Are OKRs The New Performance Reviews?

Performance Management was born out of the wartime ranking system, which became the most sensible way of quickly organising a large number of people when the industrial revolution rolled around. But can is this old system versatile enough to adapt to the Fourth or even Fifth Industrial Revolution?

Are performance reviews dead?

Performance reviews have a pretty bad rap in the world of work, and it’s easy to understand why. Performance reviews are used by employers to “manage people out” by making their work lives so impossible that they simply have no reason left to stay. Performance reviews also offer managers a process to hide behind, leaving them little room to take real accountability for the performance of their subordinates.

Whilst I agree that there is still room for performance reviews, done well, I think it’s time for a reframe. Performance management, when implemented for the purpose of employee growth supported by regular check-ins, can certainly work. Still, when you consider that even the use of the word “feedback” sends most people into a state of complete panic, performance management can no longer be served up in the form of a feedback sandwich.

Why performance reviews fail

Now, the problem of being sent into a state of complete and utter panic has a natural effect on our brains. Broadly speaking, our brain has two main principles around which we organise any piece of information:

1. To move away from the threat
2. To move towards reward

Feedback conversations tend to activate the threat response, and in this state, the brain mobilises the body to run. Blood moves away from the pre-frontal cortex and toward the limbs, and the supportive hormones activate to get moving. And that’s the opposite of what we want to achieve. Instead, we want to keep the front brain activated and spreading all the good hormones around that lead to more creative, whole-brain thinking. To do that, employees need to feel that they are operating in a safe space and can implicitly trust their managers and the process.

So, what is working?

Implementing a pull strategy

Research suggests that turning the tables on feedback where the employee actively seeks it out primes the employee for a more positive reception of that feedback. In early 2018, Microsoft worked with the NeuroLeadership Institute to turn the model on its head by empowering employees to ask for feedback instead of waiting in dread to receive it. In this way, feedback is framed as a positive thing from which one can take on board and learn. Practising such renders it easier to have bigger, more complex conversations with openness and receptivity.

Receiving feedback from a growth mindset

Carol Dweck initially identified a growth mindset and essentially spoke to a person’s capability to see themselves as a changing entity capable of learning and growing versus a fixed entity. When employees and managers approach feedback from a growth mindset, challenges are more likely to be viewed as learning experiences. People’s views of each other can be in a state of flux; therefore, employees are less likely to be defined by their managers as the sum of their mistakes, and vice versa.

Objectives and Key Results (OKRs)

Objectives and Key Results is a system of goal setting and management that is increasingly being used in the software world; for example, Google has built their management framework around OKRs. They are reviewed quarterly and are not linked to a financial reward, like other performance measures. As an example:

• O: Launch website for my new consulting business
• KR1: Research and buy the best available domain name by July 1
• KR2: Choose and implement the best content management system by July 10
• KR3: Publish the first blog post by August

How OKRs work

1. Overarching objectives are set by the organisation that speaks to the areas that need improvement
2. With that context in mind, cohorts can develop their team-specific OKRs that address their functional area
3. Team-specific OKRs filter down to the individual

Take a deep dive into OKRs here and here.

The beauty of OKRs is their simplicity and the autonomy they provide. When correctly used, they can super-charge high performing teams and empower individuals to own the improvements of which they are the custodian. As far as old-school performance reviews go, and from the angle of neuroscience, giving a person autonomy in the process is the way to go. It is more likely to stimulate the executive functions in the brain responsible for whole-brain creative thinking and insight, exactly where we want people to be when they’re in work mode.