The world of work is changing rapidly, leading to many companies moving away from annual review cycles, replacing them with something more flexible, regular and suited to today’s fast-paced and ultra competitive business world.
In recent years companies such as Accenture, Gap and GE have all switched to continuous performance appraisals as part of their employee engagement strategies. What they all have in common is that reviews are now:
- Focused on immediate and planned activities.
- Decoupled from pay rises.
- More frequent, and based on the work that someone is actually doing. For example, consulting companies typically conduct reviews at the end of every project, or at key points within them.
- Focused on the employee’s actual role and development.
The aim is to make reviews more relevant and employees more engaged. To achieve this many companies are adopting a methodology that has already been used extensively at tech giants such as Google and Intel. Called Objectives and Key Results (OKRs), it aims to simplify the review process, connecting personal, team and corporate goals in a measurable way and ensuring that everyone moves in the right direction together. According to Google setting challenging and specific goals through OKR enhances employee engagement when attaining goals, while helping them achieve things that they didn’t previously think possible.
What do OKRs involve?
OKRs are based around two simple questions:
- Where do I want to go?
- How will I pace myself to see if I am getting there?
Answering the first question provides the objective, while the second delivers the milestones (or key results) on the way to achieving it. Normally, each employee has between 3-5 objectives, which should be SMART, yet ambitious.
There are normally 3-4 key, quantifiable results under each objective. Importantly, all of these results are measured numerically on a scale, so that it is clear how close the employee is to achieving it. So, an objective of “increase revenue by X% by 31 December” could be broken down into key results such as “Win XX new clients by 30 June”. Language is clear, unambiguous, tangible and agreed by both manager and employee.
A further advantage of OKRs is that they are public, meaning that individuals understand what is expected of them, and the wider company knows what people are focusing on. This helps ensure that they deliver clear organisational value, rather than simply revolving around achieving business as usual.
Due to their tangible nature, OKRs naturally link themselves to more continual performance appraisals. Many organisations set weekly meetings to check in and see how employees are progressing – a vital opportunity to give and receive continuous feedback. The aim of these meetings is to focus on driving improvements towards achieving the goals, as opposed to the often confrontational nature of traditional employee reviews. According to Laszlo Bock, Senior Vice President of People Operations at Google, employees want to be evaluated because they want to grow and eventually become the best at their job.
What are the benefits?
As a process, OKRs are simple to set up, and there are plenty of materials available to help companies implement them. They deliver six key benefits
- Simplicity and clarity – it is clear and obvious what an employee is expected to be doing, and what their current progress is.
- Continuous appraisal – check ins provide frequent feedback opportunities, for both staff and managers.
- Focus – activities revolve around what the organisation and individual sees as important, enabling corporate and personal development.
- Measurable – staff and managers can see what has been achieved – and what needs to be worked on.
- Easy to analyse – given their numeric nature, OKRs can be analysed at an individual, team, departmental or company-wide level, giving vital data on overall organisational progress.
- Open – as objectives are public and shared, the whole company knows what each employee is aiming to achieve.
As companies increasingly move away from annual employee reviews, they need a system that combines simplicity, clarity and ease of measurement, helping staff to improve their performance and the organisation to achieve its objectives. Objectives and Key Results deliver all of these benefits, meaning that any organisation looking at continuous appraisal should investigate how they could help them succeed in boosting engagement and overall corporate performance.