Agile performance management – why agile is the new performance standard

Coffee mugs with cheeky sayings persist steadily in Germany's office kitchens. One of the classics is:

“At work I always give 100%.
15% on Monday,
40% on Tuesday
23% on Wednesday
17% on Thursday
5% on Friday.”

But what here, as a print, is meant to bring a mild smile is actually reality in many companies. Employees don't deliver continuous performance or don't tap their full capacity at work.

According to a study, in British offices, on average just 2 hours and 23 minutes are really worked productively. And no, the internet and Candy Crush alone aren't to blame.

The possible reasons for this are multi-layered and don't necessarily have to be pinned solely on a lack of employee motivation. It could just as well be due to a lack of resources, the wrong infrastructure or an unsuitable leadership style.

Regardless of the cause, the result of poor productivity for an organization is ultimately the same: loss.

One way to avoid this result and optimally tap the potential of your own employees is agile performance management.

What is agile performance management?

Before we define agile performance management, let's first take a step back to the actual core of the term – performance management.

What is performance management?

By performance management, one understands the steering of the performance of one's own employees. Admittedly, with this phrasing, one inevitably thinks of film scenes in which, on Greek galleys, the rowers were driven on with drums and whips. It's not quite that dramatic after all.

Rather, it means steering all processes and activities as well as the development of one's own staff so that the existing potential can be fully tapped. That applies both to the capacity of employees as individuals, in teams, and to that of the organization as a whole.

Performance management is consequently a multidimensional approach with the goal of continuously improving the performance of one's own company and thereby staying competitive.

Unlike with the galley slaves, however, this doesn't happen through negative impulses like pressure or punishment. Instead, in most methodical approaches to performance management, the performance optimization happens through a combination of several aspects:

• The definition of clear goals – individual as well as global;
• Creating suitable conditions, that is the deliberate use of suitable hierarchies, workflows, tools and management systems to support employees in fulfilling their tasks;
• The regular determination and analysis of employee performance, for example via feedback conversations or measuring KPIs;
• The linking of performance with incentives like additional compensation or incentives.

In practice, you can then observe how HR departments and leaders strive to turn so-called low performers into high performers.

That has its advantages. Company and employee goals are thus continuously pursued and unused potential is systematically activated.

But classic performance management, based purely on objective assessment and incentives, also has its disadvantages.

To stay with our image: just because the best rower of the day gets a gold coin, the others aren't necessarily more motivated or faster for it.

Agile performance management as a contemporary approach to staff leadership

Agile performance management starts where many experts see the limits of traditional performance management: at flexibility and focus.

Classic performance management is strongly geared toward productivity and achieving it through authority. Critics often note that this concept is based on an image of people that's based on the values of the last century. Employees are accordingly only to be motivated through competition, pressure and reward. Those who keep up rise.

The view for the big picture, however, quickly gets lost in the process. In addition, individual concerns recede too far into the background and it's assumed that staff are motivated purely extrinsically, that is through external incentives.

The possible consequences? Great time expenditure for creating feedback and rankings, black-and-white assessments due to partly inaccurate data, and thus constant uncertainty and pressure for employees.

Especially agile companies that adapt to new circumstances in the shortest time, continuously optimize their methods and goals and live an open employee culture therefore strive for a better solution.

Out of this aspiration, agile performance management arose. The goal is the same as with the classic variant: improving and increasing the performance of an organization and its employees.

The difference lies in the two factors mentioned at the start – flexibility and focus.

Agile performance management complements traditional performance management with flexibility and focus.

In agile performance management, a modern image of the employee is at the center, one that's not only more self-determined, but also more multifaceted.

People accordingly follow not only extrinsic, but also intrinsic motives. That is, besides incentives like money, fame or recognition, the work should seem meaningful to them.

The thought behind it is: the more employees can identify with their own tasks and the company goals, the more they deliver from within themselves.

On top of that comes a greater dynamic and flexibility in one's own leadership structures and workflows. Instead of, for example, taking rigid annual reviews as the assessment basis for performance, agile performance management relies on close-knit communication between all levels.

How does agile performance management work?

Similar to the concept of agile companies, agile performance management too is a still relatively new field in constant flux.

As exciting as this ongoing phase of theoretical finding, questioning and rethinking is – for companies this means, between the lines, that there's (still) no universal formula for THE agile performance management.

Furthermore, every organization brings its own conditions in terms of strategy, leadership methods, employee culture and infrastructure.

Nevertheless, there are of course some best practices for agile performance management that have proven themselves so far:

Using suitable management methods

If both global and individual goals are to be set, pursued and realigned continuously, you need a suitable instrument for it. Especially when this process is supposed to run as transparently and traceably as possible for everyone.

Many organizations therefore rely, in their agile performance management, on dynamic management methods, like the OKR approach (Objectives and Key Results).

In this form of employee leadership, each individual person sets goals that are compared at regular intervals through associated key results. In addition, all teams and departments pursue shared company goals.

OKR is a leadership method meant to help implement goals more efficiently.

The advantage of the OKR method lies, among other things, in that all actors thus pursue a shared direction and a high transparency is given. In addition, continuous feedback takes place, which also allows corrections and realignments of the requirements and goals if necessary.

Targeted talent management

We'll draw on the Greek galley one last time. What do you think happens when you ask a completely unmusical rower to start beating the drum on the ship? The likelihood that they shine with a sense of rhythm is rather low.

An important basis for agile performance management is your employees' abilities. From this arise two important rules:

1. Staff can only deliver good performance when deployed according to their competencies.
2. You should continuously foster your employees in their development. Besides professional training, this also includes giving them responsibility and trust. This way, employees can act on their own responsibility and grow with their experiences.

Holistic thinking and acting

If you want to perform strongly as a company as a whole, you also have to act as a whole.

As mentioned before, classic approaches in performance management tend to foster silo thinking. These include, for example, team members who, on the hunt for bonuses, are too focused on their own tasks and lose sight of their colleagues' goals. Or departments that function in themselves but don't collaborate across the board.

In agile performance management, the focus moves from the purely individual performance view to the holistic result. The aim is to set goals jointly and collaboratively. These should be set transparently and, at best, cross-functionally, so that all involved really know what they're working toward and why.

Agility as company culture

Agility is a quality that wants to be lived. The most expensive tools and most innovative management approaches miss their goal if the framework and the mindset aren't right.

For this reason, especially agile companies tend to develop performance management further and adapt it to the dynamic conditions of the working world 4.0. They're used to looking beyond their own nose and living new paradigms. Values like self-determination, decentralized working, open communication and flat hierarchies are no foreign words for them.

Conversely, that means for organizations that come into contact with agile performance management for the first time that the application requires a bit more effort. It takes not only a new understanding of employee leadership for this, but of the entire company culture.

This is how you benefit from agile performance management

But now we come to the decisive question of all: is this effort even worth it? This decision ultimately lies entirely with you.

But maybe the following advantages of agile performance management offer some orientation:

• Organizations systematically increase their productivity and yet stay responsive and agile;
• Companies can thereby secure their success and thus their competitiveness for the long term;
• According to studies, employees react positively to the leadership concept and feel motivated by it to work more or better;
• Growth potential as well as risks are recognized faster at all levels.

Would you like to learn more about what added value agile performance management can offer you? Then feel free to contact us.