Agile Performance Management Whitepaper - Pivot Software

Agile Performance Management Teaching Elephants To Dance? Can you teach an elephant to dance? That’s what many HR professionals are being asked to do with the introduction of ‘agile’ or ‘lean’ principles to large enterprises, particularly in areas like performance management. In the circus they get the pachyderms prancing through repetition and pain, but does injecting some agility into your HR processes need to be that difficult?

A paradigm shift? “. . . principles of speed and flexibility are being introduced in areas like performance management.” As the word suggests, agile is all about trying to increase flexibility and responsiveness. Agile concepts were pioneered in the software development sector, where people wanted to move from the slow and steady “waterfall” approach of development, where projects followed a prescribed set of steps in linear fashion towards an outcome. Agile development takes a more iterative approach, doing small ‘sprints’ of development and constantly reviewing progress. At the heart of this is an open, collaborative team approach amongst programmers, rather than the more individually oriented traditional approach. It really is an example of that tired old expression “paradigm shift”, where a radically different approach has emerged, often with good results in the software world. Applying the same principles to other parts of the enterprise is a growing trend. For example ‘agile marketing’ is becoming more common, where companies are moving from formal annual marketing plans to more flexible and adaptive approaches. And even in our own area, principles of speed and flexibility are being introduced in areas like performance management.

Agile the new trend “. . . the business environment we work in is changing faster and faster, so organisational goals are changing more quickly too – performance management needs to support that.” Performance management is traditionally managed using a waterfall-type approach. An annual process is run, reviewing an individual’s performance in line with cascading organisational goals. It is linear, ordered and relatively fixed.

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It has become trendy to disdain this approach. Traditional performance management is staid and boring while agile performance management is hip and cool. Businesses do need standards and policies around processes like performance management, and that can’t be ignored in any changes to the model. However the business environment we work in is changing faster and faster, so organisational goals are changing more quickly too – performance management needs to support that. Employees are getting feedback all the time from a wide range of sources, especially if they are working in an agile type environment and the concept of a traditional manager is also being challenged. The team are self-managing. Having a rigid feedback process doesn’t fit with that so well. US consultants Bersin & Associates see an agile approach to performance management becoming more apparent. Research conducted in 2011 showed that firms who revise and update performance goals at least quarterly generate more than 30 percent greater impact from their performance management process than those who implement the traditional annual review.

Challenging orthodoxy “. . . the agile performance management concept challenges the HR orthodoxy of a ‘forced distribution’ of performance.” At minimum the agile performance management concept challenges the HR orthodoxy of a ‘forced distribution’ of performance, where employees are roughly distributed over a bell curve of strong performers, average performance and weak performers. Agile performance management recognises reality is more complex than this, and is heavily influenced by an individual’s ability to integrate into a team. As a software development company in the HR sector, Pivot Software have a unique perspective on this issue. We’ve seen the immense benefits of introducing agile to our software development process, but also found it fascinating to see the implications in performance management terms. For example, from our experience the need for formal 360 degree appraisal becomes redundant, because it is already happening as part of the agile approach. There is also a need to consider new models of managing performance management, such as enabling team-based evaluation. The kind of issues we are confronting is when you follow the agile approach logically through to remuneration decisions. Each team is saying that the skills they bring to that group is what they wish to be remunerated on, and as the team decides on your performance, imagine if they could be given budget to split out and agree as a group – now that’s radical!


Dealing with today’s realities “The bottom line is not to be scared by agile performance management, but to recognise it as a real opportunity for increasing employee engagement and productivity.” Today’s reality for HR teams is that performance management, no matter how agile, still needs to be aligned with corporate goals, still need to be documented, and you still need to provide the right kind of support to both managers and their staff. Technology has a role to play in confronting this challenge of getting more agile, while meeting the needs of the enterprise. Agile processes need agile technology, so a monolithic HRIS will struggle to support the HR team’s needs. Software-as-a-Service (SaaS) that can be implemented relatively easily, is simple for users to learn and use, and is constantly being improved by innovative developers is what helps drive agility. This is epitomised by the recent purchase by giant enterprise software company SAP of a SaaS vendor. SAP is responding to the demands for more agility from the mega-firms they typically service. There is also the emergence of ‘social’ technology tools, where social media type approaches are being used to support HR processes. Some of this technology is in the ‘hype’ phase, and will take some time to mature and be ready for widespread adoption, but it’s still worthy of evaluation by anyone interested in HR technology. Using the right technology approach could make your organisation more like a bird of paradise, that magnificent creature most common to New Guinea and the northern parts of Australia, who is famous for its elaborate mating dances. They dance because they want to, and understand that is crucial to the survival of their species. The bottom line is not to be scared by agile performance management, but to recognise it as a real opportunity for increasing employee engagement and productivity. The challenge is not torturing your elephant to make it dance, but finding a different way to adopt agile performance management techniques. Register for whitepapers and other resources on performance management and remuneration at www.pivotsoftware.com.

