Applying Agile Principles to Performance Management

People have been writing about what’s broken in performance management for decades, and yet little has changed at many companies and across the business landscape in general. One way to reinvent performance management is by making it agile, but what does agile performance management look like? This article lays out the case for agile performance management, beginning with an overview of how traditional performance management is broken, the origins of agile philosophy, and how the main elements of agile performance management can be used to overhaul performance management practices.

Performance Management has been Broken for Decades

It’s hard to imagine a less agile approach to performance management than the dreaded annual performance review. How in the world did we get stuck with the concept of the annual performance review in the first place? Peter Cappelli and Anna Tavis explain why in their Harvard Business Review article HR Goes Agile:

“After World War II, when manufacturing dominated the industrial landscape, planning was at the heart of human resources: Companies recruited lifers, gave them rotational assignments to support their development, groomed them years in advance to take on bigger and bigger roles, and tied their raises directly to each incremental move up the ladder. The bureaucracy was the point: Organizations wanted their talent practices to be rules-based and internally consistent so that they could reliably meet five-year (and sometimes 15-year) plans. That made sense. Every other aspect of companies, from core businesses to administrative functions, took the long view in their goal setting, budgeting, and operations. HR reflected and supported what they were doing.”

There is always a certain amount of inertia in companies to make big changes around things like overhauling performance management. As noted by David Rock back in his 2013 Harvard Business Review article Give Your Performance Management System a Review, “…only 14% of organizations are actually happy with their performance management system as it stands, according to industry research firm CEB. Despite that, so far only 3% of companies are doing anything radical around how they manage performance. The rest are tinkering on the surface, altering the number of goals being set, shifting from a 3 to a 5-point rating scale, or changing the rating criteria.” Fast-forward to now and it seems little has changed from that assessment.

Clearly, the time for tinkering is over. Businesses in the digital age of the twenty-first century must deal with the pace and scope of change seeming to only get faster and bigger, a state of “permanent white water” as leadership and management guru Peter Vaill coined it back in the 1990s. Agile is the approach that can overhaul performance management in the ways needed today.

The problems with traditional annual performance reviews are obvious to most these days. It’s backward-looking rather than forward-looking. It makes no sense to wait an entire year to evaluate an employee’s performance. Doing so is the antithesis of agile philosophy. Shifting from annual to twice-a-year isn’t an agile fix either—that’s the “tinkering” effect mentioned earlier and is counterproductive.

The Rise of Agile

The best articulation of agile approach came out of the field of software development. Back in 2001 a group of seventeen software developers came together and produced the Manifesto of Agile Software Development and its twelve principles. Below I’ve rephrased them to remove the software-specific context to highlight the more general nature of the principles:

1. Continual delivery of value (customer-centric).
2. Welcome and embrace change (flexibility).
3. Deliver value as quickly as possible (nimbleness).
4. Cross-functional collaboration.
5. Projects are built around motivated individuals, who should be trusted (autonomy).
6. Face-to-face conversation is the best form of communication.
7. Desired outcomes are the primary measure of progress.
8. Maintain a sustainable pace in work to avoid burnout.
9. Continual attention to excellence.
10. Simplicity—the art of maximizing the amount of work not done—is essential
11. Self-organizing teams produce the best results.
12. Regular team reflection on how to become more effective and adjust accordingly.

When transferring agile principles to performance management, the team approach to work is a primary emphasis. This makes sense since more work is team-based than ever, and while performance will always include an evaluation at the individual level, it is also inextricably bound to teamwork.

Elements of Agile Performance Management

While there are innumerable ways the twelve principles of agile can be applied to performance management, the following are the main elements of agile performance management:

• Coaching: In the agile approach, management looks a lot more like coaching. This is a substantially different approach than management-as-usual, which means supervisors and managers will need training to understand what’s involved in doing it effectively. As the International Olympic Committee says, “A good coach is positive, enthusiastic, supportive, trusting, focused, goal-oriented, knowledgeable, observant, respectful, patient and a clear communicator.” Notice how many of those characteristics dovetail nicely with agile principles.

• Goal Setting for Employees: An agile approach to performance would never set employee goals and then only revisit them a year later. That would violate everything that has to do with delivering value frequently and continually, shorter timeframes, and so on. It’s also worth paying some attention to how goal setting can be more a more collaborative process.

• Continual Feedback: Quick vocabulary lesson: You’ll see people refer to both continual feedback and continuous feedback, but only one of these is correct. Continual means ongoing but with starts and stops. Continuous literally means nonstop. Agile performance encourages continual feedback but not continuous feedback, which would be impossible. There is lot to be said about better ways to give (and receive) feedback, especially within the coaching approach mentioned earlier.

• Multidirectional Feedback in Team-Based Work: In the agile approach, feedback isn’t just a two-way street, it’s a messy-looking multi-street intersection, but technology helps manage it and keep it all sorted. Upward feedback is as welcome and necessary as a manager or supervisor providing downward feedback to their direct reports. Peer reviews become essential to evaluate team performance.

• Data-Driven Performance Management: In the digital age of the twenty-first century, everything can be more data-driven, and agile thrives on data. However, when data includes feedback, which is notoriously subjective, care must be taken to avoid amplifying systematic errors inherent to measuring feedback. Performance management software is invaluable in making use of data, as long as you understand where its analytics may fall short.

• Robust Training for Managers and Supervisors: Implicit in motivating and empowering people is giving them the support and training needed to do their jobs to the best of their ability. Nowhere does this matter more than the supervisors and managers charged with managing the performance of individuals and teams. Despite what seems like a no-brainer, many people are promoted into managerial positions with little to no training at all, let alone the specific needs of being an agile performance manager in terms of coaching and continual feedback. They also need good training around developing high-performing teams, understanding group dynamics on teams, and managing team performance.

• Training and Learning for Employees: Agile performance management must be complemented with agile training and learning, which means making learning available on-demand and easily accessible for when the data tells you certain skills and training are needed to help an employee reach their performance goals and expectations. An easy-to-use, powerful, scalable learning management system (LMS) such as eLeaP should work hand-in-hand with your performance management system.

• Tailor Agile Performance Management as Needed: It’s important to understand you don’t need to force one performance management model into every single corner of a company. A cookie-cutter approach rarely serves a company as well it hopes. Instead, take a good look at how the performance management model can be tweaked to better fit different groups or categories or units in the company. A group of scientists who work on product development in your company’s lab many thrive under one performance management model while the customer-facing sales representatives might be better off with a substantially different model.

Technology to Support Agile Performance Management

Any company interested in transforming their outdated approach to performance management into one that is agile needs the right performance management software geared toward the kinds of practices and approaches outlined above. As you begin rethinking performance management along agile principles, also evaluate potential performance management systems by how well their features and functionalities dovetail with the agile approach.

For example, is there a Weekly Status feature? This is the kind of timeframe you want to be working in when it comes agile performance management. You can use a Weekly Status feature to capture what an employee is working on from week-to-week to see how it relates to goals, participation on one or more teams, and so on. Once you adopt the agile mindset and get used to its principles, you’ll be in a much better position to evaluate different performance management software apps to choose the one that’s right for your company and its agile future.