Blog | How do Objectives and Key Results help improve employee performance reviews?

Published May 15, 2016 by Paul Barnes

Employee Engagement
How do Objectives and Key Results help improve employee performance reviews?

Many forward looking organisations are now jettisoning theold annual employee performance review cycles and moving to more regular andflexible appraisals that are better suited to the faster pace of businesstoday. In changing times, these newer approaches are better suited to increasingemployee engagement, motivation and retention.

For example, major organisations such as Gap, GE and Accenture have adopted continuous performance appraisals processes that have a number of key aspects in common:

  • They are more frequent, and designed to fit the employee’s working pattern. So, consulting companies would typically conduct appraisals at the end of every project, or at key points within them
  • They are focused on immediate and planned activities
  • They are tightly focused on the employee’s actual role and development
  • They are not linked to pay rises

To further drive employee motivation many companies are adopting a methodology employed by the likes of Google and Intel. This Objectives and Key Results (OKRs) approach simplifies the review process, connecting personal, team and corporate goals in a measurable way. It ensures that everyone moves in unison in the same direction. Google believes setting clear, specific, challenging goals through based on OKR thinking enhances employee engagement and helps staff achieve more than they previously thought possible.

What’s the essence of OKRs?

OKRs are underpinned by two simple questions:

  1. Where does the employee want to go?
  2. How will the employee pace themselves to see if they are making progress towards getting there?

Answering question 1 provides the objective, while question 2 identifies the milestones (or key results) on the way to achieving that objective. Typically, each employee has between 3-5 objectives, which should be ambitious and SMART.

Under each objective there are usually 3-4 key, quantifiable results. It is essential that all of progress towards results can be graded numerically, so that it the employee can have a clear idea of how close they are to successfully achieving it. In this way, an objective of "increase revenue by X% by 31 April” could be broken down into key results such as "Win XX new clients by 28 January”. Crucially the language must be clear, unambiguous, tangible and agreed by both manager and employee.

OKRs are also usually made public, meaning that not only do individuals understand what is expected of them, but the wider company knows what they are focusing on. This all helps towards ensuring that OKRs produce clear organisational value.

Their tangible nature means OKRs naturally lend themselves to more frequent ongoing performance appraisals. For examples, many organisations set weekly meetings to check in and see how staff are progressing – an important opportunity to give and receive continuous feedback. These meetings are focused on driving improvements and helping employee’s move closer to their goals, rather that the sometimes confrontational nature of traditional employee appraisals. Laszlo Bock, Google’s Senior Vice President of People Operations suggests that employees want to be evaluated because they want to grow and eventually become the best at their job.

Six key benefits of OKRs

OKRs are very easy to set up, and there are plenty of materials available to help companies use them. The benefits they deliver can be boiled down to six key areas:

  1. Focus – activities are focused on what the organisation and individual views as important, aligning corporate and personal development.
  2. Clarity and simplicity – the employees’ objectives and what they need to do to achieve them is very clear, as is their current progress towards them.
  3. Appraisals are ongoing – regular check-in sessions provide frequent feedback opportunities, for both staff and managers.
  4. Progress is easy to track – given their numeric nature, OKRs can be analysed at an individual, team, departmental or company-wide level,
  5. Public – with open, public, shared objectives, the whole company knows what each employee is working to achieve.
  6. Measurable - staff and managers can see what has been achieved – and what else needs to be worked on.

As organisations move away from annual reviews, they need asimple, clear and easy to track process for helping staff to improve theirperformance - and for the organisation itself to achieve its objectives. The Objectivesand Key Results model delivers on all of these counts while contributing toboosting engagement, employee retention and overall corporate performance.

A version of this post first appeared on HR Zone on 10th, May, 2016.

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