The Missing Piece in Employee Development

In some companies, traditional annual review processes are being replaced by ongoing efforts to help employees improve their performance. The challenge? Many managers aren’t confident they can change employee behavior.

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A quiet revolution is underway in how companies manage employee performance. In recent years, organizations have begun to prioritize processes for improving future performance over evaluating employees’ past efforts. Yearly development objectives, annual reviews, and formal feedback tools, long championed by human resource departments, are being replaced by real-time feedback delivered directly by line managers.

Although this shift holds much promise, it risks bumping up against some hard realities — namely, the ability of line managers to help employees develop. We surveyed more than 500 managers around the world. About three-quarters of the managers said they had no trouble helping employees identify and understand which behaviors they needed to change to improve performance, and roughly the same percentage said they knew how to deliver feedback. Yet only about one-third said they knew what to do to help people change, and less than 10% had confidence about making behavior change stick over time. Little wonder, then, that less than half of the managers we surveyed believed that efforts to change behavior actually work. If line managers are the linchpin of the new performance management process, a 50% success rate is not good enough.

A possible explanation of these findings is that change is tough. Yet research shows that people can and do change. The frustration expressed by managers was not that development was difficult, but that it was unpredictable — that sometimes it happened and other times it didn’t.

It turns out that psychologists and behavioral economists know a lot about how behavior change works. The trouble is that their insights are rarely presented in a way that managers can apply. During the past five years, we sorted through decades of psychological research in an effort to help managers become more effective in fostering change and development.

Conventional approaches to change involve a simple, two-step process: First, identify what needs to change, and then resolve the issue, usually by providing information about what new behaviors are needed through advice, feedback, or training. Interventions using this model are straightforward, but largely ineffective. Recognizing the limitations, many organizations have recently moved to coaching by managers. Coaching conversations have a different — more collaborative — tone than the more instructional “identify and resolve” approach, but at their core they are still primarily about identifying what people need to change and what they must do about it.

This approach is fine as far as it goes, but it doesn’t go far enough. It neglects what goes on around the development activity. This is critical, because many studies have shown that contextual factors — the environment and the conditions in which development happens — are more important in determining whether change and development happen than the content and quality of the development activity itself.

The Role of Context

We usually think of context as what lies outside people — the circumstances and environment they are in. Yet there is another type of context that researchers have found to be just as important: what’s going on inside people and their efforts to change their behavior. One factor, of course, is a person’s capability, what he or she is able to do. Another is how confident people are that they can change and their commitment to the change.

To identify which of these contextual factors are most important for change, we reviewed evidence from four very different schools of psychological research: behaviorism, cognitive psychology, systemic psychotherapy, and behavioral economics. Then, we isolated four key factors that can make a real difference to people’s attempts to change and that managers can use as levers to help employees perform and develop effectively. The four factors are:

  • Motivation: Do the individuals want to develop?
  • Ability: Do they know what they need to do to change, and do they have the skills required to develop?
  • Psychological Capital: Do they have the inner resources (such as confidence, willpower, and resilience) needed to sustain change?
  • Supporting Environment: Do key elements in the working environment, such as social support, situational cues, and social norms, support personal development?


The research on motivation is pretty clear. If people don’t want to change, then the likelihood is that they won’t. When people are motivated to make a specific change, they are far more likely to achieve it. While managers may understand this, how to motivate employees is not always apparent. Indeed, our survey found that only 28% of managers felt confident about their ability to motivate people to change. This may seem odd, given the enormous attention and resources that organizations dedicate to incentive systems. Most of the time, however, companies use rewards or penalties, often referred to as extrinsic motivation. Although there is evidence that rewards and penalties can work to promote behavior change, they are only half of the picture. Intrinsic motivation — motivation that is fueled not by external rewards but by internal feelings of finding something fulfilling or enjoyable — tends to be a more powerful and durable type of motivation.


Of all the factors in the model, ability is probably the most commonplace for business managers to consider. For development to be successful, leaders need to ensure three elements: (1) whether someone’s role provides the opportunity to perform the new, desired behavior; (2) whether he or she has the necessary skills and knowledge to perform the behavior; and (3) whether the individual has the physical resources (such as equipment, time, or money) required to learn and perform the new behavior.

Psychological Capital

Psychologists have been studying psychological capital for many years. Through this research, they have identified two factors that significantly impact whether people can sustain behavior change: whether the person believes he or she can succeed, and whether he or she has the willpower and resilience to see things through. Research shows that those who are more confident they can change and are better able to persevere and cope with setbacks are also more likely to be successful in changing their behavior. Interestingly, the biggest predictor of how much psychological capital people have in the workplace is not their own life history or previous experience but their manager’s behavior and the type of work environment he or she creates.

Supporting Environment

The final element is the external supporting environment. This includes elements such as the physical work environment, team dynamics, and organizational culture, all of which can affect an individual’s ability to change. Yet there are three levers in particular that managers can use to promote change and development. They are social support; nudges (in the form of suggestions, incentives, and targeted information); and habit structure. All three of these can be used to support development initiatives such as coaching and training, and all three can make a drastic difference in whether these initiatives succeed.

Managing for Performance Development

This may all sound like too much for an overloaded manager to contemplate. Yet the factors described above can be addressed through relatively simple techniques. Deloitte at one point estimated that it was spending almost 2 million hours of organizational time every year on annual performance ratings for its employees. Clearly, there are opportunities to redirect managerial time and effort to supporting behavior change and development.

Before this can happen, however, organizations need to look beyond their simple two-step instructional models of change and development. They need to ensure that every development initiative includes a plan for ensuring that the working context supports change. This is why the shift in how companies approach performance management — focusing more on development and less on evaluation — is so important. Without change, managers won’t be able to play the supporting role required in order to make development activities more effective.

The headlines in recent years about the changes to performance management have focused on how evaluation ratings are disappearing. The real news — and the real revolution — is in how managers can use performance management to improve the performance of their people.


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Comments (10)
Charlie Martin
I think this is a great article. I read all the comments and find them interesting. If the only information I had was from this article I could find a way to implement the key points and have a significant impact.
Good Jpb

Sohel junior
Very first time I am here and read it. I found this helpful, thanks for sharing it.
Dirk de Jong
If theory does not stroke with reality, change reality.
Chandra Pandey
The frequency of feedback cycle is decreasing to reflect the fast paced market cycles. From sustainability point of view its the combination of objective that works, not all the development objectives can be achieved in short span of time or real time. The aspects of Coaching, mentoring, bi directional conversation are more fruitful for sustainable initiative/proposition than traditional command & control mechanism for the simple reason of goodwill, trust and together we travel approach.  The only difference is that it is more recorded now as formal means than informal means earlier. It is difficult to find data points in the published article to consider it as revolutionary than evolutionary. One of the more hyped and commonly overused word prevalent in enterprise world is Transformation. This is partly because it grabs attention as PR exercise and partly because everyone wants to be seen on the right side of equation in perception. Rapidly changing world & disruptive market place is a reality which requires time to time acknowledgment as course correction first followed by grounded transformation. Most of the articles/case studies often focus more on the short term financial goals as post facto rationalization than sustainable growth possibilities. It remains debatable if the glass is half full or half empty as it depends from which side it is being looked upon and where the viewer wants to take a stand.  

It is often said that Performance Management is a hollow promise without Performance Design as starting point. Performance Design has to be thought in context of operating unit, empowerment, distance from decision table, applicable constraints, leverage points, incentives & market connect to meet the expected benchmark. In changing world what is the performance design refresh cycle? In a random sampling there is good likelihood that 9 out of 10 orgs use the expectation against data points which are more than 3 year old and often wonder why change manifests itself in sporadic results. From communication point of view it has to be transparent articulation of development/behavioural change to achieve what all metrics in terms productivity gain(Time or Effort reduction), cost reduction, revenue or profit expansion etc. The bigger the organization, the bigger is the confusion of what applies to whom or everything applies to everybody. In modern era there is good likelihood that most of the org will face natural business course disruption at least once in 8 years. Therefore learning from trend line in downward spiral is both Org & Individual level prerogative, the uptrend of revival happens in symbiotic understanding of course correction & the subsequent change process initiatives. It is not uncommon in business world in large orgs that top guy thinks at 100 ft. level and passes the parcel to HR at 50ft level and the finally the line manager executes it at 10 ft. level. Each having their own priorities, constraints & limitations from where they operate to keep the lights on. In assessment the time has come for integrated performance management where line of sight & line of action is all pervasive irrespective of classification of assembly line, unit or head quarter designate(manager) to have synchronized behavioural/change effect.
Stowe Boyd
The authors pose the hypothetical, 'If line managers are the linchpin of the new performance management process, a 50% success rate is not good enough'. Yet they are clearly *not* treating this issue -- whether line managers are in fact the linchpin of a new performance management process -- as hypothetical.

How about the obvious: they aren't?
Richard Smith
I acknowledge earlier comments that this article falls well short of being a 'how-to' guide for managers and leaders.  However it does bring together a range of helpful insights, ranging from expectancy theories of motivation to behavioural economics.  It highlights helpfully how managers need to work with, rather than against, the grain of these approaches in their desire to help their people develop.  I have worked with performance management and people development processes for well over 40 years.  In doing so, I have found that success lies in getting the focus off the mechanics of an HR process and onto the quality of conversation between manager and managed.  It is in this conversation - an ongoing one through the year, supported by periodic 'stock-takes' - that real traction is gained for development.
Aaron Peterson
Interesting article, however the authors make the same mistake they pointed out early on in that this doesn't teach a manager how to use the Four Factors: motivation, ability, psychological capital, and supporting environment. Many great books and articles are written each year telling individuals and companies what they should do, the difficulty is how to do it. For example, I understand intrinsic motivation, but as a manager how do I help an employee tap into that resource if they aren't already doing so?
Chirag Gandhi
Disappointed, the fact that annual reviews are not effective has been established for a couple of years, with some of the larger organizations doing away with this ritual all together. I was expecting some insights into how the live feedback or any of the other methods have made an impact.
Abhijit Bhattacharya
Poor performance need not necessarily be a symptom of low level of motivation or other internal contextual factors as discussed here. In this fast changing world when people are constantly forced to innovate, managers constantly need to realign team members according to each individual's preferred cognitive style. Misalignment for a prolonged period can lead to frustration, communication gap and decline in productivity. It seems, very few managers are aware of the the cognitive styles of their team members which might be a cause for poor performance in many organisations.
I expected a lot more rigour and data to support the claim that the article really nails the missing piece. Performance Management has been a big drainage in management bandwidth [including HR which spends significant time every year to find out low performers /high performers and to bring new innovations to make the assessment more aligned to business objectives]. Every change in the performance management comes with promise of improving objectivity, transparency and efficiency of the process. However every year both the managers and the employees dread when the time comes for annual performance appraisal. 
So I thought the authors would provide some  new optics and clear guidance to organization on how  the process can be more evident and deliver positive experience to both the manager and the employee