Performance Reviews and OKRs
The nature of OKRs make them an obvious choice for HR leaders who are looking for a better way to measure employee performance.
Before we dig deep into this topic though, which can be quite confrontational, let’s first understand why you might want to replace your current system for measuring employee performance.
Does Your Employee Performance Track Performance?
Sadly, this is not a rhetorical question.
Ask any 10 HR leaders and, after they are done laughing, at least half of them will respond with something along the lines of “no, but it’s the best we can do for now”.
Ask the same question to non-HR employees and they will respond in a similar fashion. The fact is that very few performance review tools actually measure what the employee, manager, HR, or organization would call performance. This causes frustration from all parties involved.
The employee wants to be rewarded based on their impact on the organization, not how their manager feels about their impact on the organization.
The manager wants a better system for holding their teams accountable for delivering results and they want the feedback loop shortened. HR, obviously, wants what is best for the employee and the manager, but also needs to ensure we are measuring performance universally across all employees and that system of measurement is fair (and easy to access). The organization wants what it always wants…improved performance.
Can I use OKRs as a performance review tool?
Of course you CAN, but SHOULD you? This is the most popular topic around the virtual water cooler for HR leaders who want to implement OKRs.
There are two schools of thought, which we will call the “purist” view and the “realist” view.
OKR purists will argue that we should not measure employee performance using an OKR tool because the only type of goals which should be included in the OKR tool are something called Big, Hairy, Audacious, Goals (abbreviated BHAG). These BHAGs are not intended to be attainable. Out of 10, we should hope to land somewhere around 7. It is less about whether you actually accomplished what you said you would do and more about the effort, attempt, and ability to come close.
For many reasons, this creates problems as a performance review tool.
Most notably, when employees link their performance with these BHAGs to promotion and pay, they tend to write goals which are much smaller, simpler, and easier to obtain. This is the biggest gripe for the purist.
They believe OKRs should ONLY be used for BHAG and it is not fair to measure the performance of an employee against them.
OKR realists argue that there is no such thing as the “right way to implement OKRs”. They view OKRs as a guiding principle in helping the organization work more purposeful and results orientated.
Many feel that the “purist” view of OKRs devalues the process because it limits the application to a very narrow use-case (and audience size). The “realist” argues that we are better off capturing everything we want an employee to accomplish in a single location, instead of limiting the application to just 1-2 projects at a time.
When “realists” implement OKRs, they tend to capture not just BHAGs, but all of the goals for the employee that quarter. This gives a more comprehensive view of the performance of the employee. If you are using OKRs this way, you are losing one huge benefit of OKRs though, and that is creating goals which stretch your employees.
What does Unlock:OKR promote
The easy way out of this argument is to say “it depends” and maybe that is the answer that works for most people, but not for us. At Unlock:OKR, we address this problem head on because it was a problem we had to take head on.
When we started using OKRs in our company, our CEO (Sriraj Mallick) was pushing our Head of HR (Ajai Mehrotra) to remove our employee performance review tool, but thankfully, Ajai would not back down. He insisted that we have a way to determine which goals in our tool would be used for performance reviews and which would be considered BHAG.
Out of this necessity, one our most popular features was born; the ability to differentiate between the types of goals.
In short, we believe that OKRs can and should be used to track employee performance, but ONLY if the tool allows employees, managers, and HR leaders to clearly determine the difference between goals which are intended to be missed, versus those which we are holding people accountable.