If you’re using OKRs to measure your company and team performance, you might be considering applying them to individual employee performance as well. Why not apply them at every level and reward individuals with compensation for reaching goals? In theory, it sounds like a good idea, but in practice, it doesn’t work so well.
OKRs can keep your company aligned and unite teams with a sense of purpose. But rewarding individuals with compensation related to OKRs breeds unhealthy competition and also motivates teams and individuals to set low goals that they’re sure they can attain.
OKRs should only be one aspect of employee performance appraisal, not a replacement for other HR tools. However, using an app to see OKRs as a whole and how they’re connected can show employees how they’re contributing to the company in a meaningful way.
Let’s look at some of the problems with using OKRs for employee performance appraisal and how you can use OKRs to encourage your employees to reach their full potential.
3 Problems with Using OKRs to Measure Employee Performance
Linking Key Results with Compensation
One of the most common problems with using OKRs for performance appraisal is linking key results with compensation. OKRs are often set bi-directionally, with teams setting key results for themselves. These may be broken down further into initiatives, which would be tasks assigned to individuals.
If team members know their compensation will be affected if they don’t reach certain key results or complete certain tasks, they’ll intentionally only set goals they’re sure they can attain. This is the opposite of what the OKR system aims to achieve. OKRs are big, meaningful goals for teams to work towards together. When compensation is introduced, that instead becomes the main motivation.
Instigates Competition Instead of Teamwork
When individuals feel their bonuses and chance at promotion are attached to certain tasks, they’ll be motivated to prove that their individual contributions are more valuable than those of others on the team. Team members will be less transparent with one another and conflicts may arise.
Key results to reach as a team must be a team effort; each member should do their tasks to help the whole team, not to get credit in a competition.
Misalignment Between Individual and Company Goals
To avoid team conflict, some companies set separate, individual OKRs for employee evaluation. However, this is still not ideal because key results are numbers based. They focus on output, rather than outcome.
When teams work toward an objective, they know that their number-based results are part of something bigger. For individuals, it’s different. Connecting individual goals to the company objective becomes overly complicated, especially in a large company. On the other hand, when individuals set OKRs for themselves, they again tend to aim small when they know it’s for performance evaluation.
Using OKRs to Unleash Your Employees’ Full Potential
OKRs can still have a place in employee performance evaluation, as long as they are only a small part of it. They shouldn’t be used as a checklist of requirements for bonuses or compensation, but they can indicate how well employees collaborate and encourage them to aim high. If you’re tracking OKRs in Jira, it’s easy to evaluate all of them from a certain period to gauge overall progress.
Encourage High Goals and Innovation
OKRs boost performance as a whole because the objectives provide a sense of purpose. When teams set key results, they take ownership of their achievements rather than just following tasks set for them. Stretch goals should be encouraged, and teams shouldn’t fear failure. If you’re always hitting every goal, you’re not aiming high enough. An OKR app will show you what percentage of an objective or key result is complete. For stretch goals, aim for about 70% achievement.
Look at How Employees Have Contributed to Company Goals
When evaluating performance, look at how employees have contributed to the company objectives. Do they show an understanding of the company mission? Have they set ambitious initiatives? When considering completion of initiatives, evaluate the amount and quality of effort involved, not just whether it was completed. Again, use 70% as a favorable result for an ambitious initiative. An employee who’s completed 70% of a stretch goal might be more deserving of commendation than one who did 100% of an easy one.
Reward Collaboration Skills
If everyone on a team has contributed significantly over a period, they should be recognized for their collaboration. Monitor which key results the teams have contributed to. If you’re tracking OKRs using a Jira app, you can see all the issues that have contributed to each key result. While compensation should not be directly linked to single key results, OKRs as a whole still serve as a measure of consistently high-performing teams.
Using OKR for Jira to Track and Encourage Achievement
If your employees are working in Jira, the best way to get an overall view of certain aspects of their performance is with a Jira app. OKR for Jira allows you to view all the OKRs set over any period of time and understand how they’re connected.
Since key results should be a team effort, you can use Jira to link multiple issues to one key result. When you view the issues, you can see which key results are connected to them. Then you can see how each team member’s tasks are contributing to the overall results. OKR for Jira even has a feature that allows you to filter results by the teams that are working on them. That way, you can identify how each team is making progress toward OKRs on different levels.
You can monitor the percentage complete in the app, while taking into account how difficult the goal is. Remember not to expect 100% for all of them!
To give employees a greater sense of ownership of the OKRs, encourage them to add updates on their progress. In OKR for Jira, in addition to making status updates, team members can add comments with more detailed explanations of their progress. Comments also give managers and HR a greater understanding of how teams have contributed beyond just numbers.
Employee performance evaluation shouldn’t be completely automated or measured by numbers because there are so many factors to consider.
OKRs only show you part of the picture; using a tool like OKR for Jira makes that part of the picture clearer.
OKR for Jira is free to try for 30 days. Try it now and encourage your employees to set high goals together!