#PP Q&A: How is your performance?
How can I make performance reviews and OKRs work?
I've had a few questions asked of me since starting the post up again (as well as things from colleagues and random strangers interested in my views). So, I thought I'd share with the community.
Mike, why don’t performance reviews work?
We used to do them annually, then half-yearly. We’re about to start making the quarterly but I’m not convinced this will work. People don’t seem to be engaged in them. We’ve tried KPIs and OKRs, but by the time we get to the performance reviews, people are scrambling around trying to show that they’ve achieved their goals when they haven’t. Obviously I don’t think people have been sitting around looking at YouTube videos of Ariana Grande, but there’s a disconnect between what they do and what they’re measured on. There are such tenuous links between what they've actually done and the measurements. What can I do? - Lisa P.
Because you're focusing on the wrong things.
Lisa, this is quite common, there’s a probably a few reasons why this isn’t working. Firstly, are the OKRs aligned to the company strategy? Most people fail with OKRs because they treat them as KPIs, which they’re definitely not. OKRs need to start from the top and feed down. This is key in most things; if your people don't understand how what they're working on is helping deliver on company strategy, it becomes harder to be engaged and enthused about it. Are your OKRs goal based or prescriptive? If you're setting tasks and not outcomes people, again, won't be engaged. Set the outcomes you want to see. For example "Achieve 8% increase in sales" is an outcome, but "Setup sales funnel to achieve 8% increase" is a task. You want people to come up with their own solutions for achieving the sales increase. You might be surprised. I've always said "Hire good people, then get out of their way.".
Secondly, and this is one I see a lot, do your people know (or assume) that their performance is tied to their pay? This is a big issue because, let's be frank here, they usually aren't. Unless you have a unlimited pot of money, it's unlikely to be the case that a pay rise will be driven by performance. Usually, a department will have a finite pot of money they have to share amongst the whole team. I've never seen anyone award this based on performance, it's almost always based on things like keeping the key players incentivised, adjustments for diversity or simply people complaining they're not paid enough. Be honest about this, tell your staff that their performance isn't linked to their pay. The thing is, if people do believe it's linked, they'll do whatever they can to hit their targets even if their targets turn out to be wrong. You really want your people to know they should be doing whatever they can to deliver on company strategy and their pay will be influenced by other measures. It'll free them up to think creatively and not "What can I do that will lead to a big pay rise?"
Finally, timing is always an issue. We do these things regularly; quarterly, yearly, monthly. Try setting an end date for an OKR, then having the review then - it doesn't need to be at a regular time. Say you're still setting a sales target, set a date at some reasonable time in the future, then do the performance review then, based solely on the outcome of the OKR. Additionally, you can encourage your people to ask for a review. If they achieve their OKR early, get them to trigger the review. It'll save on the painful review cycle, mass emails and lack of focus on the work (because everyone is scrambling trying to prove they've hit their goals).
Got a burning HR question you want my errant view on? Drop me a line on mike@hashtagpeople.co.uk and I'll do my best to not be wrong. It's just my opinion though and I'm not always right. Although I try to be!