In our previous two blogs we discussed what it takes to become Agile and how recruiting needs to evolve. Now you have great talent onboard, how do you continue to manage their performance in an Agile way?

The way in which performance is managed and measured deeply affects the culture of the organization.  Traditional methods have individual goals, targets, key improvement areas and 360 reviews. With an Agile organization, these are replaced with continuous feedback, constantly evolving goals, and targets for teams rather than individuals.

Deloitte has been working with clients to redesign Performance Management processes that remove measurements and goals, and introduces counselors and check ins. They look for “team effectiveness, development, collaboration, and individual performance” and are the first to admit that this transformation is a work in progress. If you are interested in how you can start your own Performance Management transformation this makes for a good read.

So why did Deloitte take on this massive overhaul? “Today, as companies operate as a network of teams, careers and learning are strategic, and companies are shifting from “jobs to work” in their operations, the need to align goals, provide feedback, and coach for performance is real-time, continuous, and multidirectional.

They have introduced  ‘continuous performance management practices. Team members and counselors meet whenever either feels a check-in is required. This is supported by a Globoforce study that found employees who receive regular small rewards, in the form of money, points, or thanks, are a staggering eight times more engaged than those who receive compensation and bonus increases once a year.”

There are three main reasons why this resonates better with Agile teams.

1. There are more rewards, pay hikes and incentives compared to an annual salary raise. Recognition is immediate.
2. In the traditional system, rewards are not tailored to the diverse employee base. Only 8 percent of organizations in Globoforce’s survey said that their rewards program was “very effective” at creating a personalized, flexible solution
3. In the old system, often, rewards are not valued or perceived as ‘fair’. At many companies, the process for deciding pay is considered political or arbitrary, which has a huge impact on retention and turnover. Lack of transparency compounds the problem. A study by Payscale found that employees who do not understand the pay process are 60 percent more likely to leave the organization.

A critical goal in performance management design is to devise ways to align it more closely with business outcomes. Cisco, GE, and Google have all pioneered this model. These companies have built or bought sophisticated software to understand team dynamics, evaluate group goal systems, and gauge how effectively employees contribute to their teams.

The impact of these new performance practices is high: 90 percent of companies that have redesigned performance management see direct improvements in engagement, 96 percent say the processes are simpler, and 83 percent say they see the quality of conversations between employees and managers going up.

Amber Anderson says in People First: Creating a People-Centric Culture Policies that reward a people-centric way of thinking tend to focus not just on your performance but who you supported along the way. And in people-centric cultures, these policies are embedded in everything they do.”

To sum up, managing performance in an Agile organization means taking a deeper look at what you expect from your team members, what behaviors you want to reinforce, and how often you want to appreciate their efforts. It’s a big shift to how you collaborate, reinforce the cultural values and bring others up with you that counts. If the team wins, the individual wins and ultimately the company wins.