McKinsey says ongoing development conversations lift motivation from 20% to 77%. 6 fixes so feedback happens all year.

A Thursday question for People leaders in Tallinn, Stockholm and London: how many of your people had a real development conversation with their manager this month — not a status update, a proper “where you stand and how to grow” talk?

McKinsey put numbers on what happens when those talks don’t happen. On the McKinsey Talks Talent episode “What works—and doesn’t—in performance management” (Bryan Hancock and Brooke Weddle with Lucia Rahilly, 19 November 2024), they share global survey findings: without development conversations, motivation from the performance process collapses. With ongoing feedback in those conversations, it jumps.

1. What McKinsey actually said

In plain language:

• Development conversations are the motivation lever. Only about 20% of respondents who had no development conversations felt motivated by their company’s performance management. Among those who received ongoing feedback in development conversations, 77% felt motivated by it.
• Ratings themselves barely move the needle. Whether you run no ratings, two, three or five, employee perception does not change much. What matters is how you implement: clarity on what good looks like, fact-based differentiation, and fair conversations.
• Managers are under-skilled and burned out. More than half of respondents said their managers do not fall into the skilled-practitioner category when delivering reviews. In large companies, over a third of managers are perceived as lacking the skills for these conversations. About 43% of managers report being burned out.
• The majority still find PM bureaucratic and unfair. McKinsey has studied this in 2016, 2018 and 2024, and the majority still say the process is too bureaucratic and unfair. The fix is the “how”: collaborative goals and ongoing conversations, not another set of boxes.
• Rewards work better as a mix. More than half of respondents felt motivated when financial rewards were combined with nonfinancial ones — growth opportunities and praise from a manager or senior leader.

2. The mid-market hurdle: feedback that only shows up at year-end

In a 200–600 person company, the pattern is familiar. Goals get set in January. 1:1s turn into project stand-ups. Feedback lives in Slack threads nobody files. Then November arrives and managers write reviews from memory under time pressure — exactly when McKinsey says burnout and low sympathy kick in.

You don’t fix that with a longer review form. You fix it by making development conversations a weekly or biweekly habit with something concrete to discuss: live goals, a short agenda, and a place to capture what was said so the year-end review writes itself.

3. 6 fixes so feedback happens all year

1. Put development on the 1:1 agenda every time. Split each 1:1: half delivery, half “where you stand and how to grow.” McKinsey’s jump from 20% to 77% motivation tracks with ongoing development conversations, not status updates. In Revolut People: structured 1:1s with agendas and notes sit next to goals, so the development half has a home.
2. Keep goals live so check-ins have substance. Simple goals, revisited during the year. McKinsey’s point: clarity and simplicity beat a 25-line weighted spreadsheet. In Revolut People: goals cascade and stay visible, so managers and employees open the same page in every check-in.
3. Capture feedback when it happens. Don’t wait for the review window. Continuous feedback turns the year-end write-up into a summary, not a reconstruction. In Revolut People: continuous feedback sits in the same system as reviews, so evidence is already there when the cycle opens.
4. Train managers on the hard conversations before review season. McKinsey describes coaching sessions where managers practice feedback with HR before ratings go out — and notes gen AI can help managers rehearse. In Revolut People: one scorecard and calibration views give managers a shared language before the tough talk.
5. Design the process for the 95%, not only the exits. McKinsey argues against building the whole system around the few who may leave. Make it useful for people who stay and grow. In Revolut People: reviews, goals and feedback are built for ongoing performance, with a clear trail when underperformance does need a record.
6. Pair pay with nonfinancial recognition. More than half of McKinsey’s respondents felt motivated when financial and nonfinancial rewards were combined. Praise and growth paths matter alongside the rating. In Revolut People: reviews and people data in one place make it easier to connect ratings, feedback and next-role conversations.

The PDF goes to your work email. Curious what your current cycle costs in manager hours? Try the performance review cost calculator.

4. Where Revolut People fits, and where it doesn’t

Revolut People started as the in-house system Revolut uses to run performance. The part that maps to McKinsey’s finding is ongoing conversations with evidence: goals, structured 1:1s, continuous feedback and reviews in one place, so development talk isn’t an annual scramble.

To be straight about the limits: software won’t give a burned-out manager more hours in the day, and it won’t make a manager skilled overnight. Those need coaching time and leadership priority. What it can do is remove the admin that eats the coaching slot, and keep the evidence of every conversation next to the review. Related reads: Deloitte on trust in performance management, HBR on feedback that crosses the line, and Feedback that never sticks.

Bottom Line

McKinsey’s data is clear: without development conversations, only about 20% of people feel motivated by performance management; with ongoing feedback in those conversations, motivation rises to 77%. Ratings matter less than clarity, simple goals and skilled talks — and most managers still aren’t set up to deliver them. For a mid-market People team, the fastest win is a weekly or biweekly 1:1 with a development half, live goals, and feedback captured during the year. Try it with one department for a quarter and ask them if the process feels fairer.

FAQ

What did McKinsey find about development conversations and motivation?

In McKinsey’s global survey discussed on the McKinsey Talks Talent podcast (Bryan Hancock and Brooke Weddle, 19 November 2024), only about 20% of respondents who had no development conversations felt motivated by their company’s performance management. Among those who received ongoing feedback in development conversations, 77% felt motivated by it.

Do ratings themselves fix performance management?

McKinsey’s research found that whether you have no ratings, two, three or five ratings does not change employee perception very much. What matters is how you implement the system: clarity on goals, fact-based differentiation, and skilled conversations. Focus on execution, not the number of boxes.

How skilled are managers at reviews, according to McKinsey?

In McKinsey’s survey, more than half of respondents said their managers do not fall into the skilled-practitioner category when delivering reviews. In large companies, over a third of managers are perceived as not having the skills to have these development conversations. About 43% of managers report being burned out.

How can a mid-market People team make development conversations stick?

Schedule structured 1:1s with a simple agenda, keep goals live so check-ins have something concrete to discuss, capture feedback during the year so the review is not written from memory, and give managers a short practice loop before review season.

Is Revolut People available in Estonia, the Nordics and the UK?

Yes. Revolut People is available to businesses with a registered entity in the UK, the EEA or the US, which covers Estonia and the Nordic countries.