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Outperformed performance management?

Companies are drawn away from the classic assessment. An option for agile targeting is the OKR approach.

Outperformed performance management?

Can your corporate vision be implemented with the existing performance management? We guide you from the assessment system via the classic waterfall model to the agile OKR. So much in advance: it is incredibly simple and surprisingly challenging.

from Philippe Dutkiewicz & Robin Stahel

For 60 years, businesses have been doing pretty well with MBO, performance management and 360 degree evaluations. Indeed, plenty have been and still are successful with these approaches. But something that many managers have not yet noticed is that, in parallel to the evolution of performance management, there has been a minor revolution among employees. While employees have had enough of being judged, the judging system continues to be ‘improved’. The automobile industry is experiencing something similar: over 100 years, the combustion engine has been gradually optimised. But who still wants to buy combustors today?

Managers and HR teams should now ask themselves:

  • how can thinking in yearly cycles possibly still make sense today?
  • What employee now wants to be judged by a superior that has no idea what they actually do?
  • What company wants to rely on employees that need to be developed rather than wanting to develop themselves?
  • Who genuinely believes today that good employees can be motivated with a bonus alone?

The early bird catches the worm

When it comes to product development, most companies have recognised that the classic waterfall models are slow, expensive and inefficient. That’s why there probably isn’t one company today that can do without agile project methods if they want to stay on the ball. In the technology sector, nobody can afford to be slow anymore. You could say, ‘the early bird catches the worm’. Companies that took their time simply don’t exist anymore. You can learn a lot from those who are no longer with us. The biggest point of leverage to change things in an organisation has passed many of us by: setting good targets. The best thing about this one is that it’s not just anywhere, it’s in HR.

Most of these companies use a concept that’s fascinatingly simple yet incredibly challenging to implement. It’s called OKR, or objectives & key results. It was Andy Grove who first derived it from the classic MBO process and introduced it at Intel. The most successful companies in the world have come up with this concept: Amazon, LinkedIn, The Bill and Melinda Gates Foundation, Intel and Google.

Complete transparency, clear objectives and key results

‘Objectives and key results’ is almost a synonym for ‘agile performance management’. The idea behind it? A maximum of three annual targets are set based on the company’s vision. At the start of each quarter, each team considers together what objectives can best contribute to the annual targets over the next 3 months. This objective doesn’t have to be measurable. It’s much more important that it’s formulated in a way that’s inspiring, motivating and action-orientated. For each objective, the team then comes up with three to four different key results where the degree of achievement can be measured. The teams then measure if they are moving in the right direction on a weekly basis. The specific, realistic and aggressively formulated key results must be significant to the objective and ideally quickly verifiable. Complete transparency is key, so everyone can see everything. This leads to focus, mutual alignment and motivation through real impact. John Doerr explains this best: Link.

Can this idea be quickly and easily scaled through the whole company? No.

Does it require immediate transformation? No.

Can we begin on a small scale and with little effort? Absolutely.

In the spirit of design thinking, it makes sense to begin OKRs with a small prototype. You don’t even need a tool. If in doubt, a pen, paper and someone that knows the company well and is willing to wear the hat is all you need to begin with.

You need assistance? Find out more about our consulting services for agile performance management and OKR.

Published: 5. February 2020

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