Leverage OKRs and Performance Management to Drive Team’s Growth

Are you struggling with a disconnect between individual efforts and overall company objectives? Or perhaps annual reviews don’t quite capture the fast-paced, ever-changing nature of your work. 

That’s where OKR performance management comes in. In this blog, we’ll explore a step-by-step approach to integrating OKRs with your performance cycles. 

We’ll break down common concerns and equip you with proven strategies to foster a culture of transparency, continuous improvement, and goal achievement within your team. 

What is OKR Performance Management?

OKR performance management isn’t a single system but two powerful tools working together. Objectives and Key Results set ambitious, strategic goals that align everyone in the company. 

Performance management translates those goals into individual actions and tracks progress. This combination keeps everyone focused on the vast scale while ensuring daily work contributes to achieving it.

What Sets OKRs Apart from Performance Management?

OKRs ensure everyone is working towards the same mountain, while performance management helps them choose the most efficient route. Here’s how OKRs differ from traditional performance management:

• Focus

OKRs: Big picture, ambitious goals. They set the “what” – the overall direction the company or team needs to head in. Think of them as climbing a mountain – you define the peak you want to reach.

Performance Management: Day-to-day execution. It focuses on the “how” – the specific actions and behaviors needed to achieve those goals. This translates to the specific climbing route you’ll take to reach the peak

• Structure

OKRs: These are collaborative and transparent. Teams work together to define OKRs, fostering buy-in and alignment. They’re often ambitious and may only sometimes be fully achieved, which is okay! It’s about stretching and aiming high.

Performance Management: Individual-centric. It typically involves setting specific, measurable targets for each employee, often tied to past performance and compensation.

• Measurement

OKRs: Track progress, not just completion. OKRs often use a 0-100% scale to show how much of the goal is being achieved. This allows for course correction and adaptation along the way.

Performance Management: Black and white – goals are either met or missed. This can be demotivating if goals are too ambitious or external factors come into play.

What is the Ideal Process for Integrating OKRs with Performance Management Cycles?

OKRs provide direction, while performance management equips your team with the tools to navigate the journey towards success. It’s about setting clear goals, tracking progress, and using learnings for continuous improvement, both individually and as a team.

Here’s how you can integrate them for a winning system:

Step 1: Align OKRs with the performance cycle

One strategy is “cascading OKRs.” Start with annual company-wide OKRs, then translate them into shorter-term departmental or team OKRs that align with your performance cycle (often quarterly). 

This ensures everyone understands how their work contributes to the bigger picture. Another option is “rolling OKRs.” 

Set annual company objectives but establish new key results for each OKR at the beginning of each shorter cycle. This allows for adjustments based on learnings while staying on track with annual goals.

Finally, ditch the once-a-year review. Schedule regular check-ins throughout the year to discuss progress on both OKRs and individual goals. 

This penetrates ongoing communication and keeps everyone focused on achieving success. By aligning timelines and adopting these strategies, you can create a system where OKRs and performance management work together seamlessly, even with different cycle lengths. 

Example: Imagine your company’s annual performance cycle is January to December. The company-wide OKR for the year might be “Increase customer satisfaction by 10%.”

Cascading OKRs: During your Q1 planning, you’d work with your team to translate that annual OKR into a departmental or team OKR for the quarter. 

This could be something like “Launch a new customer support feature by March 31st to improve resolution time by 5%.” This shorter-term OKR directly contributes to the annual goal of increasing customer satisfaction.

By using cascading OKRs, you keep everyone focused on the long-term vision while providing clear, actionable goals for the shorter performance cycle. 

Step 2: Cascade and translate OKRs

First, ensure everyone grasps the company-wide OKRs and how they connect to the overall strategy. Then, collaboratively translate those broad goals into specific, team-oriented OKRs. 

These departmental OKRs should directly contribute to achieving the company’s vision, like choosing specific trails that all lead to the same mountain peak. Break down each team OKR into measurable key results. 

Think of these as the milestones along each trail, providing a clear roadmap for success. By effectively cascading and translating OKRs, you bridge the gap between individual work and the company’s goals, fostering ownership and motivation within your team. 

Example: Imagine the company’s annual OKR is to “Launch a new mobile app to increase customer engagement by 20%.”

Cascading and translating: During your Q1 planning, you’d work with your team to translate this into a departmental OKR for your marketing team. This could be something like “Develop and launch a pre-launch social media campaign for the new mobile app by March 31st, resulting in a 15% increase in website traffic from targeted demographics.”

This team OKR is specific to your department’s expertise (marketing) and directly contributes to the company’s annual goal of increasing customer engagement for the app launch. 

Step 3: Leverage OKRs for regular check-ins

Schedule frequent check-ins with your team throughout the shorter OKR cycles. This allows for ongoing discussions about progress on both OKRs (the big goals) and individual performance goals.

Instead of just checking completion, use a 0-100% scale or similar method to track progress on OKRs. This opens the door for discussions about roadblocks and adjustments, promoting a growth mindset. 

Regular check-ins based on OKRs create opportunities for real-time feedback and course correction. This agility ensures everyone stays focused on the desired outcome, even if external factors impact achieving a specific key result. 

By leveraging OKRs for frequent check-ins, you create a system that’s adaptable and keeps everyone motivated throughout the performance cycle.

Example: Imagine your team’s OKR for the quarter is “Increase website conversion rate by 5%.” During your weekly team meetings, you can dedicate a portion to discuss progress on this OKR.

• Track progress: Use a 0-100% scale to estimate how close you are to achieving the 5% conversion rate increase. This opens the discussion for…

• Addressing roadblocks: If progress is lagging, discuss what’s causing the issue. Maybe a specific marketing campaign isn’t performing as expected.

• Course correction: Based on the discussion, brainstorm solutions or adjustments to get back on track. This could involve tweaking the marketing campaign or exploring new strategies.
  

Regular check-ins tied to OKRs create an environment for continuous improvement and keep the team focused on achieving the desired outcome throughout the quarter.

Step 4: Leverage OKRs for performance reviews

During reviews, shift the focus from simply checking completion boxes to discussing an individual’s contribution to achieving team and company goals. Use OKRs as a springboard to see if their work actively moved the needle on key results. 

Celebrate not only reaching the finish line, but also the valuable lessons learned along the way. Maybe a specific key result wasn’t fully achieved, but the experience provided valuable insights. 

Finally, connect OKRs to individual performance goals set earlier in the cycle. Did those goals effectively support achieving the OKRs? 

This discussion helps identify areas for future development and ensures better alignment between individual and team goals moving forward. By using OKRs in performance reviews, you create a growth-oriented conversation that celebrates learning alongside achievements, and refines future goal setting for everyone.

Example: Imagine a team OKR for the quarter was “Increase website conversion rate by 5%.” During a team member’s performance review, you can discuss:

• Contribution: Did they consistently contribute to their assigned tasks related to the website conversion rate? Did they meet deadlines and deliver high-quality work?

• Learning and growth: Maybe the 5% increase wasn’t fully achieved, but the team member spearheaded A/B testing that provided valuable insights into user behavior.

• Goal alignment: Discuss if their individual performance goals (e.g., improving website copywriting) were effectively aligned with supporting the team OKR.
  

This review focuses on the individual’s contribution, celebrates learning alongside results, and helps refine future goal setting to ensure better alignment between individual and team objectives.

Can You Integrate OKRs and Performance Management?

You create a system that keeps everyone aligned, motivated, and adaptable by integrating OKRs and performance management. Here’s how: 

• Align individual goals with OKRs

During performance reviews, translate the big-picture OKRs into specific, measurable goals for each team member. Ask yourself: “What actions can this individual take to contribute to achieving the OKRs?” 

This connects their daily work to the company’s broader vision.

• Use OKRs for regular check-ins

Ditch the annual review cycle and have regular progress discussions based on the OKRs. This will allow for course corrections and adjustments as needed. 

Maybe a strategy isn’t working, or external factors require a shift. Regular check-ins ensure everyone stays focused and adapts.

• Focus on progress, not perfection

OKRs are meant to be ambitious. Don’t penalize employees for not achieving one hundred percent. 

Celebrate progress and learning, even if the goal still needs to be reached. This encourages taking calculated risks and pushing boundaries, which can lead to innovation.

• Keep performance reviews separate

While OKRs can inform performance discussions, keep the formal review process separate. Use performance reviews to assess overall skills, behaviors, and development needs. 

This distinction ensures a well-rounded evaluation that goes beyond just hitting a specific number.

Why Should You Not Combine Performance Management and OKRs?

While both OKRs (Objectives and Key Results) and performance management are valuable tools, combining them too tightly can actually be counterproductive. Here’s why keeping them separate can be beneficial:

• Collaboration is essential for OKRs but not for performance management

OKRs thrive on collaboration, where teams work together to define ambitious goals. Performance management, however, focuses on individual strengths and weaknesses.

If these get tied together, some might set lowball OKRs to guarantee success in their review, defeating the purpose of ambitious OKRs. Instead, let’s keep OKRs collaborative and inspiring while using performance management to translate those goals into individual action plans and track progress. 

• OKRs drive creativity, while performance management stresses goal accomplishment

OKRs encourage ambitious goals that might even feel scary at first. This “stretch” goal mentality is what sparks innovation and creativity. The team works together to figure out how to reach that seemingly impossible peak.

Performance management, on the other hand, prioritizes achievability. It’s more like setting specific milestones for your personal climb. 

These goals should be challenging but also attainable based on past performance. While collaboration can be helpful, the focus is on individual targets and ensuring everyone meets expectations.

• Performance management and OKRs address different aspects

OKRs help you set ambitious, long-term goals for the entire team or company. These goals are meant to be audacious, stretching everyone to achieve something great.

Performance management, on the other hand, zooms in on the individual level. It focuses on setting clear, measurable goals for each employee, often tied to their specific role and past performance. 

Here, the focus is on the “how” – the specific actions individuals need to take to contribute to the broader goals.

• OKRs are based on brief cycles, whereas performance management is based on longer ones

OKRs are designed for agility. With OKRs, you set goals and track progress frequently, often in cycles as short as quarters. 

This allows for course correction and adaptation as needed. Performance management typically follows a longer cadence. 

Performance reviews often happen annually or biannually. These reviews assess overall performance against goals set at the beginning of the cycle.

• OKRs are visible, whereas performance management is not

OKRs are all about transparency. OKRs are typically public within teams and departments, fostering a sense of shared purpose and accountability. 

Everyone can see the big goals and track progress together. On the other hand, performance management often involves a more private approach. 

Goals and evaluations might be more confidential and focused on individual strengths and weaknesses. While feedback discussions are crucial, they typically happen on a one-on-one basis.

Conclusion

OKR performance management isn’t just a new system; it’s a shift in mindset. It’s about moving from a rigid, checklist-based approach to a culture of continuous improvement and shared accountability.

Need help with change management and performance management adoption in your team? Consider working with our Performance Management Consultant.

We can guide you through the process, address any challenges, and ensure your team thrives in this goal-oriented environment.

Frequently Asked Questions

• What is OKR performance management?

OKR performance management combines goal-setting with regular check-ins to track progress on both individual and company objectives. It helps ensure everyone’s work aligns with bigger goals.

• How do we measure performance with OKRs?

With OKRs, you don’t just check off goals. You track progress on “key results” with a scale or specific metrics. This shows how close you’re getting to achieving the bigger objectives.

• What is the difference between performance goals and OKRs?

Performance goals are individual targets, while OKRs (Objectives and Key Results) are bigger goals broken down into measurable steps. They show how individual work contributes to the overall company vision.

• What is OKR performance review?

An OKR performance review uses your OKR progress (both individual and team) to discuss your contributions and identify areas for development. It focuses on learning and growth alongside achieving goals.