February 26, 2021

Why to Keep OKRs in Business Separate from Performance Reviews?

schedule 3 min
Why to Keep OKRs in Business Separate from Performance Reviews?

Annual performance reviews determine how well employees match their skills to fit into their pertinent job roles. The emphasis is on driving workforce performance, understanding their career aspirations, and making compensation decisions. Many organizations try to link performance reviews with Objectives and Key Results (OKRs) to yield better business outcomes. Performance reviews evaluate employee progress and compensation. On the other hand, OKRs in business motivate employees to set realistic goals, achieve measurable outcomes, and unlock the overall performance impact.

There are several reasons why organizations should delink objectives and key results from compensation. There may be many problems that organizations may face when OKRs in business are linked to performance reviews including-

  • Unusually Modest and Unexciting Objectives
    Companies implement the OKR framework to set realistic and ambitious goals. Managers encourage their teams to set stretch goals that are beyond what is achievable. Employees look for innovative ways to meet their intended targets in the required timeframe. If employees fail to hit their targets, they set lower goals next time that are easier to attain and reduce the risk. Ultimately, employees would end up creating ineffective OKRs- just to get their salary and other compensations. So, OKRs should not be linked to performance reviews as these lead to understated objectives that fail to boost employee performance and lower employee morale.
  • Also Read: Unlock Benefits of OKR Framework for Large & Small Companies

  • Focus on Output, not the Outcome
    Organizations implement objectives and key results framework to set common business goals, align goals to different teams, and focus on the outcomes. But when OKRs in business are associated with performance appraisals, they are cascaded down to individuals to make reviews easy. Managing a lot of OKRs for every employee becomes a daunting task. Therefore, OKRs created at the individual/team level should focus on how to achieve the intended outcomes and unlock the potential.
  • Overstated Achievements, not Linked to Business Targets
    When employees lower their targets and set simplistic goals, they still need to justify their performance and contribution towards the company’s success. This results in making employees overstate their accomplishments and contributions in taking the company forward. Ultimately, employees fail to focus on their goals, which affects their performance and overall productivity at work.

Also Read: OKRs in Business: Good OKRs Vs Bad OKRs

Besides, linking compensation to goal achievements imbibes an unhealthy competition within a team, that lead to working in silos and lack of collaboration. OKRs in business is all about the company’s goals that need to be achieved and the outcomes to be measured. On the contrary, performance reviews are about evaluating performance and compensations. You should keep OKRs and performance reviews separate from each other so that employees can focus on how to improve their performance, develop new skills, and boost the overall impact on the business. So, plan your performance reviews accordingly without affecting the OKRs that inspire you to focus, collaborate, perform, and achieve.

Do you want to set effective goals and manage the performance of your employees? Unlock:OKR is the perfect tool to help your organization meet its targets without linking them to performance reviews. The powerful OKR framework is implemented to set shared business goals, focus on priorities, drive team collaboration, and attain measurable outcomes. To know more about the features and benefits of Unlock:OKR, request a Free Demo.