More than just a buzzword: How to implement agile performance management

The term ‘agile’ has been a favourite amongst COVID-19 buzzwords, as business owners were forced to rapidly switch focus, recalibrate business plans and overhaul operations to weather disruption.

But ‘agile’ is more than just a corporate buzzword. Originally used in the context of software development, agility referred to cross-functional, self-organising teams worked to deliver solutions that quickly responded to customer feedback or a changing business environment. The term is now used in a broad range of business contexts — including HR. 

One aspect of HR that benefits from an agile approach is performance management. The traditional approach to performance management has long been a thorn in HR’s side, viewed by many as inflexible, time-consuming, and out of sync with evolving business needs.

Current performance management challenges

Traditional once-a-year performance reviews are still very much a reality for many organisations, despite these being a common employee, manager, and HR gripe. In fact, according to ELMO Software’s 2021 HR Industry Benchmark Report, 31% of organisations undertake performance appraisals just once a year. 

For a comprehensive overview of HR and payroll trends, challenges, use of metrics and technology, and much more, download ELMO Software’s 2021 HR Industry Benchmark Report today. Data in the report is split by company size, geography, role seniority and industry.

And yet it’s a notoriously time-consuming event. Research highlights that managers spend an annual average of 76 hours conducting performance appraisals, compared with 67 hours invested by employees and 39 hours by HR team members. It’s hardly surprising that 25% of respondents cited performance management as an area that takes up too much of HR’s time relative to the value it delivers. It’s clearly time for a change.

How to implement agile performance management 

So, what exactly is meant by agile performance management? This dynamic approach favours continuous, 360-degree feedback and flexible, transparent goal setting. A far cry from the traditional fixed-interval, once-yearly performance review, which tends to use rigid goal setting and downward-flowing, hierarchical feedback lines. 

The foundations of agile performance management include:

• Linking goals to business priorities: This is effectively the ‘North Star’ of agile performance management. Businesses can introduce objectives and key results (OKRs) that set top-line corporate objectives but enable each team member to decide how they will meet these objectives and how they will be assessed, usually via key performance indicators (KPIs). It requires setting objectives as a team, frequently discussing progress towards individual and team goals and pivoting as required.
  
• Transparent and flexible goal setting: As part of the agile framework, all goals, including those of the CEO, are visible to all employees in the company — helping employees to align their goals with one another and enhancing perceptions of fairness. Meanwhile, goals are set so they can be easily adjusted according to changing business requirements or feedback from others.
  
• Continuous 360-degree feedback and ongoing development conversations: Agile performance management is characterised by — among other things — frequent performance feedback collected from multiple sources, including managers, subordinates, peers and even customers. According to ELMO Software’s 2021 HR Industry Benchmark Report, only one in four respondents said their organisation uses 360-degree feedback to track performance.
• A focus on values: In addition to setting more tangible goals, agile performance management also looks at the extent to which employees ‘live’ the desired values and behaviours that enable agile ways of working. By having these values deeply embedded into performance management practices, there is less chance of personal bias to creep into 360-degree feedback processes, since there is an approved framework for behaviours. 

When implementing agile performance management practices, HR technology can help to streamline workflows and enable organisations to align individual and team goals with organisational strategies — a central tenet of the agile methodology. 

All the valuable data obtained during the performance management process can be more effectively utilised for the purposes of professional development and remuneration.

As companies navigate the post-COVID world, the ability to shift directions rapidly will be critical. By adopting agile performance management processes, organisations are better equipped to deal with this volatile, uncertain, complex, and ambiguous (VUCA) world.

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