Continuous Performance Management: implementing OKRs in day-to-day management

This second post on Continuous Performance Management and OKRs, aka Objectives and Key Results will focus on 2 aspects:

• How culture should evolved to transparency and psychological safety as a prerequisite to deployment of OKRs.
• How to integrate OKRs in the day-to-day management called in the OKRs field Continuous Performance Management.

What changes in culture come with the deployment of OKRs?

When a company is not prepared for total openness, collaboration and purpose, when psychological safety is not the rule, then transformation of culture is required before OKRs be implemented.

Indeed, in Project Aristotle, an internal Google study around 200 teams, outstanding performance was correlated to 5 principles supported by the enclosed questions:

Further, what are the other prerequisites for Continuous Performance Management in addition to a compliant culture?

Continuous Performance Management framework has 3 requirements:

• Firstly, executive support.
• Secondly, investment in training for managers and leaders to deliver effective and coaching oriented management.
• At last, clarity on the company objectives and how they align with employee priorities. Truly, this one is covered by the full deployment of OKRs.

What are the benefits of the Continuous Performance Management?

In the top quartile in terms of financial performance, more than 50% of companies review their objectives monthly. On the contrary, their are only 25% of them with an annual review.

Furthermore, regular one-to-one between manager and employees boosts commitment almost by 3 times and increases performance by 40%. Indeed, regular exchanges around objectives build trust, purpose and recognition. They also enable valuable support from the manager.

At last, by the flow dialog, prevents from the extreme scenario but unfortunately still happening in some companies: when employees do not know where they stand in terms of evaluation before the annual performance review.

How management evolves with OKRs? The Continuous Performance Management in detail

Continuous Performance Management supports the new approach coming with OKRs. Indeed, it is a continuous, holistic and forward-looking dialogue between managers and managees, as opposed to the traditional annual performance review.

It is structured over 3 parts:

Conversation

Firstly, conversation is an open and rich information exchange between the manager and the managee, focused on fostering performance.

Feedback

Secondly, feedback expected here is a bidirectional or networked communication, between peers and with managers, to evaluate progress and steer continuous improvement.

Recognition

Thirdly, recognition is the appreciation to meriting contributors for their work whatever their importance. To illustrate the impact, companies with a high-recognition culture have 30% lower voluntary turnover than the ones with a poor culture on this dimension.

Here are some options to support recognition:

• Tie recognition to company’s objectives and values.
• Make recognition frequent and achievable: stress smaller accomplishments, like extra effort to meet a deadline or all the little things a manager may take for granted.
• Share recognition stories: newsletters or company blogs can provide the story behind the accomplishment, giving more meaning to the recognition.
• Peer-to-peer recognition: when employee achievements are consistently recognized by peers, appreciation end up being part of the culture.
• Establish clear criteria:
  • Recognize employees for actions and results: completion of special projects, achievement of company objectives, illustrations of the company’s values.
  • Switch from “Employee of the Month” to “Achievement of the Month.”

Note that Continuous Performance Management and OKRs should be separated from annual performance review and related compensation with both raises and bonuses.

5 critical areas of conversation between manager and managees for Continuous Performance Management

• Objectives setting and thinking to set the employee’s OKRs for the coming cycle. The discussion focuses on how best to align individual objectives and key results with company’s priorities.
• Ongoing progress updates, the brief and data-driven check-ins on the employee’s real-time progress, with problem solving when required.
• Two-way coaching, to help employees reach their potential and managers do a better job.
• Career growth, to develop skills, identify growth opportunities and develop employees’ vision of their future in the company.
• At last, lightweight performance reviews, a feedback mechanism to gather inputs and summarize what the employee has accomplished since the last meeting, in the context of the company’s needs. As explained above, this review is separate from the employee’s annual compensation/bonus review.

5 illustrative questions for Continuous Performance Management

• What are you working on?
• How are you doing? And how are your OKRs moving?
• Is there anything impeding your work?
• How can I help you being more successful?
• How do you need to grow to achieve your career goals?

Annual performance review

Annual performance review is a backward-looking assessment, usually held at the end of the year.

Indeed, it defines compensation based for instance on the following input from the employees:

• Firstly, their performance
• Secondly, their impact on the business
• Thirdly, the relative scarcity of their skills
• Finally, the market conditions

What’s next? Learn more about OKRs and discover Strategy and Competition

Read my first post explaining OKRs if not done yet.

Review my other posts about Strategy that is the prerequisite to OKRs and Competition that is one of the factors that determine Strategy.

Check also my posts about Agile at Scale and how the Strategy and the OKRs are cascaded and implemented through Agile at Scale Project Portfolio Management and at the level of a Tribe with the Product Management Team (PMT).

Do you want to learn more about the Continuous Performance Management? Here are some valuable references

Some posts:

• A post from the website Clear Review
• Another post from the website Work Human
• At last, a post from the Gallup study about the limitations around the traditional annual performance review and the value of Continuous Performance Management

Reference books about OKRs:

• The excellent book from John Doerr, Measure What Matters
• Andy Grove’s book, High Output Management