The Ultimate Guide to Performance Management

“Continuous recognition is a powerful driver of engagement.”

• John Doerr, Author, Measure What Matters

Introduction:

It has been argued that OKRs can make a major impact on the success of continuous performance management. Since OKRs help measure the employee’s contributions to the organisation’s larger objectives, it makes sense to use them in performance reviews to help evaluate employees. So, what is OKR?

OKRs are a goal-setting and tracking methodology that help organisations set measurable goals. OKRs consist of qualitative Objectives and clear, quantifiable Key Results that define a goal, and the outcomes required to achieve the goal.

This framework helps increase employee engagement in setting and achieving important goals. Engaged employees are more committed to their roles and more productive in their tasks, thus driving higher value for the entire organisation. It provides a tactical and metrics-driven set of goals that can be easily used to evaluate employee performance. 

Significance of OKR in Continuous Performance Management:

OKRs can add magic to the weeks and months leading up to the year-end performance appraisal. OKRs are so clearly and quantifiably defined that they provide a framed goal line to work towards. Managers can use them as a reference point to give feedback, coach on improvement, provide tactical insights and even resolve problems during their periodic check-ins. This will ensure that the feedback shared and inputs given during check-ins are decidedly aimed at achieving the OKRs. One interesting approach also proposes to focus on individual achievement using OKR, thereby rolling the individual achievements into the team’s collective performance. Given that peers and team members are also competitors, this approach might actually be more useful in driving organisational goals than by expecting commitment to team goals.

Advantages of incorporating OKRs in Continuous Performance Management

1. They mirror the adaptability and flexibility of periodic check-ins. Since OKRs are reviewed periodically, it is equally easy to implement changes and change / correct the course in time. This flexibility is a key feature of the regular check-ins stipulated in the Continuous Performance Management process
2. OKRs define a qualifiable, objective and detailed outcome expected to be achieved by everyone. Having a clearly defined reference point makes employee objectives also equally focused and result-oriented.
3. OKRs are not unidirectional. They can be top-down, bottom up or even sideways. Objectives anchored on OKRs can be chosen by individuals and merged with organisational objectives. This will make the employees feel less burdened with pre-set objectives and give them the freedom to choose their own objectives within the framework.
4. OKRs do not affect the compensation earned by employees. This takes away the excessive focus on bonus-related performance among employee objectives and helps them operate without the stress of meeting compensation goals.
5. OKRs breed transparency and mutual trust, when used to model employee objectives as well. It proves to the employees that their work contributes to the organisation’s own targets. It also helps them realise the value of their own performance to the organisation and the effect of non-performance on the organisation as well.

It is thus clear that linking OKRs to individual objectives helps drive a better work environment, a positive attitude towards work and an overall sense of wellbeing. OKRs help employees understand what is expected of them at work and enable them to contribute to the goals set for them.

Checklist: How to incorporate OKRs into Continuous Performance Management

1. Evaluate employee-level objectives against the task, initiatives, and projects they are contributing towards.

OKRs are a collaboration tool. Therefore, while an employee’s individual performance does not necessarily reflect the achievement of OKRs, individual goals do have an impact on OKR achievements. Ultimately, all objectives – individual or organisational are designed with organisational success in mind. The check-in conversations could then be centred around whether or not the employee’s performance has helped achieve the OKRs and if it didn’t, what were the responsible factors and how can they be addressed in the future.

2. Use past performance data to design action plans for employees to achieve their individual and collaborative goals.

Use OKRs to assess execution of their strengths, weaknesses, and areas of improvement by employees to deliver better results. This exercise will reveal elements that led to the achievement of their individual goals which can then be recognized, appreciated, and redirected toward achieving collaborative goals.

3. Officially link OKRs to individual performance

Make OKR-related behaviours a part of the performance review system. This will help boost the employee’s commitment to OKRs and also improve communication within the team. 

For Managers:

• Conduct regular check-ins, perform timely reviews, extract performance snapshots, and engage their teams on OKRs
• Equip, coach, and mentor their team member to achieve OKRs

For individual employees

• Commitment towards their objectives
• Faith and discipline with regards to check-ins
• Actual performance or delivery of results

OKRs are not a replacement for Performance Management reviews. They are meant to enhance the employee’s experience working with the organisation and provide insight on the employee’s contribution to the overall organisational objectives.

It is also a useful tool to communicate with employees on the connection between their  objectives with OKRs. Individuals respond better to a sense of increased self-worth, belonging and having a higher purpose than other parameters. It is a known fact that employee engagement levels directly impact employee performance. According to a Harvard study, employees who consider their work important and are aligned to the organisation’s goals are twice as likely to be top performers.