Moving away from traditional performance management

Our Non-Executive Director, Ann Hiatt has championed OKRs since her days in Silicon Valley, where she saw first-hand how effective they can be. She’s always been a firm believe that they would create alignment through clear milestones from James, our CEO, whilst allowing and rewarding creativity and experimentation throughout Armadillo.

OKRs have two parts. The first is the Objective – the description of what you want to achieve. The second is your Key Results – the measures used to track and determine whether you’ve achieved your objective.

Although popular throughout Silicon Valley, with many businesses crediting them with business growth, they haven’t become the norm further afield. Yet that’s starting to change.

Ann recently contributed to an article in Raconteur, part of The Times, where she talked about OKRs and her experience of using them over the last 15 years both at Amazon and Google.

She says “chief executives need to be clear about what will keep the company in business and set OKRs on that basis. But creative thinkers should also be working on ideas beyond today’s checklist of objectives… the most innovative strategies almost always come from the bottom up, not the top down”.

OKRs aren’t about perfect performance. They’re about having some stretch goals or ‘moonshots’ which are only expected to be 60 or 70% achievable at the time set, leaving space for remarkable achievements in the long term.

Ann says: “The OKR culture rewards learning over strict, rote performance; this is an essential differentiation…If employees are not allowed to experiment and ‘fail’ due to a rigid operational system, you will likely miss out on discovering the ways your company could grow and pivot.”

“Traditional goal-setting strategies reward ‘perfect’ performance, but a ten-out-of-ten result never comes from taking the risks that are necessary to push a company forward in a rapidly changing industry.”

“With OKRs, however, your performance doesn’t have to be perfect because you’re free to learn so much in the process, which means you can be more creative and take different approaches.”

We can see the benefits clearly and we’ve already started to take steps to move away from traditional performance management. Something our Strategy Director, Fiona Craig, talked about in her recent article Is the medium-term plan dead?:

“The tide was turning against the medium-term standard annual objectives and appraisal structure even before this crisis hit, with businesses focusing on sprints and shorter-term goals and OKR (objectives and key results) setting.

The current crisis only augments the need to be more aligned and reactive. It’s important that staff development is supported and encouraged in-line with driving organisational goals so that businesses can not only survive, but thrive.