Good alternative that will end performance contracting's shortcomings

When former Kakamega Governor Wycliffe Oparanya signed performance contracts for CEC members. [Benjamin Sakwa, Standard]

In the 1990s, the Bretton Woods Institutions begun to push for structural adjustments within African countries as a condition for grants. In 2000s, the World Bank, in particular, was demanding that organisations embrace corporate governance as a means of improving their internal processes. Two important things emerged from the organisations - internal audit and performance contracting.

It was a concern that external auditors were external, only coming in at the end of the financial year to inspect conformity with laid down procedures and policies. If things went wrong, external audit could only report but not correct them. To counter this, internal audit was needed to offer timely feedback and prevent misuse of resources internally, financially or otherwise, before they happen. Performance contracting was needed to improve individual employee performance by setting yearly targets that were evaluated and scored at the end of the year.

While internal audit has lived to its billing, performance contracting, despite its benefits, continue to experience challenges as well. Unfortunately, organisations seem to lack the initiatives to seek for alternatives. Either they are idling on a wait-and-see neutral gear, have ignored and swept the limitations of performance contracting under the carpet, or they simply have never thought of an alternative. A high number of organisations incentive their employees into pursuing overly short-term, narrow view, that make them scramble to hit the desired score in performance contracting and, in the process, losing sight of the bigger mission of the organisation. Despite the reluctance, the drums for alternative to performance contracting are getting louder and louder.

This alternative is Agile HR. Agile is methodology in the IT field for developing software iteratively with constant feedback from customers. Today, Agile is no longer a preserve of the tech anymore. It has been meandering its way into other fields with HR not left behind. Agile HR helps organisations to hire, develop, empower and manage employees. Agile approach prioritises adaptiveness and speed of responsiveness in organisations. Although still rare in Kenya other than a few multinationals, organisations in the developed world are slowly demanding for Agile HR qualifications, an indicator of where things are moving.

Agility is the ability to think, move and make decisions much faster. By embracing agility, organisations deliver more value in less time. Agile HR applies agile mindset to organisational functions. The aim is to improve organisational competitiveness and performance by responding to challenges quickly, strategically and in a manner that drives value to the organisation and its employees. Because HR is responsible for all the people in departments and sections of the organisation working on different assignments, Agile HR meets all the needs of these areas. One area that is finding credence with Agile HR is performance management. A closer look at the capabilities of Agile HR in performance management, reveals its capabilities in addressing most if not all the challenges in performance contracting.

In performance contracting appraisals are done yearly to conform with yearly organisational goals. In adopting agile, organisations have to drop the charade of yearly plans and appraisals to much shorter and dynamic ones that vary in length depending on the project/task at hand. Therefore, the first causality of performance contracting to go is the annual performance reviews. Doing away with them is ideal because managers need not wait for a year to know the skill deficit in an employee.

Once a task ends, the employee is appraised and if found to lack requisite skills, immediate intervention through training or one on one engagement with the employee is done. Importantly, Agile HR has capabilities for improvement intervention to be done while the task/project is ongoing.