Effective performance management: Finding your company's gear

What is missing is the strategy and the measurable goals that show what employees will actually do to bring the company closer to the vision. That is, goals they not only understand but also care about. 

Otherwise, it's like driving in third gear and at worst in the wrong direction.  

Effective management by objectives gives your company a few more gears - and a GPS.  

Many people's mgoals have little effect

According to Microsoft's report Work Trend Index Pulse has hybrid work has led to a growing disconnect - disconnection - between employees and management. Their views on work differ apart. Without the daily contact with managers and colleagues many employees also lack feedback on their performance. How do you know how you are contributing to the success of your team and your company?

Next, we can refer to a study by BetterUp where 9 out of 10 people willing to earn less in exchange for more meaningful work.. In particular, the younger generation values the purpose of work highlyand, of course, want to understand how they contribute to this purpose.

However, it is problematic when management only announces abstract goals such as achieving x million in operating profit in 2025 or becoming an industry leader, as this hardly engages individual employees. And there is no information about what is required from the employee to achieve these abstract goals.

Initially, my experience is that they three main reasons why many companies' performance management does not work is that employees:  

1. Not understand the objectives
2. Do not know how to contribute to reach them
3. Not care themselves

In turn, for targets to be effective, they need to embrace them with both heart and brain.  

How do you make performance management effective?

It is common to spend perhaps 80 percent of the time on developing the objectives and 20 percent on working with them.. Even though this should be the other way around.

First of all, the first 20% should be used to develop a vision with a clear purpose, create a strategy that reflects the vision and break down the strategy into concrete objectives. The key is to ensure that everything is connected throughout the process.

This leaves 80 percent for perhaps the most important part. Fo ensure that everyone really understands the objectivesmust communicated, if notnot to say ingrained.

Visualize them at each weekly meeting. Follow up them and feed back frequently to all employees. There needs to be an ongoing dialog about them, asking where we are in relation to where we want to be?

Everyone needs to understand how their goals relate to those of the team, and how the team's goals are linked to the organization's. In addition, everyone should also know the the objectives of the other teamswhat they contribute and how the teams are interdependent. This welds them together and creates a sense of responsibility. I usually talk about creating verticals between employees, teams, departments and management..

Today, working in your own bubble doesn't work - transparency is simply essential for cooperation, cohesion and commitment.

In order to identify what is missing so that focus and resources can be put where they are most needed, there is a need for traceability. Where are we lagging behind? Which teams are struggling? Drill into the causes and find solutions together.

There is a method (or framework) for performance management optimized for this particular way of working. Global tech giants like Google, Microsoft and LinkedIn use this method, which has contributed to its popularity and scale.

I am talking about OKR. 

A method that works

Most people use key performance indicators and KPIsbut they rarely show the way to the goals and vision. In contrast, OKRs clearly show how to achieve these goals and visions.

OKR stands for Objectives and Key Results.

Based on the strategy, a number of main goals (objectives).

Each main objective is then broken down into 3-5 key results which show the steps you need to take to achieve the main objective. Each key result is graded so that it can be evaluated on a scale of 0-1 or 0-100.

First, like all objectives, they should be measurable, time-bound and clearly defined. However, with the OKR methodology, they should not be realistic but challenging and difficult (but possible) to achieve. Those who practice it have found that best results is achieved if about 70% of the objectives are achieved.

By following the OKR methodology you achieve several things:  

• It creates a clear connection of employee and team goals to the overall goals, vision and strategy
• A synchronized work between individuals, teams and departments
• In addition, you promote transparency and clarity
• Better cooperation at all company levels
• A way to monitor and communicate progress in relation to the objectives
• Better performance and results

Finally, do you want to know more about how your company can improve its performance management?

Hlisten up!