Last updated 17 June 2022 ·
Over the past few years, management strategies and theories have changed significantly as we’ve learned more about how to improve the performance of our employees. One strategy that’s been popular in recent years is the Objectives and Key Results approach to performance management, also known as OKRs. Anyone can use this goal-setting framework to optimise their performance management cycle and improve results. Read on to learn about OKRs and how you can integrate them into your performance management process!
What is the Performance Management Cycle?
The performance management cycle forms part of the performance management process and consists of four stages:
- Planning: Setting SMART goals
- Monitoring: Tracking progress, performance and achievements
- Reviewing: Evaluating the process as you go, mitigating obstacles
- Rewarding: Giving recognition and reward for high performance
A performance management cycle is a valuable tool for managing individual and team performance, and yet it is often not implemented effectively in practice. Why? Two reasons: steps are skipped or not done consistently enough, and feedback on how to make it effective comes too late. In many organisations, two of these four stages are rarely addressed. If you want to optimise your performance management cycle and reap its benefits, don’t skip any steps! That way, you can get maximum value from your efforts.
The benefits of applying a performance management cycle include higher employee engagement, motivation and productivity as employees are clear of their expected output and allowed to continuously improve the process as they work hard to achieve that.
What are OKRs?
OKRs, Objectives and Key Results were made famous by John Doerr, a partner at VC firm Kleiner Perkins Caufield & Byers. They are used by some of the most successful companies in Silicon Valley and thousands of other companies worldwide. And it’s not hard to see why: when used correctly, they allow you to track your goals more effectively and ensure that your team members take ownership of their roles and deliver measurable results.
How do these work together?
With the performance management cycle, organisations can measure and monitor employee performance, assess team alignment and work toward OKR objectives. OKRs are great for setting priorities and keeping track of progress. This is a vital part of the performance management cycle because they create a strategy for business success by focusing on goal-setting, teams and high-level results.
OKRs have become increasingly popular over recent years as more companies have adopted them into their organisational strategies. Because OKRs allow businesses to set goals in a quantifiable way that drives focus, growth and collaboration, they can complement an existing performance management cycle to improve its overall effectiveness.
Key metrics to measure success
Tracking metrics for OKRs and performance management is as crucial as setting clear objectives and key results. The best performance management cycle will align closely with a business’s strategic goals; these metrics need to be updated yearly to stay aligned. Some organisations create a separate list of performance indicators for quarterly OKRs - but we find it best to limit yourself to about five critical measures for both cycles. These measures could include revenue, cost savings or engagement scores. Anything that can tell you how well you perform against an objective or key result counts as a success metric. Visit our blog focusing on OKR examples to help you get started for more on this.
How to optimise these for high performance
When it comes to performance management, one of the most valuable things you can do is ensure all your OKRs, objectives and key results and KPIs; key performance metrics are related to the business’s overall success. This means using OKRs to develop your metrics and getting clear on the desired outcomes that your KPIs help achieve. The closer these links are, the more effective each will be in driving business success and increasing overall performance. How? By linking your individual goals to company-wide objectives and by establishing a clear connection between what’s expected from you and the results you’re expected to deliver. OKRs help make sure everyone involved understands their role in achieving those results. In addition, they make sure everyone knows how their work contributes to company-wide success.
To get started with OKRs in your business, download The OKR Builder™ today. It contains a step-by-step guide on how to write compelling OKRs that cascade perfectly throughout all levels of your business.
