OKRs (Objectives and Key Results) have been gaining popularity recently as a tool for measuring and managing your business goals. While they can be a valuable way to track progress and manage expectations, there are some key drawbacks to using OKRs as the sole measure of success. This article covers why you should not use OKRs as a tool for performance evaluation. 

OKRs can’t replace Performance Evaluation

OKRs can help to set and track progress towards specific goals, but they cannot replace performance evaluation. Performance evaluation typically includes a review of an individual’s or team’s accomplishments over a period of time and may also include feedback from others. While OKRs help you set SMART goals that are aligned with the overall OKRs of the organization, performance evaluation is more about measuring how well an employee is doing in their roles. 

While OKRs can be an effective way to measure progress toward specific goals, there are a few problems with using them solely to measure employee performance or as a performance evaluation system. For instance: 

• Setting too many goals can overwhelm your employees. Instead of taking action to improve performance, employees may become paralyzed by the number of objectives they have to achieve.  
• Measuring progress against too many objectives can be difficult and time-consuming. 
• If the goals are not well defined or if your company’s culture does not support goal setting, it can be challenging to achieve results.  
• If the goals are not achievable or employees do not feel ownership over them, they may not be motivated to try hard enough to achieve them.  
• If your company’s business changes or new goals are added, it can be challenging to adjust the objectives accordingly. 

OKRs are meant to be collaborative and increase innovation

Originally, objectives are meant to be aspirational. Team members are encouraged to set goals beyond what they think is achievable and seek creative solutions. These targets may often be missed, but team members are not punished for them. If you were to start penalizing your employees for missing targets, it would encourage them to set lower targets for themselves. This defeats the purpose of setting OKRs, as their higher purpose is innovation rather than measuring employee performance. 

The result of a performance evaluation should be acceptable to the employee for it to be effective. It needs to be fair, and typically comparative evaluations are considered reasonable. However, if the performance evaluation is only OKR-based, employees will be convinced that the comparison was unfair from the start because OKRs are collaborative by nature. Cooperative employees are more likely to accept a performance review as fair because they need to compare their progress to progress on their collective goals. Even when you have individual OKRs for the employees, they are aligned with the team’s and the organization’s OKRs. You could avoid employee resentment if you write out your OKRs by keeping them true to the spirit of collaboration.  

The Difference between OKRs and Performance Evaluation Reviews

OKRs break down your company’s objectives into measurable key results. This goal-setting methodology is meant to align your employees toward shared business objectives. They are catalysts for action plans for your team members to work collaboratively. Performance evaluations, however, are focused on employee performance. Employees are evaluated annually or bi-annually through performance reviews and given a rating based on how well they have performed in their roles. An employee’s performance is compared against their own growth within your company rather than against other team members. Furthermore, performance evaluations are typically linked with compensation and promotions. 

How to use both OKRs and Performance Evaluation

OKR cycles and performance evaluation systems should operate in tandem without affecting each other. OKRs can play a role in the performance evaluation process, and here’s how:  

• Separate the process of reviewing employees’ OKR performance from their compensation. If you do not draw the line between these two processes, your employees will be distracted during their performance reviews. Instead, they will focus on things other than the development and collaboration for which your OKRs are intended. 
• Do not use formulas for evaluating. No formula can take account of all the factors that determine how well team members perform. Even if you could create one, it would become obsolete within a few months. Stop wasting your time trying to develop an equation for evaluating performance, focus more on feedback from peer reviews and managers, or use the 360-degree feedback system. 
• Remember that performance evaluation and OKRs serve different purposes. Move away from the traditional approach of tying reviews to short-term goals. When pursued separately, OKRs will better serve a team’s goals by motivating them and causing alignment between team members. Performance evaluation focuses on the individual growth of your employees. When kept separate, your organization will see better results. 

Conclusion

While OKRs can be an effective tool for managing performance, they should not be the only metric used to evaluate employees. Using only OKRs as a measure of success can actually have negative consequences. By overemphasizing individual goals and neglecting team objectives, individuals may become discouraged and disengaged from their work. Additionally, this type of management can lead to inefficiency and lower productivity levels. Ultimately, using OKRs as the sole measure of success is not sustainable or beneficial to your employees or your organization. Employee or team OKRs are meant to align with the company’s OKRs and enable holistic business growth.

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