In an entrepreneurial world, classical job performance evaluations are often of little use. They are too specific, too static, and often fail to pick up subtleties and nuances. The entrepreneurial organization is constantly shifting--demands are never constant and deadlines frequently seem to be immediate. In this context, the core skills that you want people in your organization to have must perpetually be adjusted and developed.

The challenge, therefore, is to find the middle ground. How do you have a conversation in which you take the time to invest and develop others while realizing that in the world of velocity, speed-to-market, and achievement is critical?

The key is a focused, developmental conversation. It's a continuous conversation--one that is focused on the intent of enhancing the skills and capacities of your reports. In a developmental conversation, you're discussing goals and intentions, and partnering with your reports to help them come up with a development plan. 

There are four components of an effective developmental conversation:

1. Set the tone. It is important to stress the developmental nature of the conversation. That is, you want to downplay any language that is starkly evaluative in nature. During the conversation, reference what can be accomplished together. In setting the tone, you want to make sure that you listen intently, use the language of partnership, and express appreciation. 

2. Explore the situation. The developmental conversation is an opportunity for you to find out where things stand. Ask your reports how they understand the situation. Celebrate their successes, be open to hearing about their challenges, and learn about areas that they would like to develop. Have an open and broad discussion in which you are not always in the lead, but you are listening and taking in information. By exploring, you create a mutual awareness and common understanding.

3. Examine goals. This is a critical part of the developmental conversation. Once you know where things stand, you can develop an understanding with your direct report of where things should be going. Discuss feasible improvements and targets. This is an opportunity not only to set goals, but also for you and your direct report to talk about the challenges and obstacles that may come up.

4. Offer feedback. Feedback is the most concrete step of the developmental conversation. It is the specific step in which you bring in your suggestions, ideas, goals, and reactions to what you have learned. Give constructive feedback being direct, specific, and realistic. Never overload tasks, become authoritarian, or make comparisons with others.

5. Develop actions. Actions are the specific steps needed to achieve the stated developmental goals. Once there is a mutual agreement about the direct report would like to move, help them come up with the specific actions that will help your direct report move in that direction.  

As an entrepreneur, you have to develop the key skills of listening, questioning, and giving feedback. As an entrepreneur, how you speak to your direct reports, how you listen to and develop your team, how you challenge them, and how you engage in the art of conversation is the key to achieving the business results you want.