Agile And The Death Of Annual Reviews

By: Doc List | Jul 12, 2016 |  Agile Transformation,  Article
I'm so excited for my annual reviews. Said no one, ever.
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One of my (many) mantras is “an Agile team succeeds or fails together.” To elaborate, I mean that the stronger/more effective and weaker/less effective members of the team should all be combined to deliver more value. No more culture of fault and blame (“it’s all HIS fault”) or culture of heroism (“we can always count on HER”). If Joe isn’t pulling his weight, the team helps him. If Pradeepa is usually a star, her success is based on the team’s success and in helping the Joe’s of the team.

If you embrace this mindset–that an Agile team succeeds or fails together–then you might consider how that plays into things like annual reviews, salary actions, and promotions. Having nothing to do with Agile, Robert I. Sutton proposed something that I love in his book “Weird Ideas That Work.” Sutton suggests that we take the money off the table by flattening salaries at the same level of the organization or same level of the role. This is consistent with Daniel Pink’s thoughts about money versus AMP (Autonomy, Mastery, Purpose) as the prime motivator in his book “Drive”.

Given my premise, then it makes sense to change some of the tried-and-true approaches.

Annual Salary Reviews

First of all managers of Agile teams should be talking to the team members on an ongoing basis, giving them feedback and discussing career path. Review in real time, not just once a year. In addition, the best source of information about a team member’s performance is the team. Don’t be afraid to utilize a peer review system.

For “Agile” teams, then, the only purpose of the annual review is to review salaries.

Agile managers should consider two factors. First, how did this person’s team/teams do during the past period of time; and second, how is this person increasing their value to the organization? Did they acquire new skills to justify a promotion, salary increase, or both?

Regarding the performance of the entire team, wouldn’t it make sense to institute a common salary action? This encourages teamwork and unity instead of a self-centered culture of heroes and villains. Everyone gets the same N%. 

An alternative to this, also consistent with Sutton and Pink, would be to have a pot of money for the team based on the team’s performance and then give the team responsibility and authority to divide up that pool. While I worry about this a bit, my expectation is a decently-performing team will have high enough regard and trust for one another to do this in an effective and fair manner.

If you are that manager or report to that manager, then changing the compensation structure might be relatively easy. For managers and their team members that have not been on the Agile journey long, creating team-oriented compensation is more difficult. Being an effective manager of an effective Agile team requires maturity, open communication, and transparency. It requires a manager that is engaged but not intrusive. It asks that managers pay attention to the artifacts/information radiators/challenges and be in tune with the team.

It requires lots of trust, and it may require that the organization–particularly the leadership–change their mindset and the way they work. Embracing a “team succeeds or fails together” mindset and approach is dramatically different from what most of us are accustomed to. Are you willing to make that commitment?


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