"Agile" is just a word if not put into practice
"We don't want to act agile, we want to be agile" - that is the difference in short between plainly following methodology and adopting a new way of thinking. To implement such a cultural evolution, not only our HR processes such as recruitment, training, and talent management, but HR itself needs to transform radically. All operations have massively been impacted by the current COVID-19 pandemic, as we discussed in our previous piece, but the premise remains the same: for an agile organization, we also need to turn HR agile.
Agile is often interpreted as an operational method for IT or treated as an esoteric concept, in which case the point is lost, and the effectiveness of the transition will fall short of expectations. Without underestimating or over-mystifying the agile way of working, we need to state that an agile transformation is far from just a methodological change since it is at least as much a cultural one. But how can this cultural evolution be consciously incorporated into everyday functioning? Perhaps this is the greatest obstacle with such transformations.
Did NN Insurance also encounter this problem during its transformation?
Imre Sztanó (NN Group): To tell the truth, we did. We thought that adopting the methodology would automatically bring the development of an agile attitude, but we were wrong. When we used agile only at some of our teams at our Hungarian insurer, we noticed that although they had adopted the methodology, the machinery squeaked because the new way of thinking had not yet developed. In response we set up a dedicated team to work out how we could support this culture change. As an example, we wrote our very own agile handbook for the colleagues, putting into focus five new core values including openness, determination, and the ability to make decisions. Our goal was to strengthen our employees' sense of empowerment and responsibility to encourage them to operate independently and thus enable our teams to operate in a truly dynamic and agile way. We came up with several online and in-person forums: themed breakfasts, internal interviews, and even a special Agile Day to help colleagues understand and experience the new values as much as possible so that these values could nicely be integrated into our daily activities.
What makes it obvious when colleagues have not adopted the agile attitude yet?
László Juhász (Boston Consulting Group): It is quite a common symptom that our newly-appointed product owners (POs) fail to live the new role thus they do not dare to make certain decisions and make their team adhere to them. This is because they do not yet own their agile mandate and are still trying to delegate the decision-making role to their superiors. This may also hold true for the other side of the equation - when the managers continue to expect the POs to deliver a range of materials to prepare decisions. One difficulty is to overcome this deadlock. The other is that even if we overcome it, we will not get to the end of the process, simply because there is no end. We need to constantly monitor how deep the teams and team members are experiencing and implementing the agile approach in their daily activities. To do this, we need to gather impulses from our colleagues and from as many places as possible, from face-to-face meetings through standups to internal surveys on satisfaction. Based on our monitoring, we should be able to intervene at any time to help this mental development.
What is the HR's role in all this? After all, we would expect this kind of support of the staff to come from there.
Imre Sztanó: This is a cultural evolution where the top management must carry the flag. But HR does have a huge role to play in ensuring that this new kind of attitude that agile requires will stick. However, under HR, let's not just think about the HR department itself. This culture change requires everyone who shapes human relationships in the company - managers and colleagues alike - to live the values. Credibility is at stake. How credible is agile when management talks about agility and expects agility while the employee experiences something totally different in their daily lives? Would agile be credible at a company where a new joiner must wait several weeks for their company laptop or phone? Where, despite agile empowerment, you must wait for managerial approval for a cost item worth of tens of or a hundred thousand forints? Or when you must follow rules that are still in place and have not been weeded out while incompatible with the agile operation? These are just a few examples of the myriad instances we've run into at NN Insurance as well. These perhaps seemingly insignificant HR-related issues, but when taken into account together, they do contribute greatly to building a stable foundation for agility.
What areas should we focus on?
László Juhász: If we look at the employee journey in chronological order, the first point is selection. Since agile has become such a buzzword and there is a lot of noise around it, it is quite difficult to filter out employees who are really at home in agile and can handle the new approach and methodology. Here, personality often weighs even more than qualifications or experience. We need to see clearly what abilities and skills we expect from the employee in the given job both in terms of professional expertise and personal traits - we need to build a profile. Once you have these, the next dilemma comes from how much you insist on hiring a colleague who is a 100 percent in line with that profile or whether you agree to developing the new colleague in certain areas. The former obviously helps company operations in the long run, but we may need to expect a longer and more costly recruiting process. We may even have to lay off many of our existing colleagues if they do not exactly fit the profile. The reverse is true for the second option: the search period is shorter, redundancies are fewer, but the need for training is much higher. Each company will face this dilemma and make its decisions based on its size, on how big a risk to its operations poses if it lays off a high number of colleagues at once, or whether reducing headcount during the transition is a goal at all.
Does this mean that training is the second focus area for HR at the time of the transition?
Imre Sztanó: Exactly. At NN Insurance in Hungary, we chose the path where we set up the profiles, but we did not stick to them 100 percent during the selection process since we put great emphasis on the training of our colleagues. This is not easy as we are not transferring mere technical knowledge here, but we need to develop cooperation schemes, situation management, and a lot of personal skills. These cannot be passed on in a uniform way, the same way to everyone: we need to provide multiple and continuous impulses so our colleagues can find the means that best suits them to master the given skill. We do not provide a curriculum but coaching to our colleagues. That's why we've also offered training on stress management, teamwork, adapting to change, and open and effective communication. We must accept, however, that such a change process takes time. There are colleagues who are capable of quickly and successfully adapting to the new operating conditions, who can show their previously unseen sides. But there are also those for whom it takes longer to change and need more support.
After coaching, what is the next HR focus area in the agile transformation?
László Juhász: I would say talent and performance management is next. First, and as already mentioned, a slate of new personality traits is required for successful collaboration in agile. Furthermore, specific professional knowledge must also be renewed. In an agile squad, everyone must be able to understand, at least at a basic level, how their work is related to that of the others. In short, no squad is functional where the IT developer, the product developer, and the colleague in contact with an external business partner fail to understand one another. In agile, the team is much more in focus than the individual. In addition to deepening individual expertise, we also try to provide as many opportunities as possible to colleagues to acquire more extensive knowledge beyond their individual expertise. This is the so-called "T-shaped" skillset.
Imre Sztanó: All this gets reflected in performance evaluation ranging from objective-setting through feedback to evaluation and bonuses. To strengthen team approach, we also set team goals for everyone in addition to their individual goals so that colleagues sitting in a squad from different fields can feel their shared responsibility even more. Beyond business goals, we also break down individual goals to set personal development goals to help colleagues attain more extensive knowledge - the T-shaped skills. Rather than the once-a-year quantitative evaluation typical of large companies, we strive for more frequent and much more direct, qualitative feedback. At NN, we have asked colleagues to provide feedback to each other daily, and the daily standups play an important role in that. Respectively, instead of the annual personal evaluations, we have switched to quarterly evaluations, where managers should also incorporate feedback from product owners and scrum masters into the evaluation. This way we can give much more relevant feedback to colleagues.
László Juhász: Let me cite another important area that relates here but is often neglected: the reformulation of company regulations or policies. We come across a lot of corporate policies at multinational companies, including some obsolete ones, naturally. This is especially true after an agile transformation. Colleagues often run into previous standards that contradict agile. An example: a decision might require managerial approval according to company policy whereas in agile the decision should be made without managerial approval. Therefore, reviewing and rethinking all policies also need to be done when implementing an agile transformation.
Imre Sztanó: Yes, we also struggled with this in Hungary, it was a huge job, but it is essential. To this end, we established a new forum, the Risk Market, where all control functions are represented from risk management in the legal field to controlling. Here colleagues discuss all business needs and initiatives and develop a unified requirement system for implementation. As a result, business functions do not need to negotiate one-by-one with the control function areas, and we can eliminate potentially conflicting requirements.
Since HR's basic functions transform this much in agile, should HR itself become more agile?
Imre Sztanó: I think that should happen, naturally. HR can only be credible in supporting the agile transformation if itself uses these agile methodology successfully. Let it be kanban or some other tool, it is important for the HR team to consciously choose a methodology that best suits its operation and function in the same spirit as the squads. At NN Insurance, we also integrated agile method experts into the HR team. Our goal was to better integrate the methodological and cultural dimensions of the transition. Overall, it is essential that HR itself becomes the agile and learning organization that we want the entire company to become thus it could spearhead the transformation as a role model.
Obviously, communication of all these to the colleagues is a key element.
László Juhász: That's exactly right. As we have said we want to convey a new approach, a new way of thinking, and that requires very intense, finely tuned and open communication. We need new forums where there is a possibility of back-and-forth communication between leaders and team members, where we can exchange information, experience, ideas, and find and shape the elements to be developed. However, this is such a massive topic that we will need to dedicate a separate piece to it in our agile series, with specific examples from NN Insurance.
(After the position of President and CEO at NN Insurance in Hungary, Imre Sztanó now holds the position of Chief Digital Officer at the Dutch NN Group since the beginning of 2020.)