Thread by @jboogie

How do we change the way we assess performance and still harness the benefits of OKRs?

A few thoughts on why performance management and OKRs are hard and what to do about it 🧵👇:

Problem: If we connect OKRs to financial rewards we risk stifling creativity and innovation due to low-ball key result targets. Teams will set targets they’re confident they’ll hit because it gets them a raise, a bonus or promotion.

Changing performance management criteria is hard. We have decades of historical inertia that reward production.

Another problem: production targets are binary. Your team either shipped "a thing" or they did not.

Binary targets are easy to measure.

And if something is easy to measure it's easy to manage.

Organizations can easily take a look at a team's output and assess if they produced "enough" code/features/products to warrant a reward.

So we find ourselves in a position where financial rewards incentivize mediocre output that doesn't necessarily provide any customer value while also having to rewrite decades-old performance criteria.

There's a 3rd problem: changing performance criteria for long-term employees effectively amounts to moving the goalposts for them after years of working towards the old rewards. The attrition & culture impact this can create is, at best, unpalatable to most HR departments.

So what do we do? Two things (at least):

1. Decouple OKRs from financial rewards
Using money/job titles to drive outcomes ensures your teams won't push too hard or *be* pushed too hard to innovate. Why risk a failed experiment when the safe thing will hit the target?

2. Reframe what being "good" or "successful" at your job means

Traditionallly success measured an individual's contribution to the production of a product. OKRs, a team-based goal setting approach, rewards collaboration, learning and team-wide success, not individual heroism.

Consider setting performance criteria that measures/rewards:

Learning - how many and what learning activities a team does

Evidence-based decision making - what criteria is used for every decision

"Closeness" to the customer - what are teams doing to stay close to the customer

Collaboration - how well are teams collaborating with each other and sharing knowledge

These are just a start. I'm not an HR expert but it's clear that these things have to change if we hope to build agile, responsive, customer-obsessed companies.

How else would you reframe and reward success on a team that works towards positively impacting customer behavior?

I write regularly about #OKR on my blog: jeffgothelf.com/blog and in my monthly newsletter. You should sign up for it here:

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