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Written by Pete Wilkinson

Last updated 18 March 2022 ·

OKRs and Performance Management: Is there a middle ground for business leaders?

Modern businesses have many different ways to approach progress monitoring and goal setting, which is why implementing positive change is tricky. Good leaders need to ensure that they’re choosing the right strategies and time is being spent effectively to create an ambitious culture geared towards growth.

This article considers two approaches, how they are similar and where they have significant differences that can be vital for a business looking into goal-setting options.

What are OKRs?

OKRs - objectives and key results are an impactful and popular goal-setting methodology. They help businesses and senior leaders manage and track corporate goals via critical measurables. Considered to be one of the most transparent and impactful goal-setting methodologies, OKRs can strengthen communication and provide a tight focus, alignment and accountability.

How do OKRs work?

A company, team or individual sets a series of core objectives that will allow them to deliver a specific outcome. Each objective is broken down into measurable outcomes, known as key results. Achieving all of these key results signifies the achievement of the main objective, delivering the overall outcome. It allows for strategic focus, core objectives, and crucial responsibilities to be cascaded through a business and for leaders and middle managers to track progress. An effective way to structure and cascade OKRs throughout a company is by using the award-winning 1-3-5® business planning methodology:

  • Set 1 x crystal-clear Vision for the business.
  • Create 3 x mission-critical objectives that are required to achieve that Vision.
  • Break down each of these Objectives into 5 x measurable Key Results that signify progress towards each objective.

OKRs work effectively to align the business vision and aspirations with the everyday work carried out by teams and individuals. Using OKR software can be very effective to establish the cascading nature of OKRs and maintain the strategic focus as core business priorities are filtered throughout all teams. One of the main advantages of using OKR software is being able to see in real-time how each team member is performing towards achieving the overall business vision, allowing progress towards what’s most important to be visible at all times.

What is Performance Management?

Like OKRs, performance management ensures the business is performing to the best of its ability and making good progress. The main difference relates to the structure and focus on individual efforts.

A performance management programme ensures that both employees and team leaders agree on expectations and objectives, however these can sometimes be viewed in isolation to the overall business vision. It’s thought that currently only around 50% of the active workforce strongly feels that they understand their employers’ expectations of them – a massive problem for leaders.

The difficulty is that performance management can, in some roles, present a grey area of confusion and misalignment if roles and responsibilities are not made 100% clear. Manually collecting data and performance evaluations can be time-consuming, making the 121 preparation process somewhat tedious and ill-informed. 121 meetings get delayed and disorganised, making them overall less efficient.

Is there a middle ground for business?

OKRs and performance management have similar intentions, and there are certainly overlapping features that can go hand-in-hand for any business.

Both OKRs and performance management programmes focus on the employees’ role within the wider business. Performance management is very much focused on the individual’s role in the progress, whilst OKRs align this focus and individual effort with the overall business Vision.

For the modern workplace, a combined offering may have many advantages. With some staff now working remotely with more flexible schedules, arranging 121s and maximising team performance is more important than ever. Alongside this, maintaining high-quality data based on individual input can be challenging. In this scenario, OKRs lead the way, providing huge benefits. Leaders monitor progress and performance aligned with what the business is trying to achieve rather than in isolation, according to the individual. OKRs allow for a more agile working style centred around achieving a specific outcome, rather than being overly concerned about the time spent or location of work being carried out.

OKRs provide a structured way to approach performance management and can, therefore, be used in collaboration. For example, within 121 meetings to help team leaders and middle managers identify progress. OKRs provide a clear picture of progress, performance and achievements at a team and individual level, allowing for recognition where it’s due. They can also be used to identify any inefficiencies or areas for development.

What’s the solution?

For most businesses, a hybrid solution will work perfectly. OKRs are outcome-focused and highly structured, providing visibility and transparency at all levels. Such benefits can facilitate effective performance management by providing results-based data that improve 121 meetings making them much more productive, focused and effective.

You can build your own set of OKRs with this free OKR builder to get started.

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