When measuring performance in an Agile environment, there is one typical problem I see over and over again, personal performance measurement takes the front seat and most everything else is not truly measured or even defined for measurement. This is “bass ackwards”.
Individual performance management should be handled by the team, they self-select out poor performers because they intimately know who is pulling their weight on the team and who is not. They know who is good at their job and who is not competent to the degree needed and wanted. They (the team) should escalate such issues to management for resolution but annual performance evaluations for individuals should go out the window.
Performance in an Agile company should be measured in two ways, the first is team performance in delivery of value and secondly OKRs and KPIs. There are two reasons for this, the first is that team performance is what matters, not the isolated contribution of each individual. On a truly cross-functional team this is nearly impossible to do and of no real value. You cannot measure anything but the sum of a teams parts, nor should you because that is not what matters, what matters is are they delivering value to the customer or not? How do you measure this value delivery? By OKRs and KPIs. By aligning the teams activities to corporate goals and strategy and then measuring performance against those through specific and measurable metrics and you leave the team alone in how they meet their performance goals.
You leave the “how” up to the team and focus in OKRs and KPIs on the “what”. This is how you measure performance. This is how you know if you are on the right track and how well you are doing (as a team).