When you pay bonuses, can you get away from the annual performance appraisal process, and move towards OKRs?
What if performance appraisals were directly correlated to OKR achievement? I’m not here to suggest we throw out performance appraisals. Instead, I’m advocating that business and HR leaders look at this process in a different way. Rather than asking an employee how they did on their individual objectives, they should ask themselves how did I help my team achieve the impact of key results? This entails achieving the measurable success factors needed by the business, as opposed to achievement being predicated on expending effort delivering things. If the right things are delivered, they improve what was intended, e.g. reducing costs per transaction, retaining customers, increasing revenues, etc.
We aren’t interested in how much velocity a team achieved, or how much effort they put into achieving the impact, as effort does not translate into results: there is an educated guess at the planning stage of how one is to go about executing on a hypothesis that has the best probability of achieving an outcome that impacts on the OKR. People need to realise that there is no such thing as zero risk, so at some point you have to make an assumption and run with it, getting fast feedback every sprint.
If you aren’t working on OKRs they why are you there? Google, Microsoft, Goldman Sachs and Salesforce are amongst those who have found their business objectives are not going according to plan, so they are laying off people who are not helping them achieve the results. It pays to be watching how your firm is aligning to objective and making sure you are contributing.
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