OKR and Performance Management: How They Work Together

OKR and Performance Management: How They Work Together

While objective and key results (OKRs) can improve accountability and visibility, combining them with performance management can deter progress and encourage wrong behaviors when done hastily. When proper care is taken to ensure both frameworks interact harmoniously, managers can serve organizational needs with improved precision – while leading their team members to achieve challenging goals.

Differences between OKRs and performance management

OKRs are a goal management framework designed for and by teams. On the other hand, the performance review is an assessment process designed for individuals and overseen by Human Resources or another hierarchical entity. Let’s break these down to understand their components better. Employee goals have always been vital to performance management because they ensure evaluations are fair by removing personal opinions, subjectivity, and biases, provide accountability by defining the actions required to achieve these goals, set expectations by clearly outlining the primary purpose and means of measurement, and enhance professional and personal development. On the other hand, OKRs focus on impact as opposed to individual tasks, emphasizing outcomes instead of outputs that rely on joint efforts. That’s why many large organizations set OKRs for teams or the entire company – but smaller teams can benefit from individual OKRs. Most commonly, though, some separation between OKRs and personal performance management is necessary.

Using OKRs with Performance management

As OKRs and performance review processes have different takes on measuring performance, managers must distinguish them to depict what’s happening inside the business accurately. Performance management processes ensure that the work done by employees helps the organization move towards its goals and typically involve four steps – plan, monitor, review, and Reward: Managers Plan with employees to establish individual goals that reflect business objectives, Monitor their progress on goals through regular one-on-ones and help them overcome issues, Review performance at the end of the quarter or year, and let the organization decide on the Reward based on the goals achieved. OKR performance management techniques can accommodate all these phases, and here are a few ways to integrate OKRs successfully at every stage of the performance management cycle.

Planning with OKRs

The planning stage of performance management requires individual employees to set goals – but this might not be a good idea for bigger teams or organizations. There are several reasons for this: Individual OKRs can slow down the organization, adding time-consuming admin work, check-ins, and meetings that deter teams away from organizational goals. Not everyone can contribute to growth or innovation on their own. The more OKRs managers have, the harder it becomes to understand what’s prioritized. With individual OKRs, employees prioritize their goals over the company’s, shifting from group to individual thinking. Instead, managers can help employees understand their role in achieving team-level OKRs and establish growth-oriented concrete key results.

Monitoring with OKRs

The flexibility of the OKR management framework allows managers to adapt objectives or key results to suit the needs of their organization. They should embrace adaptive performance management methods that OKRs provide to change individual goals, objectives, and behaviors in response to the changes necessitated at work. OKRs ensure managers can deal with failure and incorporate subsequent feedback into the loop, freeing up their team members to develop creative solutions and be resilient. Managers can compare the organization’s OKR progress with employee performance and discuss how to improve impact. Frequent checks are essential to OKR management, and these one-on-ones/team meetings should follow a fixed schedule.

Reviewing performance with OKRs

Individual feedback is essential for employee growth, but managers benefit when the input aligns with organizational OKRs. They can recalibrate the efforts of their team members to spearhead goal-related outcomes. Keeping an eye on the initiatives can help them assess how employees contribute to organizational OKRs and find ways to train team members whenever necessary. Managers must emphasize teamwork while reviewing performance to help each other achieve overall objectives and not focus on their individual goals.

Recognizing effort with OKRs

OKRs, at first glance, seem like a lousy way to establish a recognition/reward system – after all, 70% completion is considered successful in OKRs. Traditional performance review processes, where employees are judged based on their contribution towards their team goals — create an environment where they focus on their performance instead of helping team members. The transparency of OKRs helps team members understand how their objectives result in organizational growth and enables them to support each other so that the group succeeds together. Managers can set moonshot team OKRs and assign different aspects of the product to various team members so that the cooperative nature of OKRs comes to the fore. As only 60-80% of key results are meant to be accomplished, managers can step in to help team members while motivating them to do their best.

Performance management is a risk-averse process where employees try to maximize their outputs. The fact that they are often tied to compensation makes people look at them skeptically. OKRs, on the other hand, is aspirational, collaborative, and completely separated from rewards. But they bring plenty of recognition (in the form of one on ones, team meetings, and project catch-ups) and encourage employees to bring their honest selves to work.

Succeeding with OKRs and performance management

Performance management processes evaluate the abilities of employees to generate desired outputs, while OKRs guide teams and organizations toward meaningful outcomes. By understanding the differences between the two, managers can use them together effectively to streamline organizational success. Being a practical and straightforward framework to define, track, and measure goals, OKRs ensure employees’ actions are aligned with business objectives. Objectives focus on what matters, and key results guide team members to find innovative ways to execute initiatives. OKRs help them (and their managers) bring strategy, stakeholders, and data together so that decisions can be made faster, operations can be streamlined better, and goals can be achieved sooner.

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