Complete Guide to Agile Performance Management: Definition, Benefits, and How to Implement It

Project managers have been implementing agile tactics to keep up with the rapidly changing customer trends. But sometimes it can feel like the newly implemented tactics are doing more harm than good.

Accurately measuring business performance is key to improving operations and ensuring great results. Although performance management allows managers to track results, the time it takes to gather feedback may be too slow for some organizations.

Agile organizations thrive on frequent feedback which necessitates the need for an updated performance management strategy. Agile performance management provides that well-needed shift from traditional practices by streamlining communication between employees and project managers through regular check-ins and frequent reporting.

In this article, we’ll come to understand agile performance management, its benefits, and how to implement it.

What is Agile Performance Management?

Agile performance management, also known as continuous performance management, is a modern approach to measuring and evaluating the performance of agile teams throughout the year. It is different from traditional performance management as it focuses on conducting regular check-ins rather than annual reports.

These check-ins are usually monthly or quarterly reports that help assess team progress. Since these are informal meetings between managers and employees they help promote a collaborative workplace and involve meaningful conversations with much-needed feedback.

This constant flow of feedback between employees results in a responsive workplace. Companies that implement agile performance management tend to be more responsive to change and shift business priorities as needed.

Differences Between Traditional and Agile Performance Management

In agile performance management, the process adheres to agile principles stated in the Agile Manifesto. This includes the frequent delivery of high-value products and regular collaboration of business people throughout the project.

Agile performance management involves day-to-day interaction between managers and employees and quarterly reporting to assess the performance of agile teams. Managers are encouraged to give real-time feedback as soon as problems arise so employees can quickly adjust and get back on track.

With feedback check-ins and a higher frequency of communication between team members, agile performance management leads to improved collaboration, trust, and productivity.

In traditional performance management, organizations conduct a performance-based annual review. This review assesses the performance of team members with feedback provided at the end of the year.

Traditional performance management is largely unpopular with employees. Most people think traditional performance reviews are unfair and don’t provide the feedback they need. Since feedback is given at the end of the year, team members may receive irrelevant or delayed feedback, which is unhelpful and can lower productivity.

Why is Agile Performance Management Important?

Measuring employee performance, including objectives and key results (OKRs), with traditional methods creates inefficiency. Shifting towards an agile approach to performance management can bring about many benefits.

Increases Responsiveness to Change

Through regular check-ins, companies can identify employees’ strengths and weaknesses early on. Shortcomings that threaten the organization’s adaptability, like competency gaps, can be quickly diagnosed and tackled.

This allows companies to be flexible in their approach and embrace changes in the process – a key feature of agile organizations.

Frequent, Real-time Feedback

Annual reporting can hinder the team’s productivity as they only receive feedback at the end of the year. This limits the ability of a team member to actively make corrections and adjust their strategy to ensure better alignment toward set goals.

In an agile performance system, employees receive immediate feedback, which drives them to take action, improving the efficiency of performance reports.

Clarifies Employee OKRs

In a traditional hierarchy, goals are usually integrated between different departments, and these objectives may compete with one another. This confuses the team regarding what they should focus on or what they need to achieve. This is why an annual performance review has been proven inefficient – 65% of employees say the performance review process isn’t even relevant to their jobs.

Agile performance management tackles this by setting OKRs. These OKRs are then cross-checked quarterly or monthly to gauge whether teams are effectively achieving their targets. This process gives teams a framework to know what to work towards and what they should focus on.

Boosts Team Motivation

Big companies like Adobe have also reported many employees handing in their notice just before a performance review. Why is this the case? Because annual performance reviews are anxiety-inducing. They cripple employee morale and often provide vague, delayed feedback that isn’t actionable.

Under agile performance management, constant communication and frequent exchange of feedback allows managers to set better OKRs that align with business goals and cross-check individual team efforts. This motivates team members to do better as it gives them a sense of direction and certifies that they will be judged fairly on their work.

Yields Accurate Results

Gartner Research found that 95% of managers are dissatisfied with the way their companies conduct performance reviews, with around 90% stating that their approach doesn’t convey accurate information.

“Employees that do best in performance management systems tend to be the employees that are the most narcissistic and self-promoting. Those aren’t necessarily the employees you need to be the best organization going forward.” – Brian Kropp, VP and Head of Research at Gartner

By conducting regular check-ins, HR managers can gather rich data on the team’s performance and progress, which allows them to accurately evaluate organizational performance. HR can use this data to define a baseline for the team’s strengths and weaknesses, which can help employees adjust their behavior and set realistic goals.

How to Implement Agile Performance Management

To introduce an agile performance management system to your organization you’ll need to make sure your key project team members are on board. Since it requires a collaborative workplace to succeed, getting your employees, managers, and HR on the same page is vital to ensure the effective delivery of frequent feedback from regular check-ins.

Here are six steps for implementing agile performance management in your organization.

Conduct Frequent Feedback Check-ins

Check-ins are informal two-way conversations between employees and managers. Most of the time, check-ins are integrated with the agile workflow where teams rely on real-time feedback and make adjustments as soon as possible.

But it is equally important to conduct formal quarterly reviews as well. This way you’ll be able to gather enough data to highlight trends and patterns in an employee’s performance. These reports can then be shared with team members to show them the progress they’ve been achieving as well as places where they may be falling short.

You would also have to get HR involved to manage this data. This would help your HR manager evaluate the data to track business capabilities and suggest changes to overcome shortcomings in the next quarter.

Practice Continuous Feedback

Effective communication is critical for successfully implementing agile performance management. Managers in an agile organization should provide instant feedback to team members rather than preserving it for an upcoming meeting. Getting feedback at the right time encourages employees to quickly adjust their behavior and stay on track.

As managers and employees develop better communication through regular performance check-ins, their relationship improves. Employees will know what they have to do and not do as they start to trust their managers to guide and support them toward the end goal.

Encourage managers to self-identify as mentors or coaches as it can bring about a sense of belonging in the team and increase transparency between departments.

Establish OKRs or SMART Objectives

OKRs or SMART objectives can provide team members with a framework to realistically measure and monitor performance objectives. They are goal-setting techniques that break down corporate goals into key results. As business priorities shift, managers can adjust key results to incorporate changes into the framework.

Establishing performance objectives allows team members to know what to work towards and how their performance is measured. During every check-in and quarterly report, managers cross-check goals with employee efforts.

Providing Coaching for Agile Performance Management

Many managers are accustomed to traditional performance management practices, such as conducting annual performance reviews. Before implementing agile performance management, you should provide managers with the right training to give actionable feedback, evaluate daily performance, and improve communication.

“Companies that provide high levels of development planning and coaching to their employees have a third less voluntary turnover and generate twice the revenue per employee of their peers. These are huge returns.” – Josh Bersin, Global Industry Analyst and HR Expert

Educate managers on the role they play in developing the skills of the team. They should be active listeners and try to overcome any barriers in giving and receiving feedback to employees. Also, train managers to collect data more effectively, using techniques such as crowdsourcing feedback which involves gathering data from groups of people rather than asking each person separately.

Consider Using Agile Performance Management Tools

To ensure a smooth transition to agile performance management you’ll need to integrate agile processes into your current performance management strategy. You’ll also need to monitor your team by noting potential OKRs, arranging feedback, defining competency frameworks, and setting goals to assess performance. Doing so manually can be exhausting and time-wasting and can even lead to inaccurate information if managers don’t know when and why team members are struggling.

Using an agile performance tool that integrates seamlessly into your current agile workflow can help overcome these challenges. These tools give you the ability to have all important information in one place, which helps HR managers highlight underlying issues and find opportunities for capability development.

Review the Agile Performance System

Once you’ve implemented an agile performance management system in your organization, you need to carry out a post-implementation review to assess its effectiveness. Survey managers and employees and perform regular check-ins to see how you are transmitting feedback to employees.

Monitor your team’s key results and individual progress and see whether they are properly adopting the new performance management system. If the team is not handling the new changes well, find out why and make changes to the workflow accordingly and monitor their impact. With some trial and error, you’ll eventually develop a system that works for you.

Best Tools for Implementing Agile Performance Management

1. Oracle HCM

Oracle is one of the market leaders in providing scalable business management software. Oracle HCM is a particularly useful tool for managing core HR operations. It has a user-friendly interface, advanced real-time functionality, and integrates with most business systems.

Key Features

  • Talent management
  • AI and data-driven functionality
  • Global human resources
  • Employee information
  • Workforce management

2. Totara Perform

Totora is a flexible performance management software solution that helps organizations transition to agile performance management. It allows you to set your performance schedules, gather employee feedback, and align OKRs with goals to enable just-in-time learning.

Key Features

  • Integrates with HCM products including payroll, recruiting, and talent management
  • Gathers 360 feedback for better identification of strengths and weaknesses
  • Streamlines the appraisal process with advanced reporting
  • Includes the ability to create custom solutions

3. Zoom

Zoom is a great tool for hosting virtual meetings and performing frequent feedback check-ins with remote workers. Remote work doesn’t seem to be going anywhere. An estimated 50% of the US workforce will work remotely in the future as many companies saw an increase in profits and productivity when remote work became the norm.

To monitor your agile performance management practices, you can use Zoom to keep a check on team performance without spending too much on conducting surveys and crowdsourcing feedback.

Key Features

  • Ability to host virtual meetings
  • Enable online two-way communication with Zoom chat
  • Online whiteboard to visualize concepts
  • VoIP phone system

Making the Shift to Agile Performance Management

Performance management is essential for keeping track of your company’s success, but traditional performance management usually involves vague saved-up feedback which may not accurately represent the organization’s performance. As an organization moves towards agile processes it needs an updated performance management strategy to embrace performance agility.

Agile performance management plugs the holes in traditional performance management by offering a solution to outdated and often inefficient ways of gathering feedback and reporting. Through feedback check-ins, informal meetings between managers and employees, and quarterly reporting, an agile organization streamlines the performance management process and increases employee motivation, and productivity, enhancing the overall work experience.