Leaders Have the Power to Align Rewards, Metrics, and Culture to Desired Ways of Working
In any successful adoption of agile ways of working, the leadership team plays a significant role in creating the conditions that encourage everyone in the organization to consider, experiment with, and adopt new ways of working.
Leaders have many responsibilities that drive the performance, culture, and growth of the organization. Amongst these responsibilities are setting a vision for the organization, selecting the right people to bring (and keep) onboard, and where to invest the organization's limited time and resources. Right up there with those other responsibilities is the critical job of creating a rewards and promotion system that will drive the desired behavior within the organization and the desired business outcomes.
The foundation of a rewards and promotion system is normally a set of measurements and criteria of some kind to form the objective basis for who gets rewarded and who gets promoted. While some rewards can be driven mostly on a subjective basis (for example, high fives, spot bonuses, public acknowledgment within the organization), generally the bigger the rewards (salary, promotions), the more organizations rightly want to have an objective set of measures to justify their decisions. One commonly used management practice for measuring accomplishment that is tied to salary increases, bonuses, and promotions is the use of OKRs. OKRs, or Objectives and Key Results, are goals linked to outcomes and the actions that are required to achieve those outcomes.
The positives behind OKRs and similar performance-driven metrics are that they are objective (if done correctly), give direction on prioritization, and create alignment throughout the organization. However, one has to be careful that these objectives and other metrics are flexible enough to allow individuals and teams to adapt to new information and aren't used as a rigid, pre-determined twelve month project plan. This is true in general, and even more so when we are trying to encourage agile ways of working. Communicating desired business outcomes and measuring performance against those outcomes is vitally important, but leaders must do so in a way that allows the people in the organization to consistently apply learning from frequent feedback throughout the quarter/year to adapt to the best course of action to achieve those outcomes. If we hold our team members to a specific course of action throughout the year, we should not be surprised when there is little adaptation, learning, or agility.
Even when measurements aren't tied to formal mechanisms like OKRs or other performance management systems, they can still impact behavior is material ways. Information dashboards used to track various metrics also influence behavior. Even what behaviors leaders and managers choose to call out for recognition sends a message about what is desirable behavior (and what is not).
People become very focused on what they are being measured by. The good news is that you will get what you measure. The bad news is that you will get what you measure! This is why one should be very thoughtful and deliberate before deciding what to measure, even more so when the measure is tied to compensation or promotion.
Agile ways of working encourage individuals to work together as a cross-functional team to produce great outcomes for customers and for the business. In many organizations, rewards and promotions are tied exclusively to either individual metrics or individual accomplishments. While on the surface that seems like a reasonable approach - after all, you are promoting the individual - if you believe that agile ways of working are the best way for your organization to achieve its desired business outcomes, you will be disappointed to find that your well-intended rewards system has encouraged individualistic behaviors over collaborative behaviors, and by extension limited your ability to adopt agile ways of working. When people feel they can't be promoted unless they take on most of the work on a project by themselves, they are going to resist sharing collective ownership for a project with their teammates.
Another tenet of agile development is to deliver iteratively, learning and adapting along the way, and focus on delivering continuous value rather than making a big bet on a pre-determined twelve month plan. If you reward people only for leading large, complex projects of a certain size and look at quantity delivered rather than the outcomes delivered, it should come as no surprise to you that very few will want to work in an iterative, adaptive way delivering only the items that provide the highest customer value.
Bottom line: make sure your measurements and reward system are aligned with the values and culture that drive the way you want your organization to work.
Going further beyond metrics and rewards, the behavior and actions of leaders themselves has a distinct impact on the behavior of others in the organization. Sometimes, the most effective way of affect a change of behavior is for leaders themselves to model the behavior that they want to see in others. If we want our team members to be open to new ways of working , then we as leaders also need to be open to new ways of working. If we want teams to feel empowered to make decisions, adapt, and learn, then we can't impose a command and control management system on them that criticizes them when they deviate from a pre-determined plan.
Organizational culture is driven by all these things: rewards, recognition, metrics, stated values, and modeled behavior. If you want to create the best foundation for successfully adopting agile ways of working, make sure your organizational culture in all its component parts is aligned to those agile ways of working.
Things like whether a company embraces individualism or team collaboration, complexity or simplicity, executing big, fixed projects or working iteratively while adapting and learning are largely influenced by your organization culture.
You, as a leader in your organization, have the awesome responsibility to encourage and cultivate the organization culture that is aligned to the values and ways of working you desire. No one else has the power you do. Use your power wisely and thoughtfully!