What do today's most successful, fastest growing companies have in common? Companies like Yammer, which was sold to Microsoft for $1.2 Billion, or Salesforce which grew to $1 Billion in revenue in 10 years, all practice management by objectives (MBOs) for goal-focused, company alignment.
Inc. 500 companies (and even some Fortune 100 companies) all use a variety of slightly different models; Objectives and Key Results (OKRs), V2MOMs...etc... The common themes are creating objectives every quarter, implementing metrics to measure them, communicating along the way, and then discussing successes and missed opportunities when the clock runs out.
But when managers view and analyze performance metrics, they often need more context to determine the causes of success or failure, and how to take action. Rather than looking at performance figures in a vacuum, managers can take a step back to see what employee behaviors influenced the numbers. For example, a company can look at sales figures as a KPI, without looking into the quality of the demos that were done or the number of customer phone calls made. Those details are indispensable for understanding how to improve performance moving forward.
The Rhythm of Communication
In his best-selling book, Mastering the Rockefeller Habits, Verne Harnish provides an overview of three habits that are crucial for successfully managing a business. Harnish, who has been described as "the guru of fast growth companies", observed that businesses need to do the following:
1) Create five overarching priorities for the year and the quarter, as well as priorities for individual employees that align with those of the organization. One of the company priorities should include a theme for the quarter or year.
2) The business must have sufficient data to provide daily or weekly insights, along with key performance metrics for each employee.
3) To maintain company-wide alignment and drive accountability, the company must have an effective communication rhythm of weekly check-ins, bi-monthy or monthly one-on-one meetings, and quarterly performance reviews.
When applied to OKRs, these three elements make for a powerful business practice:
The company establishes 3-5 top priorities every quarter. Each team and individual employee creates objectives that are in-line with the company-wide priorities.
Every employee has measurable results that are tracked and updated each week. Employees regularly update their performance statistics so that management can see the performance of individuals, teams, and the entire organization at a glance.
3) Communication Rhythm
Create an overall theme for the quarterly goal, and implement a rhythm of feedback and meetings that maintain alignment and accountability. The communication rhythm is the most vital element for creating growth. Communication provides context to the data so that when employees and teams fall off target, managers have a method for discovering why.
￼Themes create the focus & the fun, but what makes a quarterly goal achievable is daily and weekly rhythm aimed at keeping everyone informed, aligned, and accountable.
~Verne Harnish, Mastering the Rockefeller Habits
The Complete Picture
Analyzing employee performance and team dynamics involves listening to employees to hear a story more subtle and complex than the numbers alone can convey. This qualitative analysis provides a complete picture of the health of organizations who know that their people are the main determining factor between success and failure.
For more information and in-depth advice about how to implement OKRs, download The Ultimate Guide for Making OKRs Work at Your Company.
Holistic management practices like soliciting regular employee feedback coupled with management by objectives, allows managers to delve into the drivers of employee performance. Was productivity low for a certain time period? Why? Asking questions can provide valuable information to replicate what's working and to turn failures into wins.
When company leaders connect long term goals with regular communication, they tap into the human element of performance. People move naturally towards doing their best work and becoming their best selves. But without supplementing the numbers with context, leaders are just guessing about the future of their company. By asking the right questions every week, managers obtain deeper insight into the motivations, distractions and other issues that influence or hinder results.
Employee Feedback Provides Context
Soliciting employee feedback is not just about information gathering, but also aids in the establishment of trust. Asking team members "how do you feel?" or "where are you challenged?", elicits valuable information like, "I am stressed because we re-structured departmental procedures and it feels like there are still gaping holes in our new process", or "I am getting run down and can't do my best work". Managers can then respond to employee needs before they get out of hand.
Q&A allows managers to quickly and easily discover misalignments and make weekly course corrections. They can see where employees are challenged and offer just enough support to allow them to grow into their roles and achieve their objectives. Employees also have the opportunity to share triumphs and be acknowledged by management. Acknowledgements help motivate employees to perform and they boost morale team-wide.
The quantitative by itself only provides half the picture, but when managers have conversations early enough, so much can be addressed before breakdown. When people can share openly because they don't feel that their jobs are at risk, managers learn where they are struggling beyond their capacity and become aware of the things that need improvement before it's too late.
This post was originally published on the 15Five Blog.