Pioneering A Culture Of Success Through Agile Performance Management

The terms performance management and performance appraisals are often interchangeably used though they are distinctly different. Performance management is the process of identifying, measuring, managing, and developing the performance of the employees in an organisation, while performance appraisal is the systematic evaluation of the performance of the employees which helps in identifying the areas in which they need improvement.

Performance management as a concept has evolved over time from linking individual goals with departmental goals to achieve departmental/organisational objectives to maximizing employee potential with both the employee and the organisation benefitting from it. Gallup in its research paper, ‘Reengineering Performance Management’ has stated that, only 2 in 10 employees strongly agree that their performance is managed in a way that motivates them to do outstanding work. Their analysis reveals that the reason behind the employee’s aversion towards traditional performance management are tied to five primary obstacles: infrequent feedback, lack of clarity, manager bias, adverse reaction to evaluation and feedback, and too much focus on pays incentives. This calls for a complete overhaul of the traditional processes/systems and design new ones that focus on metrics that drive business impact.

Agile performance management relies on the agile concept of frequent value delivery through continuous collaboration and improvement. It emphasizes performance management with complete adaptability to meet organisational demands supported by good coaching. It also involves a change of mindset, to incorporate behaviours like agility, adaptation and collaboration. 

Understanding Agile Performance Management

Traditional performance management approaches are generally designed within an MBO (Managing by Objectives) framework, where a strategic approach is used to enhance the performance of an organisation. Individual parameters like goal setting, defining key result areas (KRA), setting up performance standards etc. are usually aligned with the organisational objectives. However, the focused approach on the expected goals/targets may not factor in organisational issues or market conditions which usually are dynamic and at times even unpredictable in nature. Hence, it has become inevitable to design processes that focus on metrics that drive business impact.

Agile performance management takes cognizance of the internal and external changes that happen and the impact they have on individual and team performance. This helps the HR team to track capabilities at the individual, team, and organisational level which in turn helps them in developing/modifying talent strategies based on evolving business priorities. A quarterly objectives and key results (OKR) framework can support agile performance management by aligning performance with business priorities.

The agile performance management model allows employees to create/take accountability for their own goals, facilitate acquisition of certain competencies, alignment of their values both at an individual and a team level to facilitate collaboration and enhance performance. In short it would be a complete shift from a performance management to a potential management, where the entire focus would be on building and managing employee potential, wherein performance would be a natural output.

The Evolving Role of a Manager in Agile Performance Management

Shifting to an agile performance management model may have a huge impact on your overall talent management strategy. Traditional appraisal processes like the ‘forced ranking/bell curve systems’ equated the current performance of employees with their potential thus leading managers to work only on the potential of a select group of high performers. Most of the organisations executed their top development programmes only for their top players and these were commonly labelled as ‘top talent’ development programmes.

In an agile performance management model, managers are expected to co-create goals with individual employees/teams on short sprints ranging from a month to a maximum of a quarter. These goals should focus on matrices which can directly relate to actions which helps improve performance and produces results which impact the business. This would also mean a paradigm shift for the managers who were managing performances to play the role of coaches to help employees build their capabilities/potential and to coach them on how to achieve the results that impact business results. This also put the onus on the leadership teams to ensure that the agile individual and team goals dovetail into organisation goals that produces results that impact business.

Another major shift for a manager from a traditional performance management model is the process of an annual/bi-annual process of appraisal feedback which mostly leads to their increment in annual cycle of pay/compensation. The agile model encourages a regular ongoing approach of goal alignment and outcomes at an individual/team level supported by a feedback discussion which focuses on how to achieve those goals/outcomes through developmental initiatives. These regular check-ins/discussions followed by developmental initiatives will also help the employees in their career development as their Individual Development Programme (IDP) will now become an integral part of their performance management system.

Alignment of L&D Strategy in Agile Performance Management

In an agile performance management model, the success of any learning and development initiative will purely depend on how it can directly relate to actions which help improve the performance matrices which are aligned to their organizational objectives. Research on ‘Top Priorities for HR Leaders’ in 2021 by Gartner reveals that, using a dynamic approach to reskilling leads to employees applying at least 75% of their learnings in real time as against any other method. Hence, in an agile performance management model the success of any learning solution will depend on how it can be converted to a performance solution. Hyper-personalization of learning and the shifting of collaborative learning from theory to practice will further help to build capabilities and enhance the potential of your employees.

In the agile performance management model data is a key differentiator. This would not just include collecting/recording gigabytes of data in your systems, but also being able to use them effectively to shift your critical performance management process to improve current performances and grooming the required talent for future. The agile model of performance management is sustainable as it is developed and modified as per the needs of the dynamic business environment and would adapt to the market and workplace changes.

As John F. Kennedy describes it aptly, “Change is the law of life. And those who look only to the past or the present are certain to miss the future”. The principles of agile performance management are a pre-requisite for all organizations who would like to embark on a journey of transformation in the ever-changing business world to create a successful tomorrow.