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117 | How to create a performance management process that drives success, with Lucinda Carney
Episode 11719th January 2024 • HR Coffee Time • Fay Wallis
00:00:00 00:33:45

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How is your performance management strategy impacting employee engagement? Understanding how to use it effectively can lead to better results for employees and therefore the organisation, as well as save money through staff retention. Performance management should be about more than KPIs and day-to-day tasks, it should be seen as an individualised opportunity to support career growth. With continuous conversations, clear goals and regular constructive feedback, performance management can become a far more effective tool.

In this episode of HR Coffee Time, host Fay Wallis is joined by Lucinda Carney the CEO and Founder of Actus. A purpose-built performance and talent management software, which makes her the perfect person to share her knowledge on:


  • Performance management’s impact on employee engagement
  • Best practices for performance management
  • The importance of clear goals
  • Tailoring performance management to individuals
  • How to drive high performance
  • Why you need to do more than annual appraisals

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Resources Mentioned During the Episode

Actus Resources

 

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(Disclosure: the book links are affiliate links which means that Fay will receive a small commission from Amazon if you make a purchase through them)

 

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Looking For the Transcript?

You can find the transcript on this page of the Bright Sky Career Coaching website.


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If you found this episode of HR Coffee Time helpful, please rate and review it on Apple Podcasts or Spotify. This video shows you how to rate and review the podcast on Apple Podcasts (because it isn’t very intuitive). If you're kind enough to leave a review, let Fay know so she can say thank you. You can always reach her at: fay@brightskycareercoaching.co.uk.

 

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Transcripts

Fay Wallis:

Hello and welcome back to HR Coffee Time. It's wonderful to have you listening today. I'm your host, Fay Wallis, a career and executive coach with a background in HR, and I've made this podcast especially for you, to help you have a successful and fulfilling HR or people career, without working yourself into the ground.

is the first guest episode of:

ftware, which was launched in:

Lucinda talks us through what performance management is and how it's changed over the years. She shares her recommendations for doing it as well as possible, and has brilliant practical tips that you can start using straight away. I hope you're going to enjoy learning from her as much as I did. Let's go ahead and meet her now.

Welcome to the show, Lucinda. It's so fabulous to have you here.

Lucinda Carney:

Thank you very much for having me on, I'm quite excited to have the boot on the other foot.

Fay Wallis:

Well, that's great to hear. And for anyone listening who hasn't come across Lucinda's podcast before, it is absolutely fantastic, and when I was first thinking of starting HR Coffee Time, I actually sent Lucinda a fan message saying how much I loved her show, so it's an extra special feeling to actually have you on the show today, Lucinda.

Lucinda Carney:

Well, thank you. I'm so impressed of where you've taken yours as well, so I'm delighted that I was able to play a very small part in your success in terms of this, because you do an amazing job with this podcast.

Fay Wallis:

Thank you, and I really appreciate how encouraging and supportive you were when I got in touch with you and said, "I'm thinking of starting a podcast." And you could have thought, "Oh no, I don't want any competition," and you did the absolute opposite which was, go for it, it'll be great. So, I discovered very early on from my interactions with you just how supportive the podcasting community is.

Lucinda Carney:

I think it's important, isn't it, though? Because it is... Not just women, but we just need to hold each other up. It's so easy to think in the scarcity mentality, and takes away... Actually, building each other up, this is a great way of collaboration and delivering value, and we don't need to see things like this as a threat, although some people do, sadly.

Fay Wallis:

Yeah, absolutely. Absolutely. Well, I'd better stop saying thank you. I feel like I could just say thank you for the whole episode, to be honest, but I'll move us along to the main part of the show. And I always think it's helpful to start off with a definition of the main topic that we're focusing on, just so that we're all clear on exactly what it is that we're talking about. And especially when it comes to performance management, I think it can mean slightly different things to different people. So, could I ask you to start off by giving us your definition? What do you see performance management as being?

Lucinda Carney:

I think it's a really relevant question to start off with in terms of this topic, the reason being that many of your listeners I'm sure will agree that people hear the term performance management as sometimes saying they were performance managed out of the business. So, it can have unhealthy connotations and be seen as something negative. My view is that performance management should be seen as a process, an organisational process, which helps people to deliver their best, it helps to manage performance. And so therefore it is about the processes that support someone to perform, which includes having clear objectives, having regular one-to-ones, having opportunities to develop, having appraisals in some form, and having some sort of career aspirations, those sort of things. So for me, all of those activities should be part of a performance management process, and I am emphasising process as opposed to an appraisal form or conversation, which is sometimes mistaken for it. And they should also be encompassed by

good quality people management activities. So, often I refer to people and performance management, so it's not just a process that doesn't involve humans. It's very much about a conversation.

So, a good performance management conversation would be all around those processes, or a good process would be all of those things are included, with high quality conversations between an employee and their line manager driving it. So, it's not very concise, I'm sorry about that, Fay. But in terms of this, it's a process which incorporates all of those aspects, and is very much supported by human contact and conversation.

Fay Wallis:

I thought that was perfectly explained, and the exact amount of conciseness, so no need to apologise at all, Lucinda. And anyone listening will be able to hear your real interest and enthusiasm and passion for the topic. And I'm guessing it's partly that passion that led you to creating your company, which is called Actus Software, where you have performance management software. So, I would love to know a little bit more about that. Am I right, is it something you're really passionate about, is that what led you to setting it up? Or is there a completely different story behind it?

Lucinda Carney:

It is a passion, in that I'm frustrated when it's done badly. So I'm very people-oriented, but you are right, the origin really goes back to when I was in-house. So, my background was a learning and development person in two large businesses previously, and the job that I did before I set up Actus Software, I was involved in... I led the learning and development function, and we were driving employee engagement. It was back in the days when engagement was quite a new-ish thing, so that does age me. And we realised that actually, a lot of the questions when you're looking at employee engagement come down to clarity, opportunities to develop and grow, does somebody understand me as a person? They come down to the people activities.

And the majority of... If you think of the well known Gallup Q12 engagements, which was the original one, those questions are all down to how well somebody is managed, and they would all link to a line manager managing someone's performance, in the way I defined it earlier, so clear objectives, opportunities to develop, taking an interest in them as a person, it all ties together. And one of my frustrations has always been... And again, depending on your listeners, when we're in smaller businesses, sometimes it's even harder to get budget, if you like, for the things that are people-oriented. And what appealed to me was that, if you could create this link, or you could clearly see that performance management correlates with employee engagement, and we know that from all of the data that's out there employee engagement correlates with business relates. So, soft and fluffy stuff that's sometimes discounted, like managing people well, actually correlates with business results. Once you can make that connection,

you can persuade your FDs or other people to take people development seriously, and they see the link with these sort of things.

So for me, it really made sense that you need to manage performance better. When, again, we look at classically in HR, and I am going back 15+ years in terms of when I was doing it in-house, and that's why I realised when I left, set up my own business, I thought that it would be easy to get some software system to support that performance management. Because it's very hard to manage a process as a learning and development or an HR professional, if you can't see the data. If it's a paper-driven process, or a semi-automated process on something like SharePoint, or a cobbled together... Where you've repurposed another bit of software, it's very hard to effectively manage performance as an HR or OD professional, because you can't see the data, and it's not built for that. And that reduces your ability to add value to the business.

And again, that means that we get criticised as a profession for not adding value, not being strategic. Well, it's hardly surprising that we're not seen as strategic when we are literally working around with... It's almost like on a chalkboard, relative to what every other aspect of the business does. Every other aspect in the business, sales always have the best bit of software, finance has the best bit of software, but HR, learning and development are often much later down the line.

So yes, I'm passionate about it. I've realized how passionate I am about it, because I think that as HR professionals we can add a lot of value. We need the right tools to do that, and making that link, which probably isn't overt for most board members, the people that handle the purse strings, making that link between good quality people and performance management, engagement, and business revenues is a way in which they can start to join the dots and value what we do.

Fay Wallis:

It's so interesting to hear you say that. It's always fascinating to hear businesses' origin stories, isn't it? Weirdly, I can relate to your story, but in a slightly different way, because I looked into engagement results when I was last working in an in-house HR role, and what I saw was bringing some of the results down was a perceived lack of career development opportunities. And it was that and diving into that that led me into becoming a career coach, because I became more and more immersed in trying to find brilliant ways to help people with their careers, and discovered a real passion for it.

I remember a real challenge that the organisation had was being able to see the results from their engagement data, and then figuring out what on Earth to do about it to improve things. And there would often be initiatives that started to feel like people were losing enthusiasm for them. So it's great to hear how performance management can really support that, and that's actually quite a concrete, tangible step that organisations can take to help improve their engagement scores. Because, oh my goodness, I can't tell you the amount of time I spent studying the Gallup Q12.

And for anyone who hasn't come across the Gallup Q12 survey, I will put a link in the show notes for you, so you can see what the questions are. It's called the Q12 because there are 12 questions that everyone within the organisation is given and asked to rate on, and Lucinda's already pointed out lots of them. And as she said, Gallup realised that actually the clue to engagement rests with the managers. But I had never taken it that one step further, Lucinda, and actually thought, from this point you have got a very strong argument, and a strong case, for making sure that performance management is really handled effectively, with proper systems in place. When you mentioned SharePoint I thought, oh my goodness, I remember I had to become a... It was called a SharePoint Super User, so I could build our performance management process in SharePoint, so that we could monitor what was happening and have some sort of data.

Lucinda Carney:

And it's just isn't it? Those sort of things, it's cobbled together, and probably if you think about it, when there are... I mean, now, shameless plug, but when you've got a system that's purpose-built for it, which is what Actus is, and we've been evolving it over the last ten years, then why would you want to do that? Because it's your time, and you still have to do lots of manual data processing. So, all of these things, it doesn't really make sense, but we often end up as the poor relation, and no-one will give us even a relatively small bit of budget, and definitely compared to Salesforce or something like that that other parts of the business might have. Relatively cost effective, small budget to get something that's actually going to give you tools that could drive engagement, and save loads of money as well, because engagement links to retention. How expensive is it when we lose key people? So, it's making those connections, I think can be really helpful.

Fay Wallis:

And where we've been talking about the process, and you've very clearly said right at the beginning, it's not about just filling in a performance appraisal form, I did a bit of research into performance management when I knew that we were going to be recording our episode together, Lucinda, because I thought, although I know a bit about this, I really don't know a lot, and I know you're an absolute expert on it, so I thought I'd better swot up. And for anyone listening, I thought this might be quite interesting for you to hear as well. I unearthed some really interesting things about the history of performance management, and the ideas behind it and how it's evolved. So, I'm going to just look at my notes, because I can't remember all of this without reading it, and I'll read it through.

There were a few things that I found that were really interesting, and I'll make sure that I pop links to them in the show notes for you, in case if you're listening and you think, "Right, I really want to learn more about this, and really get this right," then you can take a deep dive into it. There are CIPD fact sheets, unsurprisingly, and a CIPD research report called Could Do Better? Assessing What Works In Performance Management. And there's a great book by Harvard Business Review that I downloaded and listened to on Audible called HBR's 10 Must Reads on Performance Management.

ry increases. But then in the:

Then in the:

Then more recently, over the past ten years or so, some companies have started dropping annual appraisals altogether, because they didn't think that they were adding enough value, they were often really unpopular, and really time-consuming. So, instead of having annual appraisals, they started asking managers to have regular, less formal meetings, where ratings aren't necessarily used. And I'm sure for people listening, they are going to be able to remember some of these things, or they are still using some of these mechanisms. I think we're going to probably have people coming at this from all different angles. So, I would absolutely love to know, Lucinda, what your opinion is, and what you think the best way forwards is for companies, when it comes to performance management.

Lucinda Carney:

Absolutely. That was a lovely historic journey through, and what I would say is the Could Do Better? analysis by the CIPD is quite an interesting one. I allude to some of that, I've done a number of webinars and writing on that, so I allude to that. One thing that I'll provide you with that might be useful to your listeners is, we did a research review, as in we asked a psychologist to come and do a research review of what works and what doesn't work. Because lots of these are fads, if you like. They're things that... There wasn't necessary any evidence basis to what worked or didn't work.

And some of them were very controversial, as in the GE literally sacking the bottom 10%, because if you think about it, from an equity point of view, how do you know that that rating is fair? Because you can't rate somebody fairly if you don't have very clearly defined, SMART, objectives, and if you don't have line managers who can fairly assess someone's performance against those objectives, and if you don't have some sort of moderation process which allows these assessments to be regulated. There's huge room, that's one of the reasons it became very unpopular, there's huge room for inconsistency in some of these things. That's not to say that you can't manage things like that, it can be a useful way to distribute reward, but there are pros and cons to those sort of things, and I think the GE approach was very '80s and a little bit over the top in terms of those things, although lots of these things become spin.

re was lots of stuff in about:

In fact, if you look at data by the MacLeod Report in the NHS, they illustrated that having a poor appraisal was actually more dangerous than having no appraisal at all. So what we need to do, and this links into managers really, is understand how important it is for people to have clarity. Again, that links to what were talking about in terms of Gallup. The first question is, I know what's expected of me. So, do the people in your business have clear goals and objectives, and do they get regular constructive feedback against how they're performing against them?

And that really should be what's going on on a regular basis. And the objectives should be more than KPIs, they should be more than tactical, have you done... It should be much more of something where someone is growing. The objectives could be about developing a project. It should ideally be a bit more than the day job, in my opinion. You could also have development objectives, which therefore that links into people's career opportunities and their performance.

So, it's hard not to jump around because there's lots of pieces that we're talking about here. But if I was looking at reshaping thinking about how to do performance management, and the guidance that I often share with clients and is regularly used, is think about what you're trying to achieve from your performance management process. Are you a company where you do have to allocate reward in a discretionary way? In which case, you do want it to be about performance, it needs to be fair, it needs to be transparent, and it needs to be an effective structure, but you still need to have clear objectives. Or is it about development? Say you're in a public sector organization where you don't have discretion, it's literally just pay bands. Well, what do you want to do there? The issue for you there is retention and engagement. So you need to make sure it's really people-y, that people are getting development opportunities, that it's a quality conversation, and maybe people's performance could link to them having

career opportunities. So, it's horses for courses. You need to think, what's the purpose of performance management process in my organization? And how can we gear it up to support that? And then with that in mind, how do we get it to be continuous?

Now, the organizations ditch the annual appraisal, as I said, some of that's smoke and mirrors. I remember, I won't name names, but big companies were out there saying they were doing it, but when you actually dug into it, they still had a process behind the scenes that allocated reward, some of the big professional services ones. So, it wasn't really go out and have a continuous conversation.

I asked everybody [inaudible:

So, you go out and say someone to do continuous conversations, they'll go, "Great, that means you're not going to be telling me off for not having done my appraisal, I'll probably do very little." I mean, often managers will say, "I talk to my people all the time," but you survey the people, and their engagement says that they're not having those conversations, or the conversations are not of the nature that are engaging. Let's link back to why we're doing this, it's to engage people. They're much more about the managers' agenda.

So, I have a process that I recommend, and I'll give you links to where people can go and get more information on it, rather than... Because it's quite visual, to explain it. But very simply, a model that's worked for a lot of businesses that I work with is, if you think about a clock face, at the start of the year, usually it's aligned with your financial year, you set objectives, you would agree the objectives, ideally they would be aligned with your organizational objectives. Then we should be having regular one-to-ones, just should be happening, but the one-to-ones should be quality one-to-ones, where there's an agenda and it's supporting the individual.

hat's the point of [inaudible:

At the half-year point, that's a good point for a mini appraisal. Are we on track? Are we off track? How do we get back on track? That's so important if you are going to align reward, because you want no surprises at year end. If you have a competency framework, maybe it's a good time to talk about behaviors.

At month nine, so three-quarters of the way through the year, that's the point where we know, actually, these are our high performers, and we want to keep people motivated, so maybe a little conversation about career aspirations there is useful. And then at the end of the year, you're talking about wrapping up the year. If you do ratings, you do that there.

So, by breaking down what sits in the old-fashioned, epic, three-hour annual appraisal, which is painful for everybody, and which combines objectives, development, career, quite a lot of things that don't necessarily all sit together, then you're breaking it down into something which you're talking on a regular basis. And if you as an HR department say, "This is what we expect you to talk about here, this is what we expect you to talk about there," that gives greater clarity. And you may not want to dictate whether you do monthly or weekly one-to-ones, but if you have at least those four touchpoints, you're getting this sense of continuity.

then looping back [inaudible:

So for me, that's where, if you think about it then, splitting out conversations about development and career aspirations, which should be really soft and supportive and positive, from maybe a bit tougher, you're a bit off track on that objective, what are we going to do about it? It feels like a better fit for those conversations, rather than having a tough conversation, you're not performing, and now what do you want to do with your life? It just doesn't fit together. It's an incongruous conversation.

So, those my summary as to a way in which you could practically encourage continuous conversations in your organization. But the point of that is, you are having to mandate it, and you need to keep an eye on it, because everyone that I've ever met, things just don't happen if you tell them to do it, even if they think it's a good idea. What you measure gets done, essentially, so that's why... And again, if you have systems so you can see it, it's much, much easier for you than if this is all going on in paper or something like that.

Fay Wallis:

Yes, that was one of my big worries when I started hearing about the move to continuous conversations, which was, will the conversations ever happen, or are they going to be high quality? So I love how you described that, but also the fact that what you've described is real flexibility in making sure you're taking that step back to think about, how is your organization structured? What is the purpose? What are you actually trying to achieve with this? It's so easy to forget to take those really important foundational steps, so that's such helpful advice for everyone to hear.

And you touched on the difference of quality of feedback when it comes to things like 360 degree feedback. Can I ask you to talk us through 360 degree feedback and how you think this all fits in? Is it something that you think everyone should get the advantage of having? Or is it something that should just be reserved for middle managers or senior leadership? And how does it fit into this whole process, this whole performance management process that we're talking about today?

Lucinda Carney:

So, feedback should fit within the process, but I personally, and this is my personal opinion, I don't advocate 360 feedback as part of a performance management process, because I think 360 feedback should be developmental. And if people think it's going to affect their pay, then I don't like that, so I think that's... I mean, people aren't going to be honest, going back to the evidence in that that we just talked around Could Do Better? So, personally I think it's a really valuable development tool. Feedback that we're talking about that should be happening is delivered by line managers over the course of the performance management year, and it should be observable [inaudible 00:26:35] recognizing what people did right, coaching them [inaudible 00:26:38] what they can improve.

So, feedback should be happening during performance management. 360 feedback, for me, it's something that... It's a highly personalized, should be high quality feedback. There's lots of... It's almost, we could do an entirely different podcast on this, so won't go into too much detail here. But I would advocate it as really useful for people who, for example, are in senior roles. So, they've done lots of training, and they want some personal, customized training, or somebody who aspires to go into a new role, and they need to identify where their development needs are. So, something like that. Or, someone who is going through a development program, you might have a 360 feedback tool which assesses their competency in relation to the skills they're going to develop on that development program. You do it at the start and the end, and you could use that to show how far they've gone. Because it's personalized, it's actually... To do it well, it's quite high cost, because you should combine it with a one-to-one

And that would be [inaudible:

Fay Wallis

Okay, so I'm hearing that loud and clear. This doesn't need to be part of the regular performance management process at all. Well, it has been amazing taking a deep dive into performance management with you today, Lucinda, and I know that it's going to be so helpful for so many people listening. Now we are at the point of the show where I ask pretty much every guest who comes onto HR Coffee Time whether they would like to share a non-fiction book recommendation with us, or if you want to share a confidence-building tip.

Lucinda Carney:

So, I've got to go for my all-time favorite business book, because I was lucky enough to actually train people on it in my twenties, and I come back to it time and time again, and it's The 7 Habits Of Highly Effective People. It is actually reasonably hard read, but it's not too bad if you listen to the audio. Interestingly, right at the start we talked about scarcity mentality. Well, I came across scarcity versus abundance mentality in that book 25 years ago, and that's why I would want to collaborate with you rather than consider it a scarcity mentality. It's so powerful as a book, and I think... And lots of things in terms of being proactive, the first habit in there, they could be useful for confidence tips as well. So, if you haven't come across it, I feel it's almost essential base-line reading for anyone in a business role.

Fay Wallis:

It's one of my absolute go-to books as well. I think it's fantastic, Lucinda. So I'll pop a link to that in the show notes as well, and I completely second what you're saying in encouraging everyone to listen to it. There are just so many valuable insights that you'll get from reading the book. I think everyone would benefit from reading it, definitely, so it's great to have it recommended on the show. And for anyone who would like to get in touch with you, Lucinda, or learn more about the work that you do and the work that Actus does, what is the best way of them doing that?

Lucinda Carney:

Thank you for the opportunity to share. So, you can get hold of me on LinkedIn, Lucinda Carney, C-A-R-N-E-Y. It's pretty easy to get hold of me. Or go through our website which is www.actus.co.uk. Either of those will get to me quite easily, and the Actus website has got quite a lot of resources, and I'll give some links to Fay anyway because there's also something on feedback that we've just talked about, I've done an e-book on that. So, those sort of things could be useful if people want to dig out some other resources there.

Fay Wallis:

And of course, if people want to hear more of your words of wisdom and your insights, they can listen to your brilliant podcast, HR Uprising.

Lucinda Carney:

You can find all the links... You can just google it on your podcast provider, but also we have hruprising.com shows all of the past 200-odd episodes, so you can go and see what we've talked about there as well.

Fay Wallis:

Well, all that leaves me to say is a huge thank you. It's been absolutely wonderful having you on the show.

Lucinda Carney:

Thank you so much for having me, Fay.

Fay Wallis:

That brings us to the end of this episode. If you decide to put any of Lucinda's ideas into action, we would love to hear all about it, so please do go ahead and get in touch with either of us on LinkedIn to let us know. I've put links to both our LinkedIn profiles in the show notes for you, and you can always find me on LinkedIn as myself, Fay Wallis. That's Fay without an E on the end, and Wallis with an I-S on the end instead of an A-C-E.

And if listening to this episode has left you ready to dive into some more episodes of HR Coffee Time, there are quite a few that you might find helpful, because they touch on lots of the things that Lucinda talked about, so I've put them into three groups for you. The first group of episodes are all about career development conversations, and they are episode 25, how to use career conversations to improve retention and engagement with Sarah Archer, episode 33, a helpful framework for career conversations at work with Steve McIntosh, episode 79, how to create a powerful career development program that has an impact with Kate Mansfield.

The second group of episodes are about getting and giving feedback. There's episode 57, using the Johari Window to develop and grow in your HR career, and episode 78, five ways to get useful feedback at work to help your HR or people career. So, although both of those have got an HR and people career focus, there are lots of techniques in there as well that you can use to roll out throughout the entire organization.

to set your career goals for:

And that's it. I hope you've enjoyed listening today. If you've found it useful, I'd be really grateful if you could recommend HR Coffee Time to a friend. Perhaps just send them the link to this episode right now. Or, if you're able to rate and review the show on whichever podcasting platform you're listening to it on, that would be wonderful, because it makes a real difference in helping HR Coffee Time get discovered by new listeners, and I would love to reach as many HR and people professionals as I can with this free podcast.

Thank you so much, have a great rest of your day, and I will be back again soon with the next episode for you.

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