Unleashing the Power of Agile HR: How HR Departments are Breaking Free from Traditional Models

Agile is an approach used in IT industries for a long time and it has evolved and adjusted over the years. Agile in IT refers to the use of agile methodologies in software development and other IT-related projects. Agile development involves an iterative and collaborative approach to project management, emphasizing flexibility and responsiveness to changing requirements and feedback (Rigby, Sutherland, & Takeuchi, 2018).

The adoption of agile practices in many companies is happening gradually and almost naturally, often influenced by the IT sector where over 90% of organizations already implement such practices. This shift is exemplified by the Bank of Montreal (BMO), where the inclusion of tech employees in cross-functional product-development teams led to a customer-centric focus. As a result, the business side has acquired agile principles from their IT counterparts, while IT has gained knowledge about customer needs from the business. BMO now considers team performance management instead of just individual performance. In contrast, other companies have deliberately and quickly embraced agile HR. For instance, GE, which was known for management through control systems, shifted to FastWorks - a lean approach that reduces top-down financial controls and empowers teams to manage projects as requirements change (Rigby, Sutherland, & Takeuchi, 2018).

Introduction to Agile HR

Agile HR is an approach to managing human resources in an organization that is based on the principles of agility. The key characteristics of Agile HR include flexibility, adaptability, collaboration, and continuous improvement(Culture Amp, 2021)

The goal of Agile HR is to create a more responsive, resilient, and engaged workforce that can quickly adapt to changing business needs and market conditions. It also aims to create a culture of continuous learning and development, where employees are empowered to take ownership of their careers and contribute to the organization's success.

Agile HR involves applying agile methodologies to HR practices, such as coaching, compensation, performance management, and learning and development. This means using an iterative and incremental approach to these processes, emphasizing quick feedback loops, continuous improvement, and cross-functional collaboration.

Source: https://management30.com/workshops/agility-in-hr/

Agile HR needs real-time employee feedback 

Adopting an agile approach to employee feedback can be a fundamental component of the shift towards agile HR, but how does it manifest in practice?

In recent years, traditional consultant-led feedback processes have been gradually replaced by in-house solutions. Relying on consultant-led models can impede agile HR due to factors such as high cost, a lack of internal ownership, and dependence. Conversely, in-house ownership enables HR to support agile business practices, giving them the autonomy to facilitate positive organizational change. The following table highlights the key disparities between consultant-led models and an agile feedback approach(Culture Amp, 2021).

Source: https://www.cultureamp.com/blog/agile-hr

As HR departments are involved with every employee and aspect of an organization, the transition to an agile framework may prove to be more challenging and far-reaching than other functional changes. Businesses are currently revamping their talent management strategies in the following domains:

Performance appraisals.

Businesses that adopted agile methods in their core operations found that traditional HR practices, such as annual performance reviews, no longer made sense. As a result, many companies have switched to frequent performance assessments conducted project by project, spreading to various industries. The focus is on delivering more-immediate feedback throughout the year, which allows teams to become nimbler, correct mistakes, improve performance, and learn through iteration. Managers and employees have had a hand in shaping, testing, and refining new processes, with some companies creating customized apps for real-time feedback exchange. Some companies have even created distinct appraisal processes tailored to different employee groups' needs. Although this adds complexity, the benefits to the organization far outweigh the costs to HR(Rigby, Sutherland, & Takeuchi, 2018).

Coaching

According to Rigby, Sutherland, & Takeuchi (2018), Effective adoption of agile talent practices requires investing in sharpening managers’ coaching skills. Companies like Cigna, DigitalOcean, and P&G have made significant investments in enhancing the coaching skills of their managers. Cigna has designed “coach” training for its supervisors that is broken into weekly 90-minute videos, which can be viewed at a convenient time, and learning sessions to test-drive new skills on the job. DigitalOcean employs a full-time professional coach to help all managers give better feedback to employees and develop internal coaching capabilities. P&G has invested heavily in training supervisors on how to establish employees’ priorities and goals, provide feedback on contributions, and align career aspirations with business needs and learning plans. P&G has also separated evaluation from development discussions and eliminated talent calibration sessions, freeing up more time to devote to employee growth.

The idea is to move supervisors from judging employees to coaching them, enhancing employee engagement and building their capabilities, which, in turn, helps companies innovate and move faster. Cigna has incorporated peer-to-peer feedback in its manager training, while P&G has rebuilt training and development for supervisors, enhancing their role in the organization. These investments have already yielded positive results, and the companies hope that building employees’ capabilities and relationships with their supervisors will continue to bring about more improvements in the future (Rigby, Sutherland, & Takeuchi, 2018).

Compensation strategies

As agile work becomes more common, companies are adapting their compensation strategies to better align with the agile mindset. Macy's and other retail companies are using spot bonuses to recognize contributions when they happen, rather than waiting until the end of the year for salary increases. Research has shown that instant rewards reinforce instant feedback in a powerful way, making annual merit-based raises less effective. Patagonia has eliminated annual raises for knowledge workers and instead adjusts wages for each job more frequently based on market rates and employee performance. Compensation is also being used to reinforce agile values such as learning and knowledge sharing, as evidenced by Rent the Runway's decision to drop separate bonuses and DigitalOcean's focus on personalized compensation that maps individuals' impact on the business.

Agile organizations also value upward feedback from employees to team leaders. DigitalOcean has redesigned its rewards to promote equitable treatment of employees and a culture of collaboration, including diversifying its portfolio of rewards to include nonfinancial gifts. Matt Hoffman, the vice president of people at DigitalOcean, says the company focuses on creating a culture that inspires purpose and creativity to motivate employees to perform their best. As a result, DigitalOcean ranks 17 points above the industry benchmark in satisfaction with compensation according to their latest engagement survey(Rigby, Sutherland, & Takeuchi, 2018).

Recruitment

To quickly scale up its workforce in 2015, GE's digital division implemented innovative recruitment methods, including cross-functional teams, headcount managers, rotating hiring managers, and a scrum master overseeing the process. They prioritized vacancies that had cleared all debates and ranked openings to concentrate on the top-priority hires. The team worked on several hires simultaneously to share information about candidates and used a kanban board to identify bottlenecks. Other companies, such as IBM and Cisco, are following a similar approach to recruitment and using technology such as Ascendify and HackerRank to find and track suitable candidates for an agile work environment(Rigby, Sutherland, & Takeuchi, 2018).

Learning and Development

To bring new skills into organizations more quickly, companies are using data analysis to identify the skills required for particular jobs and for advancement and suggest appropriate training and future jobs for employees based on their experience and interests. IBM uses artificial intelligence to generate personalized training advice for employees while offering special training for agile environments using animated simulations built around a series of "personas." Traditional succession planning has also been adopted by some companies, such as Pepsi, which provide brief quarterly updates on possible successors and delay appointments closer to when successors are likely to step into their roles(Rigby, Sutherland, & Takeuchi, 2018).

References:

1.Culture Amp. (2021). Agile HR: A Guide to Getting Started. Retrieved from https://www.cultureamp.com/blog/agile-hr, Accessed on 19th March, 2023

2.Rigby, D.K., Sutherland, J., & Takeuchi, H. (2018). HR Goes Agile. Harvard Business Review, 96(2), 74-81. Retrieved for https://hbr.org/2018/03/hr-goes-agile, Accessed on 18th March, 2023