How to use OKRs for performance management

Felipe Castro is famous for soap-boxing about this goal-setting framework that’s popular with Silicon Valley companies like Google, Twitter and Spotify. OKR forms one of the pillars of performance management. The other two being great process and performance conversations.

OKRs helped Gmail grow its user-base from 400 million to over 1 billion. That’s a whopping increase in uptake of at least 150%. Still on the fence?

How do OKRs work?

OKRs help companies bridge the gap between strategy and execution. In they’re simplest form, they show employees how their work contributes to company success. Which makes OKRs the perfect tool to support employee performance.

OKRs also encourage managers and employees to move from an input and behavior-based approach to instead focus on impact and outcomes. It’s a mindset shift but using OKRs gives employees more autonomy and accountability for the work that they do.

How to use OKRs to support an employee’s performance

OKRs work best when used with ongoing feedback, performance conversations and a well-planned performance management strategy. They shouldn’t be used solely to measure an employee’s performance because there are lots of contributing factors to consider. They don’t take into account how the person achieved the goals or if they’re a team player, for example.

Here are 5 steps to use OKRs to support performance management in your business. And it all starts at the top with a clear strategy and ideally, total transparency.

1. Set company-wide Objectives and communicate them clearly

Start with high-level Objectives that align with the overall mission and vision of the company. This could be a growth target or to lead a sector. The most important part here is communicating them clearly and early to business leaders so that they know and understand them. They will have time to brief their teams to set Key Results that measure the right things. Not just the obvious things.

2. Set Key Results to show how you will measure the Objectives

It’s important to communicate to the business how you’ll measure the Objectives. And by extension, the role that each person and team will contribute. You’re telling your people what your expectations are for the next year (or more). Knowing is 50% of the battle. So set your people up for success from the start.

3. Set Team OKRs that align to company Objectives via the Key Results

Next, managers need to brief their team about the company OKRs. That’s so employees have a clear understanding of the company direction. And how they can contribute to it. It’s important that employees feel empowered to set their own OKRs or SMART goals so they feel accountable.

Feeling like our work matters is a huge part of employee engagement. When you can’t see the impact of your role, it’s easy to become disengaged from it. After all, if your work doesn’t make a difference, why bother?

4. OKR transparency means better performance management alignment

Take an interest in other team’s OKRs. See how they’re measuring their impact. This helps with cross-team collaboration. And you never know, your work might impact another team’s OKR or vice versa. That’s where transparency really works. It means that the whole company really is working together rather than in silos. Which is often the case with SMART goals. Or no goals!

Remember to say thank you if someone else has supported your OKR. You can do this using the recognition question in an Engage365 employee check-in.

5. Update Key Results regularly through check-ins

Keep your employees focused on the work that makes the biggest impact by including their KRs in their employee check-in. If they don’t have an update, it’s an indication that they need to re-focus or re-prioritize their work next week. Or change tact if something isn’t working. If an employee is loosing focus, it’s easy to get them back on track rather than waiting for the wheel to come off. Check-ins are a great way to get manager support on this.

Feeling like our work matters is a huge part of employee engagement. When you can’t see the impact of your role, it’s easy to become disengaged from it. After all, if your work doesn’t make a difference, why bother?

6. Re-align when appropriate, including stretch OKRs to boost employee performance

OKRs are agile by their very nature, and team and individual objectives tend to be even more flexible than company-wide goals. If a Key Result (KR) needs revising, you can easily make adjustments, especially if you review them often. In fact, a 70% completion rate is generally considered an acceptable achievement when you use OKRs for performance management. However, anything above that indicates exceptional performance or suggests that the KR wasn’t set high enough to begin with. Therefore, don’t hesitate to tweak your KRs as you go, particularly if you want to provide your top-performing employees with a stretch target. Additionally, make it a point to check in regularly with your team to see how you can best support them in achieving those goals.

7. Celebrate successes often and publicly

Employees want to be appreciated and recognized for their accomplishments. After all, we all need to know that our contributions are valued. Without this recognition, it becomes easy to feel that our hard work lacks purpose. Consequently, without a sense of purpose, disengagement and poor morale can set in.

To counter this, celebrate key milestones along the way by utilizing peer and manager recognition. For instance, if you use Engage365, you’re already able to incorporate this recognition as part of your weekly check-ins. By doing so, you not only acknowledge achievements but also foster a more engaged and motivated workforce.

8. Build performance management conversations around OKR progress

Make sure you’re discussing OKR progress in any conversation you have in your performance management process. Monthly 1:1s and quarterly reviews are the perfect place for these. As well as your weekly check-in. Use progress updates to ask how, as a manager, you can better support your people.

Every goal and question has a history that can be viewed by managers and relevant employees. So with a performance management software like Perform365, it’s easy for everyone to keep track of their progress.