A common piece of advice given to writers is to spend time listening to people talk so that you can imitate their speech. The advice fails to mention that you want to imitate their patterns and their cadence, their quirks and oddities, not their language verbatim.
Like everything else in a piece of fiction, or nonfiction for that matter, dialog needs to support the story (or argument). The dialog and the description both need to move one of two things forward in fiction: the plot (revealing more clues to the intrigue and helping create movement) and character (revealing more information about who is who and how they relate to each other). While an occasional obvious bit of information can be thrown in, we don't need a lot of the day-to-day stuff that people say to each other. Here are some tips for more effective dialog.
1. Skip anything the reader already knows. If your main character has just spent time ruminating about the takeover of her corporation, you don't need her to announce it to her husband in dialog. We already know. Have her tell him things we don't know about the situation.
2. Use contractions (I'm, I'll, we'll) unless your speaker is the Queen of England or a recent immigrant who doesn't yet have the hang of the language. Almost no American speakers use non-contracted language in conversation.
3. Consider each dialog interchange for its impact on plot or character. How can you move things forward by what their speeches reveal about themselves, each other, and the story?
4. Skip the niceties (Hi! How are you? I'm fine) unless they are unusual and add something new.
5. Use physical attributes rather than verbs of speech when possible. Keep the characters in their bodies.
He nodded instead of "Yes," he said.
6. As I mentioned in an earlier post, use verbs of attribution sparingly. You really only need to indicate who's speaking if the dialog itself doesn't make it clear. Again, you can use physical attributes instead of speech verbs and make your interactions more interesting. I'm also a proponent of "said" as the only speech verb.