A New Approach to Performance Management with Michael Bungay Stanier

A New Approach to Performance Management with Michael Bungay Stanier

Improving employee performance is such a big part of company success. But what tools and tactics really improve performance and what’s just getting in the way? Michael Bungay Stanier, author of The Coaching Habit, is back on the podcast to debunk the myths of performance management. He joins us to talk about how companies are changing their approach, what works, what doesn’t and how coaching can make all the difference.

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Run Time: 26:08

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Brandon Laws: Hey. Welcome back for another episode of the Human Resources for Small Business Podcast. I’m your host Brandon Laws. Hey, thanks for all the downloads, the connections lately on LinkedIn and Twitter and Instagram, all those places. I always love connecting with listeners to learn more about what you want to learn. So keep doing that and keep messaging me about the books or recommendations, anything like that. Love hearing those ideas.

Today I interviewed Michael Bungay Stanier and for those loyal listeners who’ve been with us from the very beginning, I interviewed Michael a couple of years ago on his book The Coaching Habit. I love this book and actually, within our organization Xenium, we circulated this throughout a lot of our managers and leaders within the company and we just took a big liking to this book. There’s a lot of really great tangible things in this book.

In this episode, we don’t talk about that book necessarily, but we do talk about a new ebook that Michael co-authored with a couple of other folks. It’s called The Truth and Lies of Performance Management. So our discussion is all about performance management, why it may or may not be broken and what, we as leaders of organizations and HR people, can do about it.

So there’s a lot of great stuff in this podcast. Michael is a wealth of knowledge and you’re really going to appreciate what he has to say. Please, please, please, if you’re listening on Apple Podcast, go and give us a review. It helps other people like you find the podcast and that’s how we can continue growing and getting new fresh content to people like you.

So without further ado, I’m going to step aside. Here’s Michael Bungay Stanier.

Brandon: Hey Michael. So great to have you back on the podcast. Welcome again.

Michael Bungay Stanier: I know. It’s been a year or two years or something. So it’s nice to come back. You’re even better-looking than I remember.

Brandon: Oh, how nice of you. [laughing] It is good to see your face. The last time we talked, it was about The Coaching Habit, a book that has completely taken off. Fantastic work. And you’ve got some new material now. It’s called The Truth and Lies of Performance Management. It’s co-written by you, David Creelman and Anna Tavis. Is that right?

Michael: That’s right, yeah.

Brandon: Yeah.

Michael: David is an HR consultant and expert, writes regularly for HBR and a range of different magazines. Anna Tavis is actually an academic based out of New York. She has been published in the print copy of HBR on performance management a few times. So we both have our point of view on performance management. But we really wanted it to be robust. So we got these other smart people to help us out.

Brandon: Yes. You brought the all-star team together to write this book –

Michael: Exactly.

Brandon: So I guess a good place to start with this is what’s wrong with the way most organizations are treating performance management right now.

Michael: Well, I mean honestly, everybody listening to this already knows what’s wrong with performance management because it has been in conversations for quite a while, which is that old way of thinking about performance management which is once a year, we get together and we give you your score out of five and therefore we give you some money or not.

It kind of just doesn’t work. It doesn’t work in the way of generating performance. It doesn’t work in the way of generating engagement. It really has been kind of a messy, unsatisfying process and maybe as long ago as ten years ago, maybe a little less, Adobe and others took the lead in saying, “We’re abandoning ratings. We’re abandoning this whole performance management process.” And since then, there has just been this air of a growing – kind of like The Emperor has New Clothes moment where everybody is finally going, “Yeah, you’re right. I mean I thought it was just me that thought this up.” But apparently everybody thinks as such.

So we’re all thinking, OK, if performance management doesn’t work, the old way of doing it, what’s the future of performance management? What are we going to be doing over the next three, five, ten years? The basic answer is nobody really knows and why we’re interested in this, just to make the connection for people is – you know, at Box of Crayons, we stand for teaching busy managers practical coaching skills. So they can coach in 10 minutes or less.

What we do know, what we think pretty clearly is that performance management in the future will have some role for your managers and leaders needing to be more coach-like as part of the work that they do. But we were just curious to know. There’s a lot of rumor and myth and innuendo and stuff swirling about. What are people actually doing?

Brandon: How did we get to this place? What was performance management really intended to do in the first place? How did we get to this rating model where everybody is so unhappy? Where do we go from here?

Michael: You know that as our work is increasingly about the amorphous thinking, soft skill stuff that needs to be done. There was – you know, if you go on and go back to Frederick Taylor where it was all about how many – what is it – pins can a man make in an hour and what’s the process for doing that? You can see how applying machine measurement against a machine job makes sense. It’s just basically a bit of a legacy around how we need to track how people are doing somehow.

Brandon: Yeah.

Michael: We need to find a reason to pay some people a bonus and some people not a bonus or to give them a pay raise or give them a promotion. How do we do that? And we’ve just been trying to figure that out all along and it’s tricky, right? It’s tricky just working with other people yet alone actually saying, “Here’s how we have to lift your game and here’s how we’re going to figure out how to pay you in a way that feels fair.”

Brandon: In your book, you have a really cool chart on what areas of performance management need to be fixed. Dive through that a little bit. Just give listeners a sense for what areas the data is showing need to be fixed out of performance management.

Michael: Yeah. One of the key messages that needs to come out from the report that I think listeners would be interested in is going look, almost certainly your performance management approach can be improved and it’s really early days in figuring this out. So even the people who have been doing this and been starting to make changes in their performance management approach, they haven’t done a whole lot of it. They’re still trying to figure it out as well.

So part of why we’re doing this is just to actually reduce people’s anxiety about thinking, “Oh my gosh. Everybody else has changed everything. We haven’t. What should we be doing around that or not?” So once there are levers for you to be thinking about, which may or may not be appropriate for your organization.

So in a sense, one of the key takeaways – which is that there’s no magic silver bullet approach that works for everybody – you’ve got to shape your performance management to fit your culture and fit your organization. But I think you want to be thinking about first of all ratings or no ratings. There are good signs that say ratings can actually be a little demoralizing for people. People disengage around their ratings rather than get more engaged around that. And there’s a place that if you demolish ratings, that can create a bunch of uncertainty for people around, “Oh, where do I stand? What am I doing around that?”

So you need to figure out what might work best in your culture. Your general trend though is that people are moving away from ratings although most people haven’t yet. But it’s certainly in the air.

The thing that has happened most often is people have gone, “Look, a once a year conversation doesn’t work. We need to have this at least twice a year or maybe four times a year, around that.” So just the biggest change has happened so far because there’s incremental change that definitely is happening. It’s just increasing the number of full moments of sitting down to have a conversation about, “Hey, how are you doing?”

What’s less clear is how to have that conversation because it’s one thing to go, OK, here’s what we’re doing now. Then there’s another whole thing to go, “How do we make the change management of that to actually happen?” and in fact there’s a podcast series that we launched called “Performance Management Stories” which is kind of doing what you’re doing to me right now – it’s me interviewing people who have led performance management in their organization and going, “OK. What did you really do?”

Brandon: Yeah.

Michael: And what’s really rolled out and what’s really working and what’s not working. So we just get more actual stories about the thing that’s actually happening in people’s approach to performance management. There’s a bit of a scattergun approach just to cover up the fact that I don’t have that chart in front of me.

Brandon: No, that’s perfect.

Michael: But if you do and you’re looking at it, is there a topic in particular that’s on the chart that you’re like, “Michael, talk to me about this”?

Brandon: No, I think what I really was hoping you would say, which you basically said, was that there’s no silver bullet to performance management. I think what’s – it’s not clear that there’s just like one methodology for everybody to use and I think what you said was kind of interesting. It’s like there’s some shifting going on with people thinking we need to change our performance management system because everybody else is doing it.

But I think everybody else is in the same spot. They don’t even know where to go. They don’t – so there’s a shift happening whether it’s just in our heads or we’re actually making incremental shifts. But I’m curious to where this is actually shifting to. What’s being changed about performance management first, if anything?

Michael: Yeah. Well, I think what’s obvious to lots of people is that we just need a few more conversations. So you’re going to formalize your expectation that your manager should be speaking to you two or three or four times a year. What often follows that is that we’ve got to get our managers better at having these conversations. So that’s often providing training around coaching skills or training around feedback skills and kind of looking to make that happen.

Then there’s a kind of hope that somehow technology is going to come in and save us all and there’s all sorts of platforms and providers who are trying to be the people who go, “Here’s the easy way to make performance management an ongoing part of their process.”

It doesn’t feel to me that anything has emerged yet as being the technology savior around this. I think lots of organizations are figuring out ways to make technology a more effective process. But I was talking to Gary the CEO of WD-40 about this. You know, the kind of lubricant spray.

Brandon: Yeah.

Michael: And he’s like, we proudly – and I think there are like 2000 people in their organization, so medium-sized, they’re a billion dollar organization. So they’re like – we are proudly still a pen and paper approach to this.

Brandon: Sure.

Michael: Because we want you to have kind of coffee stains on this piece of paper because it becomes your map, your guideline, your piece of conversation between you and your manager. There’s other people who have definitely moved over to technology going, “Here’s what we recorded. Here’s how we make it happen,” particularly the larger organizations where paper and pen become less available.

Brandon: It seems like with technology, since you brought it up, it seems like you should just shift the administrative burden of like managing performance management. It’s like reminders and maybe documentation systems. But really it shouldn’t – maybe I’m wrong. Maybe you shouldn’t be the end-all, be-all. Like oh, it’s going to manage our entire system and manage it for us.

Michael: Your robots and AI are not going to be able to have this conversation to figure out how to have that – how to engage that person and have them kind of focused on doing more great work, work that has more impact and work that has more meaning as well.

Brandon: Yeah. I’ve heard statements from a lot of people either inside our organization or people I’ve interviewed on my podcast just about performance appraisals in general. Why do we need them in the first place or why do we need to have ratings? Let’s scrap them. What are you hearing from most people about just performance appraisals? What changes do they want to make to those?

Michael: Well, people want to know how they’re doing.

Brandon: Yeah.

Michael: They do. They want to know, “Am I doing a good job or am I not doing a good job?” People also want to know, “Am I getting paid or not? Am I getting a pay raise?”

Brandon: Yeah.

Michael: Part of the biggest challenges, we’ve collapsed performance and management into the same phrase. So it’s now performance and management and often there’s an inherent tension between the two, which is to manage people, you tend to go, “Here’s how you’re doing. Here’s where you stand. Here’s your bonus for hitting your targets.” Performance is, “How can I get you to be at your best and help deliver work at your best?”

In the report, we actually have an example. It’s like, OK, you say to the lumberjack, “All right. I’m so excited to be your lumberjack manager. I really want you to do well. I’ve got your back. Let’s really push things here. How many trees do you think you’re going to chop down today?”

Then he goes, “Oh, I think a hundred,” and you’re like, “That’s amazing!”

Brandon: That’s great.

Michael: It’s like that’s the high end of what’s possible for you. But I love your ambition and striving to have that impact. Then you go into the management and you’re going, “And of course you only get your bonus if you hit your targets.”

So knowing that, how many trees are you looking to cut down today? And the lumberjack is going, “Actually, when I said 100, what I was really talking about was 40. Well, I think 40 is a target that I can definitely hit.” So you have that tension that kind of plays out in that tiny little story.

So that’s what I think people are up against, which is like, “How do we figure out those different things and have really two different tracks?” One is about a measurement piece going, “Here’s how you’re doing and here’s how you’re going to get paid.”

Brandon: Yeah.

Michael: Another is here’s how we help you step up to do your very best work.

Brandon: I guess why like pay-for-performance practices are so challenging because that example that you gave. What if we measured an annual performance appraisal based on those number of trees that you cut down and because I’m going to get paid off of the hundred. I’m like, oh, actually I’m going to back off. I want to go down to 40. I’m going to set the bar lower.

Michael: Right.

Brandon: Because I know I will hit it and then I will get my bonus.

Michael: Right, exactly. You know the saying, “What can be measured can be manipulated.”

Brandon: Yeah.

Michael: So as soon as you set that up, you stop playing those games.

Brandon: What kind of creative things are people doing from a pay-for-performance practice perspective?

Michael: I’m not sure I’ve seen anything super creative around trying to make that actually work. I do think there’s a couple of best practices. One is maybe we just can’t do pay-for-performance. It makes it sound like you’re a rugged individual and sold down to you and the truth is that we are, I think, more and more dependent on the performance of those around us to truly shine. So it’s more like how is your team doing. How is your business unit doing? And trying to measure success at that level rather than carrying on the myth of the individual solo great leader piece.

Brandon: So you have a lot of great research throughout this book and I encourage people to go download it. I want your opinion, your opinion based on all this information. What do you feel about the performance appraisal? Do we need to scrap it as organizations and really go to the coaching model and just have those one-on-one conversations all the time? Do we need the measurement?

Michael: It’s such a big question.

Brandon: I know it is.

Michael: And the answer to this, the best answer but it also sounds like a copout is to say, well, it depends.

Brandon: Yeah.

Michael: It depends on your organization. It depends what your goals are for your organization. But different people have different agendas. So I have an agenda that I’m wanting for the world which is a call for people to do their best work. You know, that’s why I wrote The Coaching Habit because I think coaching is one of those foundational skills that not only allows people to work less hard but it allows those around them to have more impact and be a more fulfilled, more successful person in the work that they’re having.

So that’s kind of my agenda that I have, which means that I have a bias to more coach-like conversations, more clarity about what success looks like, more kind of setting ambitious personal goals to become this and to do that and to have your management leader have your back and go, “Part of my job is to see you fully express yourself and have the most impact possible.”

Brandon: Your podcast on the “Performance Management Stories,” what are a couple of things that you’ve learned from those interviews that maybe you didn’t think of before you’ve talked to some of these smart people doing some great work?

Michael: Well, I think one of the key things I’ve learned is how different everybody’s approach is. You know, really you get everything from – we do it on a scrap of paper to we have a big technology platform that does it around the world.

Second, I think that this stuff is changing slowly and incrementally rather than in a huge leap. It’s really rare that somebody blows it all up and goes, “We’re starting again with something completely different.”

More likely it’s like OK, we’ve made this tweak. Let’s run this through a couple of cycles and see how that works and whether we need to make further adjustments or not.

Now I don’t think you can ever get into a good conversation about, “Is incrementalism smart change management or is it cowardice?” You could go either way on that.

But it does lead me to the third piece which is around deciding how changing your system is nothing if you don’t get really clear on the change management behind what’s required because you and your HR department or learning development department or people and culture department may have come up with this amazing approach. All you need to know is that everybody, even the people who hate the current approach, are still wedded to the current approach. So you’re going to be thinking about, “So how do we roll this out? How do we get people to engage? How do we engage our C-suite so that they’re supporting this in the appropriate way?”

You’ve got to be thinking about your 12-month change management plan, not just what’s the solution for the new performance management approach.

Brandon: With the change that is happening with performance management, who is that usually led by? Is this HR saying, “We’ve got issues with our performance management system. We need to make a change,” or is it usually the C-level saying, “We’re just not getting what we need out of our people and it’s hard to manage performance”? Where does that usually come from?

It normally comes from – what I’ve seen anyway – outside the C-level suite and led by HR and typically some combination of HR and somebody in there who’s OD. So HR are like we care about compensation and making that all happen. OD is like we care about change management and trying to get the best out of people and making that happen. I mean that’s a crude generalization but that’s roughly true.

The people that work, if you’re going to get your C-level thoroughly engaged in this and caring about it and really behind this going, “We get this is a business priority, not just a latest thing that HR seems to be caring about and I don’t care one way or the other.” There seems to be a really strong correlation between getting the C-suite involved and not just having your back, but being an active proponent for it and the success of it getting down in organizations.

Brandon: A huge component to performance management – and I know you’re a fan of it – is coaching. That’s a humongous component and that’s why you wrote the book The Coaching Habit and that’s how we started talking about it.

Michael: Yeah.

Brandon: So a couple of years ago, you and I talked about that book. It’s a fantastic book. I want people to go back and listen to that and get your –

Michael: Oh, yeah.

Brandon: Because it’s great stuff.

Michael: Thank you.

Brandon: But since you wrote that book and since you’ve had all these conversations, what have you learned about coaching that can make you more of an effective coach; that you’ve wanted to share with listeners and with me?

Michael: Well, I think the thing that we’ve learned is really useful to understand what people’s resistance is around coaching because if you’re Michael or maybe Brandon and you’re like, “No, I’m already a believer,” it’s easy for you to kind of think, “Well, I think this is awesome. So other people should think it’s awesome as well.”

In fact, there’s a number of different points of resistance that would stop even good-hearted managers and leaders becoming more coach-like. You know, and it starts off with the, “I don’t have time for this coaching malarkey.” You know, because people think that coaching is a manager’s – like an executive coaching thing, so it’s like an hour-long conversation.

Brandon: Yeah.

Michael: And of course we’re like, “No, you’re right. You don’t because if you can’t coach in 10 minutes or less, you don’t have time to coach.” But honestly, people still come back and go, “Well, Brandon, that’s fine. But I still don’t have time to coach. I mean even if I could do it in 10 minutes or less. I can’t add coaching onto anything because I am flat out.”

Of course we say, “Well, you’re right, because we’re not about adding coaching. That doesn’t work. We’re about transforming what you currently do to make you more coach-like.” So it’s actually transform what’s already there and then people go back. Well that’s all well and good. But I don’t even want to be a coach. I mean I’ve met coaches. They’re weird and they’re everywhere and I’m normal. I’m a normal person. Don’t make me be a coach.

To that, our answer is, “You’re right. You don’t want to be a coach. You want to be more coach-like. You just want to be you but be more coach-like as a leadership trait.”

To that, people go, “Well, that’s interesting. But I don’t even know what that means? What is this coaching thing that you’re talking about?” and for us, we stay focused on a behavior change. We say, “Look, coaching is staying curious a little bit longer and rushing to action and advice just a little bit more slowly.”

Now of course people are kind of intrigued. But they do then have a final objection which is, “But OK. What’s in it for me?” I mean I get why being more coach-like can help my organization. Maybe performance management, maybe just productivity or engagement and also why people I’m managing and leading would like to be more coach-like because I get more attention and I’m encouraged to be more self-sufficient and autonomous and all that good stuff.

Well, what’s in it for me? And our answer to that is look, we reckon if you’re more coach-like, you get to work less hard but have more impact. That kind of gets people interested and now we’re into a conversation about, well, maybe this isn’t some weird HR initiative that I don’t care about. Maybe there’s something that’s really valuable here.

So that’s a detailed answer to your bigger question, which is, “What am I learning about trying to make coaching happen in organizations?” It’s like you’ve got to be clear about where the points of resistance are and then systematically tackle those points of resistance.

Brandon: Well said, Michael. Hey, I appreciate you coming back on the podcast. Fun discussion. You’re an amazing guy. Where could people find your book, the new one, The Truth and Lies of Performance Management and also The Coaching Habit? Where can people find more about those books and you?

Michael: Yeah, that’s perfect. So the best place to go to – really the one website that rules them all is www.BoxofCrayons.com. That’s where you find information about our coaching programs. It’s also where you will find the downloadable report for the performance management piece as well. Of course if you just Google “The Truth and Lies of Performance Management,” maybe add “Box of Crayons,” you’re definitely going to find that link.

Brandon: Awesome. All right. Michael Bungay Stanier, thank you so much for being part of the podcast. A pleasure.

Michael: My pleasure, Brandon. It’s nice to have the conversation again. Thanks for having me back.

Brandon Laws

As Director of Marketing, Brandon Laws leads all marketing efforts for Xenium, providing oversight on all marketing campaigns, digital marketing strategy, events, sponsorships and public relations. Brandon brings a positive energy to every aspect of his role at Xenium—from internal initiatives around culture and wellness to industry thought leadership through the Xenium podcast and other social efforts. Active within the HR community, he currently volunteers on the board of the Portland Human Resource Management Association as the Director of Marketing & PR.

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