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How Agile Is Transforming the Way Business Is Done

Corporations apply project management theory to organizational development

A businessman is pointing at the word agile.

​The concept of agility as a way to organize a business has been gaining popularity across the corporate world, after emerging from long-standing collaborative practices cultivated by software development teams.

In agile project management, groups set short-term goals and continually produce deliverables, incorporate user feedback, and react to changing priorities as they develop larger products. Businesses are following those tenets, too.

HR is expected to play a vital role as employers in numerous industries adopt these lean, flexible, decentralized practices.

What Is Agile?

"Agility refers to the ability of organizations to respond to change with speed," said Sanjiv Augustine, co-founder and CEO of Herndon, Va.-based "agile" training firm LitheSpeed.  "In the past few years, business units have begun adopting agile across the entire value stream of business functions—legal, marketing, sales and HR."

ING, the Dutch banking giant, initiated a makeover in 2015 from a traditional organizational structure to the kind of agile model embraced by major digital pioneers like Google and Spotify. Thousands of headquarters employees had to reapply for jobs and shift into "squads," "tribes" and "chapters."

Becoming agile means shifting from "a siloed, hierarchical organization to a flatter, adaptive one," Augustine said.

Leaders will "work more closely with their employees and customers on small, collaborative teams to deliver value in a more iterative and incremental fashion," said Augustine, author of Managing Agile Projects (Prentice Hall, 2005).

"That is, solutions are developed collaboratively and progressively with close customer interaction.  Employees are thrilled to have their work count for something and find greater meaning and purpose in their lives, due to closer bonding with their peers and clearer contributions to their organizations," he said.

While there's no one universally accepted definition of agile organization, the SD Learning Consortium—a group of large, agile-embracing companies including Ericsson, Fidelity Investments, Barclays and Microsoft—met in 2016 to try to characterize it. They defined the four main themes of agile:

  • Delighting customers.
  • Descaling work.
  • Enterprisewide agility.
  • Nurturing culture.

Accenture has defined agility as "a company's ability to anticipate, sense and respond to volatility in markets in ways that create competitive advantage" or, in Accenture's shorthand, "Agility = adaptability + speed + execution."

Agile at Work

Rather than depend on a few high-level decision-makers to rigidly control activities, agile companies rely on their entire workforce to nimbly respond to change, Accenture noted in 2015.

Agile teams need a "product owner" empowered to make decisions about scope, timing and budget without having to consult a steering group or governing body, the Boston Consulting Group says, adding that two or three people may assume the role in more complex companies.

A 2016 Harvard Business Review article described agile methods as a group of values, practices and principles representing a "radical alternative to command-and-control-style management." It reported that some companies had reallocated 25 percent or more of leaders' time from "functional silos" to agile, multidisciplinary teams.

Department leaders at Mission Bell Winery, for example, joined an agile executive team that prioritized company initiatives based on value and collaboration opportunities, according to the article, which noted that National Public Radio, John Deere, Saab and GE also had adopted agile methods.

Consulting firm Scaled Agile Inc. says 70 percent of Fortune 100 companies have adopted its Scaled Agile Framework training and certification program.

New Role for HR

HR will need to take on new roles and responsibilities as companies seek to become more agile, and this will require HR to reshape its own structure and operations to promote flexibility, according to Scaled Agile.

HR professionals will need to foster worker mobility, help discover unknown talent, help to build "an adaptive, ethical and empowered culture," emphasize quick skills development, and redesign work to allow "on-the-fly problem-solving and experimentation and less conformance to rigidly prescribed job tasks," the firm said.

"HR organizations of the future will have to reinvent themselves—and the HR and talent management practices they support—to drive agility in their organization. Those that fail to do so may put their organizations at risk of obsolescence," Accenture said.

HR can support agile environments by hiring the appropriate people, using performance reviews that don't kill collaboration and implementing work policies that lend proper flexibility, said LitheSpeed co-founder Arlen Bankston.

Bankston recently laid out several principles for organizational agility, including the concepts of choosing self-managing groups over hierarchy and wholeness over work focus alone—that is, supporting employees' well-being, motivation and growth through "organic, human work environments, flexible hours, workspaces, tools, approaches and connection to a resonating purpose."

Keith Johnstone, head of marketing for Peak Sales Recruiting, recommends that HR teams:

Work with C-suite executives to empower middle managers and front-line leaders to build small, dexterous, talented, cross-functional teams with decision-making autonomy.

Transform internally at scale. Johnstone cited a McKinsey report on ING's "agile transformation," which said the changes led to better time to market, employee engagement and productivity. After headquarters employees reapplied for jobs, 40 percent wound up with different positions in the firm. The selection process was weighted more for culture and mindset than for experience or knowledge, according to McKinsey. ING executives said the financial institution lost a lot of people who had good knowledge but lacked the right mindset, and many older employees adapted more quickly and readily than younger counterparts.

Hire versatile "change agents" with fresh ideas and thinking who won't rely on doing things the way they've always been done. "For agile to become an organizational practice, HR leaders first need to get buy-in from the C-suite. If there isn't support from the top, the promise of increased productivity and efficiency won't be realized. Second, they need to educate front-line managers on the benefits of the approach and its core principles," Johnstone said.

"Third, they need to make agile part of the onboarding program for new hires. This not only highlights to new employees that agile is a core organizational practice, but it ensures new team members have the skills and mindset necessary to execute," Johnstone said.

Dinah Wisenberg Brin is a freelance writer covering workplace issues, entrepreneurship, small business, health care, personal finance and logistics from Philadelphia.

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