Two weeks before the end of the quarter, it’s time to grade your OKRs and plan for the next cycle. After all, you want to hit the ground running on day one of Q2, right?
There are two common systems for managing OKRs: confidence ratings and grading. Each has its benefits and downsides.
We’ll start with confidence ratings, the system I’ve outlined in my book Radical Focus. Confidence ratings are a simple system best used by startups and smaller teams, or teams at the beginning of OKR adoption. When you decide on your objective and three KRs, you set a difficult number you have fifty percent confidence in achieving. This is typically noted by a 5/10 rating on the status four square.
In your Monday commitment meeting, everyone reports on if and how their confidence levels have changed. This is not a science, it’s an art. You do not want your folks wasting time trying to track down every bit of data to give a perfect answer, you just want to make sure efforts are directionally correct. The first few weeks of OKRs, it’s pretty hard to know if you are making progress or not on achieving your key results. But somewhere in week three or four, it becomes very clear if you are getting closer or slipping. Each team leader (or team member, if a very small company) will start to adjust the confidence rating as they begin to feel confident.
Then the confidence rating will start to swing wildly up and down as progress or setback shows up. Eventually around two months, the confidence levels settle into the likely outcome. By two weeks from the end of the quarter, you can usually call the OKRs. If they were truly hard goals, the kind you only have a fifty-fifty chance of making, there is no miracle that can occur in the last two weeks to change the results. The sooner you can call the results, the sooner you can make plans for the next quarter and start your next cycle.
The advantage of this approach is twofold. First, the team doesn’t forget about OKRs because they have to be constantly updating the confidence level. Because the confidence level is a gut check, it’s quick and painless, and the key for getting a young company in the habit of tracking success. The second advantage is this approach prompts key conversations. If confidence drops, other leads can question why it is happening and brainstorm ways to correct the drop. OKRs are set and shared by the team, and any team member’s struggle is a danger to the entire company. A leader should feel comfortable bringing a loss of confidence to the leadership team and know that he’ll have help.
At two weeks before the end of the quarter, you mark your confidence as 10 or 0. Success is making two of the three key results. This style of grading leads to doubling down on the possible goals and abandoning effort on goals that are clearly out of range. The benefit is to stop people spinning their wheels on the impossible and focus on what can be done. However, the downside is some people will sandbag by setting one impossible goal, one hard goal, and one easy goal. It’s the job of the manager to keep an eye out for this.
The second approach to OKRs ratings is the grading approach. Google is the most famous for using the grading approach. At the end of the quarter, the team and individual grade their results with data collected. 0.0 means the result was a failure, and 1.0 means the result was a complete success. Most results should land in 0.6-0.7. From the Google official site on using OKRs, ReWork:
“The sweet spot for OKRs is somewhere in the 60-70% range. Scoring lower may mean the organization is not achieving enough of what it could be. Scoring higher may mean the aspirational goals are not being set high enough. With Google’s 0.0 – 1.0 scale, the expectation is to get an average of 0.6 to 0.7 across all OKRs. For organizations who are new to OKRs, this tolerance for “failure” to hit the uncomfortable goals is itself uncomfortable.”
Google sets high value on transparency. As well as all OKRs, individual and team, being posted on the intranet, team progress is shared throughout. Again, from ReWork:
Publicly grade organizational OKRs. At Google, organizational OKRs are typically shared and graded annually and quarterly. At the start of the year, there is a company-wide meeting where the grades for the prior OKRs are shared and the new OKRs are shared both for the year and for the upcoming quarter. Then the company meets quarterly to review grades and set new OKRs. At these company meetings, the owner for each OKR (usually the leader from the relevant team) explains the grade and any adjustments for the upcoming quarter.
And ReWork warns against the danger of set and forget:
Check in throughout the quarter. Prior to assigning a final grade, it can be helpful to have a mid-quarter check-in for all levels of OKRs to give both individuals and teams a sense of where they are. An end of quarter check-in can be used to prepare ahead of the final grading.
This is also done differently across teams. Some do a midpoint check, like a midterm grade. Others check in monthly. Google has always had an approach of hire smart people, give them a goal, and leave them alone to accomplish it. As they’ve grown OKRs are implemented unevenly, but OKRs continue to allow that philosophy to live on.
Ben Lamorte is a coach who helps large organizations get started and sustain their OKR projects. He shares a simple technique to keep OKR progress visible: progress posters. Several of his clients have set up posters in the hallway that are updated regularly with progress. Not only does this make OKRs more transparent and visible across teams, it can be effective for communicating scores on key results and really creating more accountability.
It doesn’t look good when your team hasn’t updated any scores and when you’re already a month into the quarter. Most of these posters include a placeholder to update scores at four to eight planned check-ins throughout the quarter. Certainly OKR posters are not for all organizations, but they can be quite effective in some cases.
No matter if you use confidence check-ins or formal grading (or a combination of both), there is one last piece of advice from ReWork that is important to keep in mind:
OKRs are not synonymous with performance evaluation. This means OKRs are not a comprehensive means to evaluate an individual (or an organization). Rather, they can be used as a summary of what an individual has worked on in the last period of time and can show contributions and impact to the larger organizational OKRs.
Use the accomplishments of each person to determine bonuses and raises. If you use the status report system described in Radical Focus, it should be easy for each person to review their work and write up a short summary of their accomplishments. This report can guide your performance review conversations. Some things shouldn’t be automated, and the most important part of being a manager is having real conversations about what employees have contributed. And what they haven’t.
If you rely on OKR results to guide your decisions, you will encourage sandbagging and punish your biggest dreamers. Reward what people do, not how good they are at working the system.