Traditional Vs. Agile Performance Management: How Do They Compare?

The old ways of recruiting, training, leading, and managing employees are over. For too many years, talent and workforce management has focused on heavy processes, antiquated performance management philosophies, and a lack of focus on employee development and growth. The result of companies being stuck in their old ways of managing people and performance has been disengaged employees, quiet quitting, and an overall decline in organizational performance and profits. 

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As organizations continue to face internal and external existential threats, it’s critical for them to not only acknowledge people as their greatest asset, but put some actions behind those words. In short, performance management can no longer be about lip service, the traditional ways of leading, and managing through gut instinct. For companies, this acknowledgment has led to major shifts in the way employees are valued, measured, and elevated at work. They’ve also led to greater trust between employees and organizational leaders.

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This article outlines the differences between traditional performance management and a more agile approach. Read on to understand more about different performance management frameworks and how organizations are embracing a new way of building high performing teams.

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Key Takeaways 

• Traditional performance management is an outdated, top-down approach that undermines digital transformation.
• The future of business demands greater flexibility, adaptation, and transparent communication. 
• Agile performance management recognizes employees as a valuable asset to be invested in. 

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Traditional Performance Management Explained  

Performance management is the process of communicating and clarifying job responsibilities, priorities, performance expectations, and development planning to optimize an individual's performance in alignment with organizational strategic goals. 

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If you’re more than a few years into your career, you’re probably familiar with the traditional approach to performance management, which typically includes annual reviews, performance ratings, and/or one-sided discussions around your job performance. 

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This top-down, linear-structure, static process has been in place since the early 1900’s when the U.S. military created a “merit rating” system during World War I to identify poor performers for discharge or transfer. Since then, over 90% of businesses have implemented some sort of performance management process. A traditional (simplified) performance management process typically looks like this:

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• The Human Resources Team defines and manages the performance management approach and process.
• Employees complete a series of questions about their performance over the course of a specific time period.
• Managers do their best to answer a similar set of questions about their direct report’s performance while trying to mitigate against recency bias.
• The Human Resources Team recalibrates any inaccurate review ratings and/or rank employees based on their performance scores.
• Performance conversations are held, evaluations are placed in personnel files, and performance ratings are revisited during the next appraisal cycle.

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Traditional performance management, the conventional benchmark of the past, still prevails in most companies. While the process differs depending on company stage, size, etc., what likely is consistent are the feelings of anxiety, the buildup of hope for promotion or raise, and the drain on productivity due to an intensive process. 

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Today, employees are signaling the need for a mindset shift when it comes to how goals are set, what gets measured, the level of autonomy and ownership of their work, and the cadence of feedback. 

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What is Agile Performance Management?

Agile performance management is a future-oriented, people-focused approach to employee relations and development. It recognizes that employee engagement drives overall business success, and emphasizes adaptability and alignment. By definition, agility involves seeking out new information and embracing continuous change in a collaborative way – and it promises to become the new competitive advantage.

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Within an agile approach to performance management, team members:

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• Have an open and collaborative dialogue with their manager to set goals that ultimately impact the company’s success
• Feel empowered to achieve their goals because they’re transparent, measurable, and attainable
• Receive continuous affirmative and constructive feedback that is actionable through regular one-on-one meetings
• Feel psychologically safe to voice concerns, offer feedback, and acknowledge opportunities for improvement
• Receive guidance in crafting an Individual Development Plan so they can further develop their skills in alignment with their goals and the company’s

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To support the transition to Agile Performance Management, people leaders and managers are trained to support, guide, and encourage employees as coaches rather than transactional task delegators. Everyone learns to embrace change and work toward excellence in ways that are both sustainable and progressive. 

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Traditional vs Agile Performance Management Differences  

It’s important to acknowledge that a shift to Agile Performance Management doesn’t happen overnight. You must assess change readiness, thoughtfully pace the changes you want to make, train managers and staff on new processes, experiment through pilots, and continue to iterate as you integrate feedback from employees and managers. 

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If you’re curious about where your organization is in terms of performance management philosophy and approach, check out the chart below. 

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Conclusion 

Regardless of your organization’s performance management philosophy, it’s important to view performance management as a core discipline and competency, not just an HR program. 

Agile performance management represents the future, increasingly adopted by forward-thinking businesses. Organizations that challenge the status quo, choosing agility over stagnation, will benefit from increased employee engagement and retention, and overall improved productivity and profitability.