Some time ago, on an Internet workplace forum, an Internet practitioner posted a complaint: “Before coming to the company, I felt that working overtime was nothing, it was nothing more than leaving work at 10 o’clock. It’s okay to go home anyway. After I came to the company, why do I need I’m busy until 11:30, but I still have to follow the project at 1 am? I was thinking about coming to the company to work hard and raise my salary. This directly killed my career dream. Are there any pits in state-owned enterprises? I want to go. There are really too many things to do, OKR indicators are too big, almost pure business, no one pushes me, but OKR is there..."
Such complaints instantly aroused crowds and discussions among netizens. There are not a few people who hold the same views, and there are not a few who complain about OKR.
Why does OKR that emphasize employee growth make people so tired, and even arouse many complaints? Maybe too many people use OKR wrong! Although many companies are now vying to introduce OKR, they have used it as a tasteless one and slowly become a "KPI wearing an OKR coat."
In fact, OKR and KPI are two different dimensions. KPI is a performance management method, which is used to measure the work performance of employees. And OKR is a way to achieve goals.
For example, KPI is the dashboard of a car, which tells us how much fuel is left in the car. But OKR is a navigation software that can tell us how to get to the gas station.
Moreover, OKR and KPI are not an all-or-nothing relationship. They can be used together to become a golden partner.
How should OKR be formulated? How can we better motivate employees instead of letting employees complain? Today we will have a chat.
Editor | Xie Yuhang, Business Research Team of Chaos University
Guidance | Lee Haoran
This article is an excerpt from the original book by the business research team of Chaos University
"OKR Management Rules: Alibaba and Huawei Performance Management Practical Skills"
Author: Wang Hong Qianwu
Published by CITIC Press in June 2020
OKR and KPI are golden partners
1. OKR? KPI?
KPIs can indeed improve the work efficiency of employees to a certain extent, but in actual performance management, KPIs also have many drawbacks, which are mainly manifested in three aspects.
1. It is easy to cause employees to set goals that are easier to achieve in order to achieve the performance of the appraisal, and give up the pursuit of higher goals.
2. It is easy for employees to feel that the corporate system is cold, and everything is goal-oriented, instead of treating them as emotional people.
3. When the employee's goal is not consistent with the company's KPI, it is like letting the train drive in the wrong direction.
OKR is a method of setting goals. It should contain two parts: O (target) and KR (key results). Its standard structure is O+KRs. Among them, "O" answers the question of "what do I want to achieve"; while "KR" answers the question of "how to achieve the goal/how to measure whether the goal is completed". such as:
O: Improve product quality
KR1: sort out and improve the quality management system within half a year
KR2: Quarterly production staff skill assessment reaches 90%
KR3: Achieve two technological innovation projects every year
The biggest difference between OKR and KPI lies in thinking and logic.
The KPI's final score is directly linked to the completion indicators. The higher the completion of the target, the higher the score; OKR places more emphasis on unlocking the constraints and allowing employees to dare to do things they dare not do. In the OKR model, even if employees' OKR completion is not high, they can get high scores as long as they have made achievements and surpassed themselves.
2. KPI is equivalent to dashboard, OKR is equivalent to navigation software
In fact, OKR and KPI are golden partners. They can perform their duties, let KPI be responsible for the assessment, and let OKR be responsible for the process.
To use a medical analogy, KPI represents the cholesterol index that measures our health, but it does not tell us how to make our cholesterol index reach this level. At this time, we can use OKR to set a specific method for ourselves to improve the cholesterol index.
To use another analogy, KPI is like a car dashboard, which can tell us whether the car has enough gasoline. When the "instrument panel" tells us that the fuel is almost running out, OKR is our navigation software, which can guide us to the gas station.
In fact, OKRs include KPIs.
Suppose a company sets an OKR for increasing operating income:
O: Achieve a 40% increase in operating income at the end of the first quarter
KR1: 20% of new customers in the first quarter
KR2: Gross profit margin increased to 30% in the first quarter
In this OKR, "new customers" and "gross margin" are actually the KPIs of KR1 and KR2. This also means that in OKR, because KR must be quantified, KRs essentially include KPIs.
KPI and OKR are not opposites, but a pair of golden partners that can be combined. Compared with KPI, OKR can help us get rid of the status quo and lead us into an innovative and unknown field.
OKR, breaking the shackles of traditional performance management
What kind of dilemma does traditional performance management face? Why are more and more companies, such as Alibaba, Huawei, and Vanke using OKR? Can OKR really save managers who are being constrained by traditional performance management?
1. Disadvantages of traditional performance appraisal
Former Sony executive director Tian Wai Si Lang published an article "Performanceism ruins Sony". He emphasized that the reason why Sony has suffered losses for 4 consecutive years is precisely because performanceism has ruined Sony.
Tian Wai Si Lang wrote in the article: “Performance doctrine attempts to quantify people’s abilities in order to make evaluations. But in fact it cannot be done. Its biggest drawback is that it spoils the atmosphere in the company. The boss does not take his subordinates as having People with emotions look at it, but everything looks at the indicators and uses the "evaluative eyes" to examine the subordinates."
This shows the shortcomings of traditional performance appraisal:
Top-down target assignment
Lack of participation makes employees feel that they are just a pawn for managers to complete tasks. This situation will gradually increase with the expansion of the scale of the enterprise and the deepening of the organizational hierarchy.
Performance coaching is equivalent to progress monitoring
When managers pay too much attention to the work progress, once they find that the work of an employee is lagging behind, they will be strictly supervised and required to keep up with the progress by working overtime. As a result, employees will be under tremendous work pressure and take the completion of work progress as the first priority. They will blindly catch up with the progress and lack the knowledge and in-depth thinking of the work.
Performance compulsory distribution ratio
What is the principle of mandatory performance ratio? Simply put, it is to divide the performance of a team's internal employees into several levels, and set a certain ratio at each level.
In addition, there are relative evaluation principles. Managers rank the employees by comparing the work output of the employees in the team, and the performance of the employees in the front is better than the employees in the back. From this definition, we can see that when the principle of relative appraisal is adopted, the performance of employees is obtained through comparison. This means that employees do not need to work hard to do their best work, they only need to surpass another person and they will not be eliminated, and they will not focus on improving their personal capabilities.
In this regard, Microsoft's feelings are very profound.
Prior to 2013, Microsoft strictly implemented the compulsory performance distribution ratio and relative evaluation principles. The picture above reflects the internal situation of Microsoft at that time: each department held a gun at each other, hoping to win and the other party was eliminated. The entire enterprise is full of infighting.
At that time, regarding this assessment mode, Microsoft used a lifeboat as an image metaphor:
If you and 6 people are sailing in the sea on a boat, but the boat suddenly breaks down, you must escape with other people in a lifeboat. But the lifeboat is small and the number of people it can carry is limited, so you need to decide who to abandon. So you have to rank these 6 people, the one at the bottom is the one you don't want to escape together. Microsoft even regards this as a classic question for interviewing candidates, which shows how deeply the performance culture has influenced it.
It is precisely because of this that every employee has already walked on thin ice when he first entered Microsoft. In order to make themselves a lifeboat, everyone is committed to how to surpass others, rather than focusing on work. This is a period when Microsoft missed the Internet era, which was called "lost 10 years" by the outside world.
2. Six positive effects of OKR
Achieve a more flexible work style and break the constraints of bureaucracy
In essence, OKR advocates a bottom-up goal setting method. Under this model, employees tend to have more autonomy and can participate more fully in the formulation of team goals, and are more willing to achieve team goals. Goal and work hard.
In the OKR performance management model, each team of an enterprise has a certain OKR, which is the OKR that the team must complete after the enterprise strategy is decomposed. After communicating with the team, this part of OKR will be centrally stored on a public platform named OKR Bazaar. On this platform, employees can freely choose the OKR they are interested in to implement.
In this process, the supervisor responsible for managing the OKR on the platform will mainly be responsible for two aspects of work. One is OKR arbitration. If there are multiple people claiming the same OKR, the manager will prioritize the OKR to the employees who are highly prepared for implementation based on the employee's readiness. The second is OKR clearance. If an OKR is always unclaimed, then managers need to assign OKRs to specific employees based on the principle of free and busy to ensure that all OKRs are implemented and ultimately achieve organizational goals.
The OKRs placed in the OKR bazaar have been confirmed by the team. Those OKRs that are not confirmed are usually declared by employees to their supervisors, who then comprehensively control them according to the strategic direction of the company.
Generally speaking, as long as these uncertain goals are consistent with the team's strategy in the general direction, the supervisor will generally encourage employees to make some positive and beneficial explorations, because these explorations are likely to be the beginning of a big innovation.
The following picture can more intuitively feel the difference between traditional performance management and OKR performance management.
Compared with the traditional performance management model, the benefits of OKR are mainly reflected in the following two aspects.
The first is the transition from "I want to do it" to "I want to do it." OKR is not assigned by force, but employees take the initiative to claim it, which improves their autonomy and ownership to a certain extent.
The second is the flattening of organizational levels. From the employee's point of view, they only need to pay attention to the changes in the OKR market, which will make them think that the company seems to have only two structures, namely direct supervisors and employees. If a higher-level supervisor wants to dispatch tasks, he only needs to add an OKR to the OKR market, which is no different from the role of direct supervisor. Therefore, after OKR has been carried out for a period of time, team members will find that the supervisor does not need to spend too much time in complicated task coordination, but can use more time and energy for more meaningful and valuable work. In this way, the role of the supervisor has changed from a manager to a server.
Employees dare to challenge themselves
Usually, OKR is not effective in the initial stage of development, and initially only about 1/10 of the employees will take the initiative to set challenging goals. This is because, in the initial stage of introducing OKR, many employees still hold a wait-and-see attitude towards this change. However, with the continuous development of OKR, after employees gradually become familiar with and understand the performance management logic of OKR, their doubts will be dispelled. At this time, more and more employees are willing to set challenging goals. Statistics show that after the third cycle of OKR, the proportion of employees who dare to set challenging goals in the team will increase significantly, reaching an average of about 30%. This value will tend to stabilize in the later period.
Promotion of employee performance
The openness and transparency of OKRs allows employees to check the OKRs of all the company’s owners, including supervisors and surrounding colleagues. In the traditional performance model, employees generally only pay attention to the goals of their supervisors. This habit was also obvious in the initial stage of OKR development: Although they have been told that other people's OKRs are public, most employees will not actively check the OKRs of related colleagues. The main reason for this situation is that in the traditional performance management model, it is normal for employees to distrust each other, and they do not have the habit of checking other people's work goals and work plans.
However, with the continuous development of OKR, this situation will be well improved. Generally after two cycles, employees will gradually change their habits and start to pay attention to the OKRs of colleagues related to their work. The benefits of this transformation are mainly reflected in two aspects: on the one hand, employees have better understanding and cooperation; on the other hand, by consulting others’ OKRs, employees can also gain from others’ work Enlighten them so that they can be better qualified for their work.
Fairer performance evaluation
Under the traditional performance management model, managers generally assign relatively important tasks to employees who they believe are strong at work based on their own judgment, and assign less important tasks to employees with relatively insufficient abilities. When it comes to the stage of performance evaluation, those employees who are responsible for important tasks will naturally contribute more and have higher performance; those who are responsible for unimportant tasks will get lower performance because their contribution value is relatively small.
There is no doubt that such a distribution method is obviously unfair. OKR can well break this pattern of fixed allocation.
Improvement of organizational climate
Huawei once compared the organizational atmosphere of the OKR pilot team and the non-OKR pilot team. The results show that the overall scores of the OKR pilot teams in all dimensions are much higher than those of the non-OKR pilot teams, especially in the four dimensions: information transparency, growth and development, peripheral collaboration, and work autonomy. This also means that OKR is very helpful for improving the organizational atmosphere.
Leadership changes
Many supervisors said that OKR changed the atmosphere of the team, and at the same time changed the tree-like management method, adding more autonomy to employees; OKR simplifies many processes, so that the team’s goals can be changed according to the actual situation, and at the same time. Give employees the opportunity to adjust their goals. Through these we can find that managers have accepted the concepts of agility, autonomy, and openness advocated by OKR, and have fully experienced the benefits of OKR.
How to make OKR?
1. How to make O
(1) Develop a challenging O: 30% higher than the scope of ability, and reachable
Bill Campbell, the spiritual mentor of many business leaders in Silicon Valley, said, "If companies fail to innovate continuously, they will inevitably die-please note that I am talking about innovation, not repetition."
Conservative goals will only hinder innovation, while a seemingly bold and challenging goal is like a mountain waiting to be conquered. It is extremely tempting and can attract employees to innovate and work hard to conquer it. Lead them away from their comfort zone and constantly stimulate their potential.
(2) What kind of O is challenging O
Make people uncomfortable
A goal that can be called challenging must mean that it is difficult to execute. And such a goal generally does not make people feel comfortable. It will either expose our potential deficiencies or make us have to face problems that we are not willing to face.
Can't do it before
Since it is a challenging goal, it means that this goal has never been achieved in the past. Even if this goal is the work we do daily, it also means that this daily work has been given certain incremental requirements.
can be completed
Although this goal is difficult, uncomfortable, and impossible to achieve before, it must be achievable. This is because, when formulating OKRs, a very key principle is that the goals set must be practical and feasible, and remember not to set the goal as an unfinished "mirage". Once this goal is completed, our hearts will be filled with a sense of accomplishment and value.
2. How to make KR
If O answers the question of "what do I want to achieve", then KR answers the question of "how to achieve the goal/how to measure whether the goal is completed". The formulation of KR is also crucial.
Six practical skills for formulating KR
Write only the key items instead of listing the tasks item by item
Before formulating KR, we should first understand that KR is not a display tool for us to list all the tasks to show that our work is not easy. Its role is to determine the strategy and highlight the most important value drivers for the business. Therefore, we should focus our energy on KR that can make real progress in our goals.
Based on results, not tasks
Our purpose of setting KR is not to develop a task list, but to find out specific practices that can affect the goal.
For example, "email to target customers" or "meet new sales managers" are just tasks, not KRs. "Adding 30 opportunities for cooperation in the channel" is a KR, because it requires a certain amount of effort to achieve.
Use positive language to express
KR has a certain forward-looking nature and is generally set higher. When describing KR, the language must be positive, the more optimistic and positive the better. For example, "reducing the error rate of the entire book to 10%" is not as encouraging as "raising the word accuracy rate of the entire book to 90%". Only positive information can arouse everyone's enthusiasm and sense of commitment.
Keep it simple and clear
When describing KR, only the most critical part is written. The language needs to be plain, and it doesn't need to be too long, and it needs to be read and understood by people.
Consider all possibilities
When we choose KR, we must treat all factors with a practical attitude. People are not omnipotent, and we must remain open to the factors that may affect our goals.
Overconfidence may lead to bias.
For example, the management team of a fast food restaurant wants to improve profitability and customer satisfaction. Due to the lack of corresponding data, they take it for granted that the low customer satisfaction is affected by the employee turnover rate. As a result, the team took the employee turnover rate as a key metric, and invested a lot of energy and financial resources to reduce the employee turnover rate, but finally found that the turnover rate is not a key factor affecting customer satisfaction.
Be sure to appoint a responsible person
Just because OKR is not assigned by the leader, someone must bear KR. Employees who propose effective KRs are often employees who have a good understanding of the work content and have their own ideas. They understand the logic and difficulties better than their bosses, so they can undertake the design and implementation of the KR for the next quarter.
Every KR person in charge is like a product manager. He must be very clear about what needs to be delivered every quarter, so they need to formulate solutions and mobilize resources.
When a KR changes, the person in charge must re-evaluate the feasibility of the project. It is even necessary to convene group members to discuss, understand the reasons and possible impact on the future, or revise the current KR, or adjust the path to achieve the goal.
In the case of a serious lag, convening a group discussion may be considered a waste of time. In fact, from the overall operation of the project, the time spent is definitely worth it. Otherwise, let it develop, and the quarterly target is difficult to achieve. This requires the person in charge of KR to have communication and organization skills, and be able to initiate discussions and exchanges habitually.
However, the person in charge of KR is not the bearer of rewards and punishments, and the person in charge can be rotated so that everyone has the opportunity to perform.
KR cannot be a regular job
A social networking site is planning to launch an interactive mini game, and the IT department will use it as a KR to achieve O to increase user activity. Is this KR set reasonable? The answer is obviously no.
Because how much code is written every day and what function is written by a program, even if you have quantifiable data, it is meaningless. Therefore, KR cannot be a daily job, it must be challenging. Only setting a more challenging KR can bring better performance and higher work efficiency.
In addition, the higher the difficulty of KR completion, the more it can stimulate the creativity of team members, and it is more likely to concentrate the wisdom of the team and let everyone find their own way to find better solutions.
The same KR cannot be used for a long time
Generally, the operating cycle of OKR is a quarter, but there are indeed some cases where KR needs long-term efforts to see results. Such as brand influence, user reputation, employee satisfaction, etc., these can be considered as "healthcare" indicators. Although this kind of KR is valuable, it is difficult to support the rapid development of the enterprise or solve a practical problem within 3 months. Similar KRs do not need to be included in our OKR, because they not only have no reference value at all, but also affect our strategic focus on goals.
Setting KR also needs to clarify the logical relationship
KR is the most important indicator to achieve Goal O. Sometimes we seem to have a very competitive KR, but it can only be achieved under complicated conditions. For example, "propose a new product that can save 90% of fuel." This KR may require a lot of prerequisites. Is it to change to a hybrid of oil and electricity, or to reduce fuel consumption? Such KR is generally difficult to implement and requires further clarification of the premises.
KR should be quantified as much as possible
This quantification can be judged by multiple dimensions other than numbers, such as quality, time, cost, and evaluation.
For example, quality can be judged by quality standards such as ISO9001; time can be set as the time when the project is completed, or the node when the project is completed, calculated in days, weeks, months, quarters, and years; costs can be measured by how many The estimated budget is completed by completing the project; the evaluation can be the evaluation of the superior, or the evaluation of colleagues or customers.
It should be noted that no matter which dimension is used to quantify KR, we should try our best to be objective and fair. Sometimes, we will encounter situations where KR cannot be quantified at all. At this time, we should try to refine KR as much as possible. Simply put, we must split the work tasks, that is, to what extent and to what standard. , Who is mainly responsible, all this must be clarified.
KR's three views must be correct
There is a famous saying in the workplace that employees do what the boss evaluates. But sometimes too much pursuit of indicators will make employees do some unwise things that are detrimental to the company's future development.
There is a chain restaurant that often has a large amount of cooked food not sold out every day after get off work. In order to save costs, the company established a "drying" KR indicator for each store, that is, the restaurant is required from 11 pm to 12 pm Order no longer prepares cooked food without customers ordering.
Although on the surface, this KR seems to solve the problem of leftovers in the restaurant, customers who order at night are too slow to serve food, and they will not come. This is a good example of doing bad things with good intentions. A seemingly reasonable KR has led to bad consequences.
How to make OKR effective?
After the introduction of OKR, many companies still cannot abolish performance evaluation immediately due to the inertia of incentives.
For example, some companies use quarterly bonuses, annual bonuses, etc. to motivate employees to work better. At this time, in order to ensure the fairness and justice of these measures and make the incentives truly effective, companies usually need to rely on the past performance of employees.
So, how to use OKR to generate incentives for performance?
Pay attention to the mid-quarter review
As the saying goes, what is worse than bad news is late bad news. This sentence also applies to KR. If managers do not care about the progress of OKR in a quarter, and find that KR's score is not satisfactory until the end of the quarter, then the final result of the team must be bad. Therefore, it is best for managers to keep an eye on the progress of OKR at any time, so as to ensure that the final goal is achieved.
The most suitable OKR score should be between 0.6 and 0.7
OKR recommends scoring standards as follows:
1 point: (Perfect) The effect is far beyond expectations and rarely achieved.
0.7 points: (good) the effect is as expected.
0.3 points: (generally) the bottom line to achieve the effect.
0 points: no progress.
After a few quarters, a reasonable KR score should be between 0.6 and 0.7. If the score exceeds 0.7, it means that the goal itself is not challenging and fails to give full play to the team’s potential and talent advantages; if the score is less than 0.6, it means that the set goal may be too difficult for the team to achieve.
Continuously low scores can make team members lose confidence and doubt the concept of OKR. At this time, managers should communicate with team members in a timely manner and have in-depth discussions on the possibility of achieving goals.
Don't rate or rate objective O
Many companies pay too much attention to the achievement of goals in the process of implementing OKR. For example, in order to achieve goal O, all KR must be completed. This means that if a goal has 4 KRs, and the team has only completed three and one is not completed, then the goal is not considered complete. In fact, this approach is unreasonable. In many cases, employees have put in a lot of time and energy, but in the end they are told that the goal has not been completed. Too much focus on the achievement of the ultimate goal can easily lead to self-doubt and frustration among employees.
Therefore, we recommend that when scoring OKR, management does not need to score target O, but only needs to pay attention to the score and rating of KR.
Master the rhythm of "taking responsibility and celebrating success"
In the process of implementing OKR, how should we master the rhythm of "taking responsibility and celebrating"? The answer is actually very simple, and that is to pay attention to OKR weekly meetings, OKR quarterly mid-term meetings and OKR quarterly assessments.
At regular OKR meetings, everyone should solve these problems: determine the priority of work, confirm the employee's confidence index and the implementation of OKR, understand the negative emotions of employees in time, and continue to pay attention to health measures.
At the OKR mid-quarter meeting, we should use the mid-quarter review to judge the progress of the project.
However, like the weekly meeting, the mid-quarter meeting is not a very formal review. Its most important role is to seek the right direction of OKR. Therefore, at the mid-quarter meeting, team members should dig deep into the factors that may affect the progress of OKR, and at the same time do not need to spend too much time to collect evidence to prove their views.
If your OKR goal becomes meaningless due to the rapidly changing external environment, you must immediately cancel your OKR to prevent wasting resources; accordingly, if the customer’s demand changes and the supplier’s supply capacity changes , Strategic focus adjustment and other objective factors cause your OKR goals to be adjusted in time, then you should also refresh your OKR in time; if for various reasons, your OKR priority changes, you also need to adjust in time Resources, increase investment, and make these tasks that need to be adjusted to achieve results to achieve expectations.
There is no uniform standard for the cycle of implementing OKR, but the most commonly used one is to set the cycle on a quarterly basis.
Generally speaking, after an OKR cycle is completed, there is a very clear result of the completion of the target. At this point, you need to conduct an objective and formal evaluation of the OKR that was originally formulated. We call this assessment a quarterly assessment.
Generally, quarterly assessments have to solve two key issues: First, to what extent has the OKR been implemented? The second is, what method is used to implement OKR to this degree?
OKR’s quarterly meetings must create an atmosphere where everyone expresses their opinions. If the company advocates telling the truth on the surface, but after the meeting the boss starts to "settle the accounts after the fall", then everyone will not be willing to tell the truth anymore.
Whether it is the OKR weekly meeting, the OKR quarterly mid-term meeting or the quarterly meeting, the meeting is not the most important thing, the most important thing is how to make the meeting worthwhile. The review meeting is not a meeting to pursue accountability, or a meeting to shirk each other's responsibilities. Only when problems are found in the meeting can the team achieve better results in the next OKR operating cycle.