Using OKRs in performance management could ramp up employee motivation

by Roger Longden | Feb 02, 2018

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Objectives and Key Results (OKRs for short) are changing how companies define and communicate success. Why not have a read through our free beginners guide to OKRs to get more information on how you can align and grow your company.

Performance management exists to improve productivity, performance and personal development, yet traditional methods are consistently falling short of the mark. In our opinion, using OKRs in performance management could help companies to better connect with individuals and achieve stronger results – and here’s why.


Performance management problems

New research from Gallup found that employees are 3.6x more likely to be engaged if their manager involves them in goal setting for performance management purposes. Brilliant, you might be thinking. Problem solved! Well, not quite.

Here are a few other statistics from the same Gallup study:

  • Only 30% of employees strongly agree that their manager involves them in goal setting
  • Just 20% of employees strongly agree their performance is managed in a way which motivates them to do outstanding work
  • In fact, only 21% of employees strongly agree that they have performance metrics that are within their control

No wonder employees are disengaged if they have no say in their performance goals, and don’t even feel as if these goals are attainable!


Why aren’t employers evolving their performance management methods?

Traditional performance management is time-consuming, ineffective and often a risk to team morale. However, we know that many, many companies still stick to these old habits.

Gallup argues that organisations need to “create a culture of performance development” with managers shifting from being a boss to being a coach. This demands commitment in terms of time and resources, as well as a significant behavioural change from management.

For instance, we know that making the switch to using OKRs in performance management necessitates a certain amount of education around the OKR process, both for business leaders and their employees. Without this understanding, the whole approach is doomed to fail. This is the very reason we provide coaching and team training on the subject.


Performance motivation

In a similar light to Gallup’s concept of ‘performance development,’ a recent Forbes article argues that the term ‘performance motivation’ should replace ‘performance management.’

Performance motivation more closely links an individual’s responsibilities with their broader impact on the business. Essentially, this is the same as using OKRs in performance management strategies, as personal OKRs are set in relation to broader business OKRs.

With traditional performance management, an individual’s job description generally relates to what they do, outlining everyday activities and responsibilities attached to the role, with little relation to their impact on the business in a broad sense. In a similar vein, career development is driven by the company’s existing needs.

In short, employees have no control over their role and no real autonomy in the business.

Compare this to performance motivation. Rather than a traditional job description, employees have an impact description which is closely tied to business KPIs, making it clear why this role exists and how it impacts upon the company overall. Career development is collaborative, driven by the employee’s ambition and potential, supported by the company.

In short, employees understand their role, recognise their impact and feel empowered.


Why we use OKRs in performance management strategies

If you’ve read any of our previous blogs on the OKR process, this may all be sounding rather familiar. In a nutshell, top-level OKRs are implemented to track key business outcomes, while individual OKRs can be set as contributing factors.

For instance, if a business implements a top-level OKR of winning 10 new clients in 2018, the sales manager could be set an individual OKR to arrange meetings with 50 prospects. Assuming that the meeting to conversion rate was 20%, the logic here is obvious. 

Gallup and Forbes both touch on the importance of agency and understanding when it comes to performance management, and we couldn’t agree more. OKRs are also set in a collaborative manner, so that managers and individual employees fully understand what they are working towards, and agree that the targets are realistic.

So, are you ready to start using OKRs in performance management and supporting your employees through the best possible approach? If you have any questions, please don’t hesitate to get in touch. We’d love to hear from you.

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