be an opportunity for 360-degree feedback on managers, colleagues and self?

• What tools and technologies should be used to support the performance management process?  Is a sophisticated HRIS system necessary, or can we rely on Word and Excel documents, handwritten notes and memory?

• What metrics will be used to measure key results?  How and when might they be adjusted throughout the year based on changing business conditions or priorities?

• Quantitative KPIs and goals are easy to measure - but how do we consistently assess and measure behavioral competencies and soft skills?

• Will the path to achievement be dictated to the employee, or should they be an active participant in charting the course to success?

• How, if at all, do we tie the performance management process in with skill development and career growth?

Clearly, there isn’t a one-size-fits-all approach. However, there are best practices, regardless of which approach you take, and the answer to these questions will be different for each organization, based on its unique leadership, culture and business needs.

We regularly advise brands on performance management processes and can provide support in designing processes from the ground up, assessing and refining existing processes, training and coaching managers on developing and delivering feedback, and ensuring that the performance management process is being effectively implemented, maintained, and integrated into larger corporate culture and learning & development initiatives. Get connected with us to learn more about our expertise in this area and how we can help leaders navigate this new year hurdle.