Many companies that are new to Objectives and Key Results may be wondering how OKRs and performance management are different. Since OKRs help measure the contributions that employees make to company-wide goals, many believe that they can be used in performance reviews to help evaluate employees within an organization’s performance management system. Is this true?
Good performance accountability is about having a positive conversation between manager and employee.
Before we dive into how OKRs and performance reviews work together in an organization, let’s review these two business tools:
1. OKRs
OKRs are a goal-setting and tracking methodology that help organizations set measurable goals. OKRs consist of qualitative, ambitious Objectives and clear, quantifiable Key Results that articulate a goal, and the outcomes required in order to achieve the goal.
This framework helps increase employee engagement in setting and achieving important goals. This engagement translates to commitment and productivity, benefitting the entire organization as a whole.
2. Performance reviews
Performance reviews help ensure that the team is performing well, they are engaged, and are working towards their goals. It’s a great way to assess the team’s performance over a certain period of time, give and receive feedback, to go over what worked well and what didn’t, and establish what can be improved.
Regular performance reviews with every employee can benefit both the employee and organization.
Incorporating OKRs in Performance Reviews
1. Evaluate which outputs the employee is responsible for and what projects they are contributing towards.
OKRs, by nature, are collaborative. Therefore, an employee’s individual performance is not a good indicator of if OKRs were accomplished or not. What would instead be a good indicator is to take a look at the goals an employee is responsible for and have a discussion with them about the OKR-related outputs and results.
If the organization is using an OKR software, it’s possible to pull up the employee’s OKRs. This gives some good areas of information for a discussion between the manager and employee. The OKR software will give an insight into the activities and outputs that the employee is working on for the organization to achieve its goal.
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A few questions that could be discussed are:
- How well did the employee do in executing the OKR?
- If the employee did not make much progress on the OKR, then have a discussion on:
- Why didn’t it go well?
- What was the reason that it didn’t go well?
- What can be improved in the future?
2. Refer to past performance data to map out individual plans to help employees achieve their individual and collaborative goals.
Performance reviews are a great tool to measure an employee’s performance, their strengths and weaknesses, and the areas that they need to improve upon to be able to perform better. It’s important to use OKRs to assess execution and make a note of what went well and what did not.
For an effective performance review, make a point to discuss performance-related efforts around OKR. Recognize and appreciate good work and discuss their strengths and how their strengths can be put to use while collaborating with their team members and the organization.
Have a one-on-one meeting with the employee to discuss areas for improvement and growth. Get insight into why the performance wasn’t up to the mark in the first place: was it because the employee wasn’t qualified enough, a lack of preparation, or some other reason? Whatever the reason might be, the OKR software can give you insight into employee experience so that the organization can support the individual’s growth.
3. Make OKR-related habits part of performance review systems to encourage commitment and communication.
Make OKR-related behaviors a part of the performance review system. It’s a great way to get insights into individual employee performance, which has a significant impact on the growth of the organization.
Making the OKR-related behaviors specific to the role helps it narrow it down even further. So a set for managers and executives, and another for individual employees.
For managers and executives
- Do they complete check-ins, reviews, and regularly connect with their team about OKRs?
- Do they help direct reports to achieve their goals?
For individual employees
- Are they showing accountability for the objectives?
- Do they check-in on time, and are check-ins always detailed?
- Are they able to achieve their goals on time?
Final Thoughts
OKRs should not be used in place of a performance management tool. Instead, the OKR framework can supplement HR and managers’ understanding of employee experience, and provide useful insights into an employee’s performance and their contribution to the organization.
OKRs also are very effective in providing direction and alignment to the organization’s goals, to the employees. This, in turn, helps motivate employees when they see purpose in their work. When they know their work is valued and contributes to the success and growth of the organization, it boosts employee performance.
Want to find out how you can use OKRs and Profit.co in your organization? Book a free demo with our OKR experts today!