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Written by Pete Wilkinson

Last updated 1 April 2022 ·

OKRs and Performance Management: How do they work together?

OKRs, objectives and key results have been around since the 1960s but have only recently become mainstream within businesses of all sizes and in various industries across the globe. But what exactly are OKRs? And how can they be used alongside other performance management approaches to help improve productivity and achieve better results faster?

This article explains how OKRs work and how they can help your business perform better by providing a highly effective performance management structure. We’ve also included some tips on writing and tracking your OKRs for better performance management to get the most out of them!

What are OKRs?

OKRs, objectives and key results are a practical goal-setting framework that helps businesses structure their goals and cascade strategic priorities throughout all teams. First used by Intel to help grow their business successfully, OKRs are used by Google, Facebook, Spotify, Airbnb and many other tech companies that have achieved transformational growth. It’s easy to see why these companies use OKRs - successful implementation leads to significant growth and increases performance.

Benefits for Leadership

The benefits of using OKRs in any business include improved performance through practical goal setting, better alignment between individual performance and organisational goals, greater accountability amongst those achieving those goals and faster, better-informed decision making. By defining clear targets and communicating exactly what you want to achieve as a business, employees at all levels will be able to better focus their efforts on getting there.

OKRs and other performance management tools have their place, but not all of them will work for every business. When setting OKRs for your organisation, one of your priorities should be choosing a goal-setting methodology that benefits you as a leader. OKRs are popular with many leaders because they offer long-term planning and progress tracking in an easy-to-use format, allowing leaders to spend less time on administrative tasks and more time managing their teams and growing their business.

Benefits for Employees

OKRs allow employees at all levels to visualise exactly how their hard work impacts the overall business performance. They get to show off their skills and progress, and they can be easily recognised for their achievements. Employees become more aware of the bigger picture in terms of organisational goals and can, in some cases, be invited to contribute their ideas as to how best they achieve these. This sense of inclusion increases engagement and motivates employees to work harder. OKRs empower employees to think like leaders and act like owners of their contribution and involvement. However, OKRs should be challenging but achievable. If they become unrealistic or too hard to achieve, your employee will not try as hard because it seems impossible to them.

Streamlining Performance Management with OKRs

OKRs, objectives and key results are a goal-setting process, but it isn’t all about setting goals. OKRs are, at their core, a framework for performance management that allows companies to better structure their team’s activities toward the desired result. OKRs do more than just help teams set goals; they also act as a management tool for large groups of people by communicating company goals clearly to each member of an organisation. In addition, OKRs have a unique way of streamlining performance management compared to other goal-setting processes because they allow employees to know exactly what needs to be done to succeed in reaching those goals. As OKRs cascade throughout an organisation, employees may be given some degree of autonomy to choose how they achieve the objectives being cascaded down to them through creating their key results. Overall, OKRs provide clear direction from leadership teams and as a result, they can make better-informed decisions and spend less time deliberating the course of action.

Examples of OKRs and Performance Management in action

Fixed performance review dates are becoming a thing of the past. Instead, performance is monitored by a series of key results that are measurable, clear, and concise. Employees and managers can see exactly what needs to be accomplished within a set time period. There is less ambiguity with this planned approach because of its straightforward nature.

For example, if you have an objective to grow revenue by 10% by September, this would be broken down into five key results, each forming a specific task that needs to be completed to move you closer to reaching that objective. You know what your expectations are without reading through a long document with vague objectives or KPIs included.

Our award-winning 1-3-5® business planning methodology provides a unique structured way to set and cascade OKRs throughout an organisation. To get started using OKRs and the 1-3-5® in your business, download our free workbook - The OKR Builder™ today!

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