OKR and Performance Management

Love and marriage, macaroni and cheese, appraisal time and miserable managers. Some things just go together, so how about OKRs and Performance Management?

This article will share my experience on how to successfully blend OKRs and performance management.

For as long as I can remember appraisal time has been seen as a huge drag in big organisations. It's time consuming, potentially stressful on both sides and often perceived as unfair. This is why people look for a mechanism to remove the subjectivity from assessing individual performance.

In this context it's hardly surprising that people have seen OKRs as a silver bullet. OKRs at their best represent the move from outputs to outcomes that business has been crying out for. Why not apply that to Performance Management?

Let's look at the alternative ways we can blend OKRs and Performance Management:

Equate individual performance with the team OKRs

The advantage of this approach is that it doesn't create a distraction for the individual.

Unfortunately tying appraisals to shared goals creates different challenges. 

1. There are any number of external factors that can turn the best performance into one that misses hitting OKRs. Market conditions may change, key clients may change, key people in the team may leave, organisation priorities change.

2. A team who are measured solely by their OKRs will not set aspirational goals. Why would a team put personal reward at risk by committing to difficult goals? Remember, aspirational goals are central to OKR.

3. Comparing is tricky. Would you consider a team that achieved 100% of an easier goal better than a team that achieved 70% of a very challenging goal?

John Doerr describes the separation of performance management and OKRs as the amicable divorce and I agree with him.

Set individual OKRs 

An individual's performance is less affected by the rest of the team, so it's fairer. At least that's how the argument goes. Individual performance still has context and of course you take that into consideration. Bang goes your objectivity bubble. 

In truth all you have done is repackaged the objective appraisal problem in new clothes called OKRs.

Creating individual OKRs is time consuming and doesn't negate the need for high quality conversations. 

Furthermore, individual OKRs create an even bigger problem. They dilute focus. A team aligned on a goal is a powerful force. Why would you dilute that by giving each team member an additional set of goals to focus on?

As an aside, functional OKRs can create even more confusion than individual OKRs.

OKRs are about collective success and in high performing organisations they are shared by cross-functional teams who have all of the skills necessary to achieve their goals. 

At best individual OKRs are a distraction from team OKRs, at worst they are in conflict.

So what should you do?

OKRs are the framework that aligns our organisation and it gives it focus. You want teams that work together to achieve challenging goals. For this reason OKRs must form a substantial part of the appraisal discussion. 

At Google, according to Laszlo Bock, OKRs amount to a third or less of performance ratings. [1]  I wouldn't want to put a number on it, but this illustrates that they are a critical element. Another reason I wouldn't like to quantify the importance of the OKRs, is that your experience will differ. It's a cliche for a reason, to get the best out of individuals you need to treat them as individuals. 

At appraisal time ask the following questions:

1. How did the team do?

2. What did the individual contribute?

3. How did they collaborate?

4. How did they perform their individual tasks?

5. What did they learn?

These are critical questions that help you connect individual appraisal with OKRs. You will need to get feedback as often as possible to answer these questions. Remember, feedback should be specific and constructive. 

Conclusion

In summary, the problem here is a performance management problem. Annual appraisals are seen as an administrative overhead in many organisations. Something that HR are chasing people for to lead into the forced ranking that follows.

If you're a line manager it's critical you don't see it like that. You are responsible for helping the people in your care to grow, to learn and to perform well for the organisation. The annual appraisal is just a checkpoint in that continual process. A time to take stock and consider the journey your team member is on. Just don't leave it to the numbers. 

Thanks to Peter Kappus whose article on Individual OKRs triggered me to write this.

[1] Doerr, John. Measure What Matters (p. 182). Penguin Books Ltd. Kindle Edition.