Most employees hate traditional annual performance reviews. According to the Harvard Business Review, 66 percent of employees surveyed were strongly dissatisfied with their last review, and 65 percent felt that employee performance evaluations were not relevant to their jobs. It’s no wonder that traditional annual performance reviews are often seen as not meeting the future development needs of employers or employees.
Traditional Performance Management Systems are Ineffective
Performance management strategies of the past are losing their effectiveness with both employees and employers. In fact, a Society for Human Resources Management (SHRM) article found that only 25 percent of companies felt their performance management systems were effective, and, in a related Gallup survey, 95 percent of managers said they were not satisfied with their organization’s employee performance review system.
Unless something changes, this problem is poised to become worse. Millennial and Gen Z employees are particularly interested in feedback and direction for career growth, yet surveys find that they’re not motivated (or content with) their employer systems for performance evaluation and coaching. This is a big problem: a Forbes article notes that by 2025, Millennials will make up 75 percent of the nation’s workforce. However, 74 percent of these younger workers say that they feel “in the dark” about their job performance.
Agile Performance Management vs Traditional Performance Management
Business owners and HR professionals are recognizing the need for a more adaptable and responsive performance management system. In this article, we will take a close look at some of the fundamental problems with traditional performance evaluation, along with the transformative potential of agile performance management.
By providing continuous feedback and fostering employee development throughout the year, the agile approach to performance management can reshape how organizations assess strengths and skill gaps, motivate individuals and enhance the performance of their teams.
Limitations of Traditional Performance Management
Along with both younger workers’ and managers’ dislike for typical strategies, traditional performance management has several other limitations. Let’s dive into a few of these problems before looking at how agile performance management can help correct these issues.
Inflexible Annual Performance Reviews
Surveys show that almost half of employers have an annual performance review and no other formal opportunity for performance feedback. Traditional annual performance reviews are often rigid, stressful encounters that do little to support employee development and may be disconnected from the real-time nature of their work. Infrequent performance appraisals can lead to delayed feedback and missed opportunities for improvement, hindering employee growth and organizational success.
Potential for Subjectivity and Bias
Traditional employee performance reviews heavily rely on subjective assessments by managers, leaving room for biases that may impact the fairness and accuracy of evaluations. This subjectivity may lead to frustration among employees and erode trust in the performance management process, undermining its effectiveness.
Lack of Employee Engagement
The one-way nature of traditional performance management systems, in which feedback flows from the manager to the employee, can result in a lack of engagement. Employees may feel disempowered and less motivated to actively contribute to their own development when performance appraisals are perceived as strictly top-down.
Disconnected from Organizational Goals
Traditional annual performance reviews often fail to align individual goals with broader organizational objectives. With an annual review system, the employee is likely to be focused on whether they can earn a raise for the coming year, while the manager is thinking about numerical ratings of past performance and which specific skills can be improved. This lack of alignment can render the whole process ineffective, hindering the development of a cohesive, goal-oriented workforce and, in turn, impeding the organization’s agility in responding to changing market conditions.
Advantages of Agile Performance Management
Agile performance management can help correct the limitations of traditional performance management, but it also has its own merits. Some advantages of an agile system of performance management include:
Application of Agile Methodologies
The agile approach to performance management takes inspiration from agile methodologies used in project management, which emphasize adaptability, collaboration and continuous improvement. By applying these same principles to performance management, organizations can create a more responsive, employee-centric approach to coaching.
Continuous Feedback and Communication
One of the fundamental aspects of agile performance management is the shift from annual reviews to continuous and ongoing feedback. Regular check-ins between managers and employees facilitate ongoing communication and allow for more timely discussions about goals, expectations and performance. And, with more frequent communication about performance, the high stakes and stress of an annual review can be lessened.
Continuous feedback helps eliminate the problem of recency bias, in which a manager’s view of the employee may be unfairly weighted by a recent failure or a mistake. More frequent feedback also gives the manager the opportunity to coach the employee on career development and other professional pursuits.
Goal Setting and Alignment
Agile performance management encourages dynamic goal setting that aligns with both individual aspirations and organizational objectives. This alignment helps ensure that employees are working toward goals that contribute directly to the success of the business.
While the organization’s goals may be obvious to the manager, they may not be to front-line employees. Use the greater frequency of review meetings to make sure that each employee is clear on company goals. Managers should also explain how their own goals and the employee’s goals must be aligned. Finally, every employee needs a clear baseline for daily, weekly and quarterly goals.
Individualized Development Plans
Recognizing the combination of strengths and areas needing improvement that are unique to every employee, agile performance management emphasizes individualized development plans. This personalized approach tailors training and growth opportunities to meet the specific needs of each team member.
Measurable Results
An effectively implemented agile performance management process has the potential to deliver solid, measurable benefits to any organization, including:
- Increased Employee Engagement
- Increased Earnings for the Organization and Employees
- Reduced Employee Turnover
- Increased Workplace Productivity
- More Employees Working Together for Common Goals
- Employees Regarding Their Job as More Manageable
- Employees Seeing Goals as More Achievable
- Employee Sense of Empowerment, Autonomy and Ownership
Challenges to Agile Performance Management
While there can be many benefits to implementing agile performance management, like anything in HR or business, it can also have its challenges.
Shifting Organizational Culture
Transitioning to agile performance management requires a cultural shift within the organization. Overcoming resistance to change, fostering a mindset of continuous improvement and emphasizing the value of continuous feedback are crucial elements in this transformation. Managers will need to be trained on the agile approach, leaving behind some familiar practices and getting used to a new system that is fundamentally different (and possibly outside their comfort zone).
Technology Implementation
While technology is a key enabler of the agile approach to performance management, its successful implementation may face challenges. Ensuring that employees are adequately trained on new platforms, addressing potential technical issues and providing ongoing support are critical for success. Successful implementation is all about careful selection of the right platforms, thorough attention to training as users develop competence and support from senior management.
Managing Diversity in Performance Expectations
Agile performance management recognizes the diversity of skills, preferences and career paths among employees. But, tailoring performance expectations to individual strengths and aspirations requires careful consideration and customization. For example, one employee may simply aspire to perform well in their current position, while another may see today’s role as a ladder to positions with greater autonomy or authority.
Preparing to Implement Agile Performance Management
When preparing to switch from a traditional performance management system to an agile one, there are several things to consider. These include:
Avoid Risk by Planning for Gradual Deployment
Large or small organizations that are new to agile methodology should deploy their own agile performance management process just as they would with any other innovation…in small steps.
- Educate the HR team first. Have them acquire agile methodology know-how through study and seminars.
- Meet with leadership to promote the benefits of agile versus traditional reviews.
- Invite stakeholders to help develop a process that will fulfill their review requirements.
- Design a prototype agile performance management process.
- Work with senior management to select one department or team to pilot the process.
- Train employees and managers on agile methodology and how they can help support the process.
- Experiment with the selected department, review results and adjust as indicated.
- Measure results and use what you have learned to improve the process.
- Schedule deployment for the next department or work team.
Apply Agile Technology for Frequent Feedback
Utilizing technology platforms for continuous feedback and performance tracking is a crucial step in implementing agile performance management. Digital tools facilitate real-time communication, detailed documentation of results and follow-up data analysis. The right tools will make it easier for managers and employees to share insights and collaborate on subsequent development goals. Platforms like Totara, Deel, Lattice, Trakstar, Primalogik, Paycor, PerformYard and Peoplebox may prove helpful in tracking OKRs (objectives and key results) and providing continuous feedback.
Train Managers for Agile Leadership
The shift to an agile performance management system requires a corresponding shift in leadership style. Training managers to provide constructive, ongoing feedback and coaching is essential for the success of the new approach. Developing empathetic and agile leadership skills contributes to a positive employee experience. To help promote this, develop custom training sessions and reading materials to familiarize managers and team leaders with agile principles, including the business rationale for replacing traditional performance evaluations with agile performance management.
Set Clear Expectations and Metrics for Employee Development
Transparent communication about expectations for each employee’s performance metrics is essential in an agile performance management framework. Clearly defined goals, key performance indicators (KPIs) and success criteria can provide employees with a roadmap for success and help managers evaluate performance effectively. This is a good place to apply the criteria for SMART goals (Specific, Measurable, Attainable, Relevant and Time-bound).
Establish Regular Check-Ins
Replacing the traditional annual review with regular check-ins is a fundamental aspect of agile performance management. These check-ins serve as opportunities for managers and employees to discuss individual elements of short-range progress while addressing specific challenges and adjusting their methods and goals in real-time.
Without the pressure of an annual review, managers can break down improvement goals into much more digestible bites, clarifying how individual goals can be aligned with their goals as a manager and the overall goals of the organization.
Key Performance Indicators (KPIs) for Agile Performance Management
When tracking the results of the new agile performance management system, there are a few metrics that may prove helpful. These can range from overall employee engagement to individual goal achievement rates.
Employee Engagement
Measuring employee engagement through surveys, feedback mechanisms and participation in goal-setting processes provides insights into whether agile performance management has been effectively implemented. Higher engagement levels are one indicator that agile methods are working, and engagement can correlate with increased job satisfaction and worker productivity.
Goal Achievement
Tracking the goal achievement rates with individual and team performance can offer tangible evidence of the effectiveness of agile performance management. This data can inform future goal-setting processes, helping to improve alignment with business objectives and contributing to a more strategic approach to workforce development.
Time-to-Feedback
Analyzing the amount of time that it takes for feedback to be provided and acted upon is a key performance indicator for agile performance management. Shorter feedback cycles contribute to a more responsive and adaptive organizational culture.
Time-to-feedback gets right to the power of agile methodology, which preaches that employees must be empowered to try new things, to fail fast, to learn from setbacks and to re-orient the team to the goals.
Transforming Workforce Development
The shift from traditional performance reviews to an agile performance management system represents a fundamental transformation in how organizations approach workforce development. By prioritizing continuous feedback, individualized growth plans and a collaborative approach to goal-setting, businesses can cultivate an environment that not only meets the needs of the modern workforce but also better positions them for success in today’s evolving business world.
Embracing agility in performance management is not about adopting the latest trend. It is a strategic advance toward creating a workplace culture that values adaptability, innovation, resilience and the ongoing development of its most valuable asset: its people.
If your organization is looking to implement or refine its performance management program, Higginbotham is here to help guide you through the process. Our HR Services team is dedicated to helping you create a workplace designed to be more responsive, engaging and productive. Talk to a member of our team today and discover how we can help support your organization’s performance management strategy.
