The Ultimate Guide to Agile Performance Management Process

The performance management system is a process that many companies have been using over some decades now. It has undergone many changes so that managers can get a better understanding of the employees’ productivity and achievements. However, recently, forward-thinking companies have redirected their perspectives and have adopted the Agile Performance Management process. It is reliable and is considered as a best practice for grading the performance of employees and gaining an insight into their contribution toward a company’s progress.

Why did the need for Agile Performance Management arise?

The need for Agile Performance Management arose as workplaces no longer wanted to follow a hierarchical top-down structure and wanted to adopt an open and collaborative work environment wherein employees, managers, and higher management can join forces to achieve the set objectives. 

Another reason for the adoption of this process being, employees preferred to develop their own individual objectives, aligned with the company’s objectives. They didn’t prefer the idea of working as per the objective checklist handed over to them.

If you’re one of those companies looking out for gaining an understanding of the Agile Performance Management process, and it’s working and benefits, then this blog post would help you.

Read Also: What is Continuous Performance Management (CPM)?

Understanding the workings of Agile Performance Management

Agile Performance Management was created for a new era that is more communicative, efficient, and social. It focuses more on frequent employee performance discussions throughout the year as compared to conventional reviews, which are conducted annually or bi-annually.

The unique feature of this is that it incorporates the concept of frequent performance discussions–on a quarterly or mid-yearly basis. This helps in addressing various problems faced by the employees and how they can be guided to overcome the challenges and be aligned with a company objectives.

Another great aspect of Agile Performance Management is that it is based on the process of achieving an objective rather than solely focusing on annual performance ratings and outcomes.

This approach of frequent discussions with the employees and helping them to overcome their barriers helps to cultivate a robust and meaningful relationship among employees and managers.

What factors differentiate Agile Performance Management from a traditional system?

Given below are some factors that differentiate an Agile Performance Management system from a traditional performance management process.

Improves the existing process: Agile Performance Management system scores over a traditional system because of its ability to improve the existing process and help employees to overcome the challenges related to their work. 

Frequent discussion to solve problems: Unlike a conventional system that focuses on annual appraisal and midyear review, Agile Performance Management happens quarterly or bi-yearly. As a result, it immediately helps to identify different employees’ issues in a short span and fix them. It saves time and employees can focus on the work, rather than sulking and getting bogged down by existing problems.

Employees usually use the review processes to express their opinions and concerns. Using a traditional performance management system, addressing the concerns of the employees may or may not be only possible during an annual performance review. Till then, employees will have to wait to share their problems with their managers or higher management. 

Systematic and meaningful: Another concerning area of a traditional performance management system is that a lot has to be understood in a few sessions that happen once a year. To elaborate, managers have to identify employees’ capability to meet the company’s objectives; employees’ effectiveness in aligning themselves with the company’s goals; their behavior or competencies; their personal development, and their career aspiration – everything in one to two conversations. To achieve these agendas in a single meeting or a string of meetings in two days may not be possible, rendering pressure on the employees and turning the whole activity to be a ​‘tick-box’ exercise.

Agile performance management allows the discussions to take place periodically and eliminates rushed discussions that are meaningless.

Flexibility: Since the traditional performance management process is based on fixed outcomes or rigid grading systems, without in-depth analysis, conducted annually, the management may not get a proper understanding of employees’ performance; challenges, and their efforts to meet the objectives. 

Compared to this, the Agile Performance Management system focuses on near-term goals, most commonly, monthly or quarterly goals, which ensure that all potential hindrances are eliminated during the manager-employee conversation and employees stay abreast with the shifting priorities of the business.

Interestingly, employees derive larger benefits because of this system as it focuses on employees’ development, and quicker feedback implementation. A completely opposite process takes place in the case of a traditional performance management system, as there is a time gap between the performance review and feedback process.

Also Read: How Continuous Feedback Improves Performance Reviews

Success stats of Agile Performance Management

Almost every employee in the current era does not favor annual performance reviews. Because of the annual performance review, employees’ stress level may increase substantially and companies may witness employee turnover. In fact, companies observed a high percentage of voluntary attrition after annual reviews. Reversely, once they adopted agile performance management, they witnessed a 30 percent decrease in voluntary turnover.

95 percent of managers are discontented with their conventional performance management systems, citing their inaccuracy for performance evaluations.

IBM’s Smarter Workforce Institute (SMW) research shows that most workers “react favorably” to the adaptability and openness of Agile Performance Management.

Deloitte’s research indicates that organizations that maintain a col­lab­o­ra­tive atmosphere are profitable and twice as likely to outperform their competitors.

Implementing the process in a smart way

We advocate the following strategies to set off your Agile Performance Management process to a successful start:

Getting employees to trust the new performance review system: The management should build trust among employees regarding the new performance management process, before replacing the traditional performance management process. For the same, the management should discuss the large scope of the Agile Performance Management System and the wide range of benefits it offers. 

Besides, the employees should be made to understand the need for the company to make a transition from the conventional performance management process to Agile Performance Management System. Transparency and frequent discussion to solve the problems of the employees should be emphasized while discussing the benefits of this Process.

Training: Employees cannot be expected to understand the Agile Performance Management system in a day or two, as it requires a total change in the thinking and behavior of the employees. It would be preposterous if a company expects the employees to shift to the new system without any form of training. This is one of the reasons why adequate training should be provided to the managers and the employees while shifting from a traditional performance management system to their Agile performance management process. The training should be comprehensive and should answer all the queries and concerns of the participants.

Setting Goals:

A company’s primary goals should be communicated to the workforce in a detailed and non-hurried manner, an essential step not to be overlooked.

The managers and employees should set quarterly goals and how they would achieve those goals as per the Agile Performance Management system. The goal should be set in such a way that every required step is well defined. The discussion should involve the elaborate techniques to measure the outcomes. Thus, aligned with the goals, employees will have to meet a set target every month.

Managers will play an important role in helping the employees to meet the set target every month. Managers will provide feedback to the employees as when they feel it is necessary. All these action plans ensure the goals set out are relevant, realistic, attainable, and thoroughly understood by employees. If required, the managers can suggest ways such as upgrading existing skills in order to enhance employees’ knowledge and skill set.

Explaining opportunities and career development: Employees will happily accept the Agile Performance Management system if it is going to be beneficial for them and provide new opportunities for career development.

Assessing adoption of this system: Conduct a regular assessment of the new system to understand how well this system has been accepted by the employees. In case there is low adoption, find out the reasons behind it and address the concerns of the employees so that they will embrace it at the earliest.

Why most companies are opting for the Agile Performance Management system?

An Agile Performance Management strategy involves employees in a continuous, year-round process of personal growth. Employees actively take part in developing their abilities in ways that positively affect themselves and the organization.

Meanwhile, a company preserves or enhances its employee capabilities as business requirements evolve. By using the Agile workforce management system, businesses may have employees working toward common goals and boosting productivity. The Agile Performance Management System results in less turnover, increased employee engagement, and higher earnings.

How this system benefits an organization?

Transitioning to an Agile Performance Management system yields substantial advantages on several fronts.

Benefits at the individual level:

At the one-on-one level, Agile Performance Management enhances everyday performance and enables managers to understand the strengths and weaknesses of the employees in real-time. Developing a routine of regular check-ins enables employees to communicate problems and work impediments to their managers, who serve as coaches to assist them in overcoming obstacles. The managers can also provide team members with feedback and instructions aimed at achieving continual improvement.

Reevaluating organizational goals: This system focuses on a frequent reporting and feedback loop process to promote organizational goal awareness. As a result, executives and employees are made aware of OKRs regularly and, over time, everyone knows their goals, resulting in greater employee engagement and productivity.

Benefits at the team level:

At the team level, Agile Performance Management provides team leaders with a more accurate perspective of the team’s capabilities. This makes it possible for the team to shift gears when business objectives change. 

Facilitates enhanced team collaboration: With the Agile system in place, managers may concentrate on guiding and instructing employees to complete work on schedule and within budget. Team members become more dependable contributors, which strengthens the team as a whole.

Performance data:

Agile performance management generates significant amounts of performance data at the enterprise level, enabling Human Resources to monitor organizational capabilities. These data help to identify a benchmark of the workforce’s strengths and shortcomings. In fact, they serve as a crucial starting point for building talent strategies and advancing company objectives.

Agile Performance Management takes a company’s productivity to an altogether different level, as employees become self-aware of the required commitments and witness personal development.

Also Read: 13 Ways to Use HR Data to Improve Decision-Making

Agile Performance Management tools to implement Agile process correctly and easily

Implementing this process necessitates a shift from the old annual reporting approach to a more comprehensive, engaging, and quicker Agile culture. Employing this process incorrectly might pour cold water on the entire effort. 

Thus, it makes sense to make use of digitized HR software such as Engagedly solution to ensure the Agile Performance Management process is implemented properly, with no hassles.

Engagedly solution helps managers to track their employees’ progress and milestone achievements and facilitates the exchange of real-time feedback, in line with this process. Also, incorporating Agile training for transitioning to a more dynamic performance management process is pivotal. To guarantee its seamless execution and leverage its benefits effectively, integrating digitized HR software like Engagedly is imperative. This solution empowers managers to navigate the evolving landscape, ensuring streamlined progress tracking, milestone accomplishments, and real-time feedback exchange, thus amplifying the success of Agile Performance Management. 

Want to know how Engagedly can help you mange your hybrid employees better? Request us for a demo.

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