You set goals in your organization every day, but how well do you track them? Measuring success can be a struggle, especially when your business relies on cross-functional communication and asynchronous deliverables to reach its deadlines. When it comes to goal-setting frameworks, we’ve all heard of the SMART approach.
But what about OKRs? This framework has increased in popularity 11-fold on Google in the last decade, and it’s quickly becoming a gold standard for clarifying objectives and aligning them with your business’s broader strategy.
In this post, we are demystifying objectives and key results (OKRs) to address performance appraisals in the workplace. We will explore performance management vs. performance appraisal and show you how OKRs can transform employee engagement and productivity levels.
The Power of Objectives and Key Results (OKRs)
OKRs, or Objectives and Key Results, are at the forefront of successful management strategies. In 90% of companies, C-suite executives and board members, often with the assistance of dedicated OKR software, are responsible for introducing them to the organization.
So, what do they do, and how do they work? Like most management frameworks, they sound simple in theory but can quickly fall apart during execution without the right knowledge to implement them.
Let’s set the groundwork:
- Objectives are not just “goals,” but desired outcomes. They answer the question, “Where do we want to wind up at the end of this?”
- A key result is similar to a KPI — it answers, “How do I know if I’m on the right path?”
When it comes to performance appraisal, successfully implementing OKRs requires a deep understanding of each employee’s role. In addition to daily tasks and expectations, you also need to recognize each position’s broader scope and place within the organization.
With this knowledge, you can set clear objectives with employees and develop clear, measurable key results to track their growth.
Demystifying Performance Appraisal
There is often confusion among the leadership of what performance management is compared to performance appraisal. Performance management is the ongoing process of setting expectations, aligning employee actions, and periodically reviewing success. The goal is not just to determine whether someone did their job well or not; at its heart, performance appraisal helps a company understand where it’s supporting its employees or where it needs to offer greater guidance.
Performance appraisal is a specific aspect of performance management. This assessment is performed every year, sometimes twice a year, and formally evaluates an employee’s performance to offer structured, valuable feedback. In many organizations, performance appraisal is known as “performance reviews” or “performance evaluations.”
Aligning Performance Appraisal with OKRs
Employees often dread performance appraisal because it tends to focus on what they need to do better instead of what they’ve done well. This can reduce morale and ultimately hinder someone’s potential to thrive within their role.
Management can help prevent this negative byproduct of performance reviews by ensuring their appraisal process is guided by personalized OKRs.
Google uses OKRs to develop both company-wide and department-specific goals. Further down the line, every employee also has their own OKRs to ensure they feel inspired, motivated, and clear on their purpose.
To ensure that OKRs bring the greatest value to your organization, there are several important steps to take:
- Clearly define top-level OKRs, then build them into each department.
- Align each individual’s career roadmap with OKRs, so you can effectively track their progress by evaluating their performance.
- Develop clear performance metrics to ensure you are evaluating employees based on relevant criteria.
- Check in regularly through weekly and monthly meetings to ensure individuals remain clear on their objectives and are taking appropriate steps to reach them.
Maximizing Your Organization’s Potential: Combining OKRs and Performance Appraisals
Once you have formally implemented OKRs, it is important to make sure managers understand them as they relate to each employee’s role. Leadership also needs its own OKRs — it should be a company-wide framework that offers everyone greater clarity, purpose, and motivation.
To ensure that these OKRs are meaningful to employees, other areas of management have to be oriented around achieving them. By offering recognition and appreciation, managers can reinforce positive behaviors. Continuous learning and professional development opportunities allow employees to thrive and even exceed expectations.
Most importantly, an organization has to stand behind its employees and do everything it can to help them reach their goals. These objectives may be driven by the business’s strategy, but they should be personalized to every individual.
Conclusion: The Keys to OKR Success
Wrapping things up, let’s clarify that OKRs are not just goals and metrics. They are wide-reaching objectives that help tie each employee’s unique role into the company’s ever-evolving goals.
To be successful, leadership has to develop its own OKRs, and then discern each manager’s before tricking the framework down to each department.
With routine check-ins, performance appraisals, and professional development opportunities, companies can use OKRs to bring their long-term and short-term goals into greater alignment at every level.
