Exploring agile performance management (and how to implement it)

In this ulti­mate guide to agile per­for­mance man­age­ment, we’ll explain what agile per­for­mance man­age­ment is, why it is increas­ing­ly impor­tant and how you can embed it into your exist­ing per­for­mance man­age­ment system

Agile per­for­mance man­age­ment (also known as con­tin­u­ous per­for­mance man­age­ment) has been around for a num­ber of years now. More and more high-pro­file com­pa­nies are mak­ing the tran­si­tion and are reap­ing the ben­e­fits. Despite this, a great deal of organ­i­sa­tions have yet to make the change away from more tra­di­tion­al annu­al per­for­mance appraisals.

To under­stand why it’s worth rehaul­ing your employ­ee per­for­mance man­age­ment sys­tem towards agile per­for­mance man­age­ment, we’ll answer the fol­low­ing questions:

• What is agile per­for­mance management?
• What are the main dif­fer­ences between tra­di­tion­al and agile per­for­mance management?
• Why is agile per­for­mance man­age­ment important?
• How can I imple­ment agile per­for­mance man­age­ment to dri­ve effec­tive per­for­mance?
• Do I need soft­ware to tran­si­tion to agile per­for­mance management?

What is agile per­for­mance management?

Agile per­for­mance man­age­ment is an approach to man­ag­ing employ­ee per­for­mance and devel­op­ment through­out the year as opposed to on an annu­al or bi-annu­al basis. It is col­lab­o­ra­tive, involv­ing reg­u­lar con­ver­sa­tions and con­tin­u­ous feed­back. Agile per­for­mance man­age­ment isn’t sole­ly focused on the des­ti­na­tion (i.e. an annu­al per­for­mance out­come or rat­ing) — it is more about the process of get­ting there, which involves reg­u­lar­ly read­dress­ing objec­tives and bar­ri­ers to effec­tive per­for­mance. Agile per­for­mance man­age­ment was cre­at­ed for a brave new world that is faster, more social and more communicative.

The main fea­ture of agile per­for­mance man­age­ment is the fre­quent per­for­mance dis­cus­sions, or ​‘check-ins’, which should ide­al­ly take place on a month­ly basis. These ses­sions are designed to help cul­ti­vate authen­tic, mean­ing­ful rela­tion­ships and dia­logue between man­ag­er and employ­ee while pro­vid­ing the oppor­tu­ni­ty to exchange much-need­ed feedback.

The con­cept behind agile per­for­mance man­age­ment is to address the draw­backs and inad­e­qua­cies of tra­di­tion­al per­for­mance man­age­ment, form­ing a more for­ward-look­ing and mean­ing­ful approach. To bet­ter under­stand, we should look at the main dif­fer­ences between tra­di­tion­al per­for­mance man­age­ment and agile per­for­mance management.

Agile per­for­mance man­age­ment vs tra­di­tion­al per­for­mance management

Tra­di­tion­al per­for­mance man­age­ment doesn’t enjoy a glow­ing rep­u­ta­tion. In fact, it has been proven to be insuf­fi­cient when it comes to improv­ing and mea­sur­ing an employee’s per­for­mance and con­tri­bu­tion to a business.

Tra­di­tion­al per­for­mance man­age­ment revolves around an annu­al appraisal with a mid-year review in between. At the annu­al review, man­agers are typ­i­cal­ly expect­ed to iden­ti­fy how well an employ­ee has met their objec­tives over the last year, how effec­tive they have been at dis­play­ing company’s val­ues, behav­iours or com­pe­ten­cies, what their career aspi­ra­tions are, what their objec­tives should be for the fol­low­ing year and what their per­son­al devel­op­ment plan should be. To achieve all this in one meet­ing is sim­ply not fea­si­ble so appraisals fre­quent­ly end up becom­ing a ​‘tick-box’ exercise.

Agile per­for­mance man­age­ment, on the oth­er hand, enables these items to be dis­cussed peri­od­i­cal­ly over time dur­ing check-in meet­ings, mean­ing that the con­ver­sa­tions are more mean­ing­ful and less rushed.

Tra­di­tion­al per­for­mance man­age­ment is asso­ci­at­ed with rigid goals, set annu­al­ly, which fre­quent­ly become out of date or irrel­e­vant by the time the annu­al appraisal comes around. Under agile per­for­mance man­age­ment, goals (or ​“pri­or­i­ties” as we like to call them) are set with a ​‘near-term’ focus, often quar­ter­ly, ensur­ing they stay rel­e­vant to the shift­ing pri­or­i­ties of the busi­ness. There is also a focus on employ­ee devel­op­ment rather than just on deliv­ery and outcomes.

Under a tra­di­tion­al annu­al appraisal mod­el, feed­back is typ­i­cal­ly ​‘saved up’ for the appraisal meet­ing, mean­ing that it has lit­tle impact as too much time has passed between the event and the feed­back being giv­en. Agile per­for­mance man­age­ment, how­ev­er, involves the exchange of fre­quent feed­back — some­thing employ­ees today are crav­ing and deserve.

Why is agile per­for­mance man­age­ment important?

Agile per­for­mance man­age­ment might sound good in the­o­ry, but what evi­dence is there to sug­gest we should all be imple­ment­ing it into our busi­ness­es? Organ­i­sa­tion­al change isn’t some­thing to be tak­en light­ly, so it’s nat­ur­al that you will be look­ing for some real busi­ness ben­e­fits to get every­one on board.

To get a real-life insight into the ben­e­fits of agile per­for­mance man­age­ment, watch this inspir­ing case study video from Clydes­dale York­shire Bank­ing Group who were the first major bank in the UK to remove annu­al appraisals in favour of agile per­for­mance management:

Here are some addi­tion­al sta­tis­tics to bear in mind:

• Com­pa­nies who man­age objec­tives quar­ter­ly gen­er­ate 30% high­er returns than com­pa­nies who man­age them annually.
• Research by Deloitte has found that com­pa­nies that are more col­lab­o­ra­tive in nature are gen­er­al­ly twice as prof­itable, while also being twice as like­ly to beat their competition.
• Almost every mod­ern employ­ee hates the annu­al per­for­mance review. This lev­el of stress even­tu­al­ly leads to high employ­ee turnover. In fact, Adobe found that there was a high per­cent­age of employ­ees hand­ing in their notice fol­low­ing annu­al appraisals. After tran­si­tion­ing to agile per­for­mance man­age­ment, they saw a 30% drop in vol­un­tary turnover.
• Chances are, the way you are con­duct­ing per­for­mance reviews isn’t fill­ing man­agers with con­fi­dence, either. Accord­ing to CEB research, a remark­able 95% of man­agers are dis­sat­is­fied with their cur­rent per­for­mance man­age­ment process, stat­ing it doesn’t yield accu­rate information.

How to imple­ment agile per­for­mance management

To get your agile per­for­mance man­age­ment sys­tem off to a good start, we rec­om­mend you take the fol­low­ing steps:

• Get your peo­ple on board — Your lead­er­ship and man­age­ment team will need to buy-into the ben­e­fits of agile per­for­mance man­age­ment (not too dif­fi­cult to achieve con­sid­er­ing the low opin­ion of tra­di­tion­al per­for­mance man­age­ment). This use­ful video can help to explain this. Your employ­ees and man­agers will also need to under­stand why your com­pa­ny is mak­ing this tran­si­tion, what the ben­e­fits are to them and how it will impact them. Trans­paren­cy and good dia­logue are key to a smooth tran­si­tion. A lack of com­mu­ni­ca­tion will result in resis­tance, con­fu­sion and frustration.
• Pro­vide the right train­ing — Agile per­for­mance man­age­ment requires a shift in think­ing and behav­iour. Just because you have made the deci­sion to switch to reg­u­lar per­for­mance dis­cus­sions, this doesn’t mean your man­age­ment team will auto­mat­i­cal­ly know how to con­duct them. Spend time prop­er­ly train­ing your lead­ers so they know what to dis­cuss dur­ing employ­ee one-to-ones. This is the only way your man­agers will have the con­fi­dence to car­ry them out and it is the only way your employ­ees will feel supported.
• Cre­ate a dynam­ic goal set­ting process — This new sys­tem will require a shift in the way you approach SMART objec­tives. Instead of cas­cad­ing down 12 month objec­tives, you should be encour­ag­ing employ­ees to work with their man­ag­er to define their own SMART goals that are near-term and aligned to the organisation’s goals. This means tak­ing the time to com­mu­ni­cate the company’s over­rid­ing objec­tives to your work­force. This is an impor­tant step that can’t be skipped. Employ­ees have to know where the com­pa­ny is going and what it wants to achieve if they are to help dri­ve it forward.
• Pro­vide devel­op­ment oppor­tu­ni­ties — Employ­ees and man­agers alike are going to be more excit­ed about the tran­si­tion to agile per­for­mance man­age­ment if they under­stand how it will ben­e­fit them. Explain how this new sys­tem will help them ful­fil their per­son­al devel­op­ment objec­tives and their career goals. This can be encour­aged by incor­po­rat­ing a career/​personal devel­op­ment agen­da item into your reg­u­lar check-in meetings.
• Con­duct reg­u­lar reviews of your new sys­tem — Reg­u­lar­ly mon­i­tor the adop­tion lev­els of your the new per­for­mance man­age­ment sys­tem, and where there is low adop­tion, find out why and address the con­cerns as soon as possible.

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You need the right per­for­mance man­age­ment soft­ware to rein­force your agile per­for­mance man­age­ment approach

Hav­ing reg­u­lar per­for­mance dis­cus­sions and giv­ing con­tin­u­ous feed­back is a sim­ple con­cept, but with­out the online tools, it can be dif­fi­cult to man­age on a day to day basis. There­fore, invest­ing in per­for­mance man­age­ment soft­ware that can help man­agers and employ­ees sched­ule and keep track of check-ins and goals, and which can facil­i­tate the easy exchange of real-time feed­back, is pret­ty much essen­tial. We’ve spo­ken to numer­ous organ­i­sa­tions who have attempt­ed to move to agile per­for­mance man­age­ment infor­mal­ly, with­out a ded­i­cat­ed online tool and have failed to get traction.

When con­sid­er­ing tech­nol­o­gy, it’s impor­tant to choose per­for­mance man­age­ment soft­ware that was pur­pose-built for agile/​continuous per­for­mance man­age­ment. If you try to cus­tomise a tool that was designed for annu­al objec­tives and appraisals to be more agile, it will end up feel­ing ​‘clunky’ and your employ­ees and man­agers sim­ply won’t engage with it.

How can Advanced Clear Review help you?

Advanced Clear Review per­for­mance man­age­ment soft­ware has suc­cess­ful­ly helped com­pa­nies large and small tran­si­tion to agile per­for­mance man­age­ment while boost­ing per­for­mance and employ­ee engage­ment. To find out more, book a free per­for­mance man­age­ment demo today.