Advances in Economics, Business and Management Research, volume 650

2022 International Conference on County Economic Development, Rural Revitalization and Social Sciences (ICCRS 2022)

Research on Enterprise Performance Management

from the Perspective of OKR
Deyu Chen1*, Jiaying Chen2, Minjuan Ning3
Guangzhou College of Commerce, Guangzhou, China
1,2,3

*Corresponding author. Email: [email protected]

ABSTRACT
With the continuous improvement of enterprise management level and the development of information technology,
the performance management method has been upgraded iteratively, in the process of industrialization, such as KPI
(performance indicator), Mbo (management by objectives), BSC (balanced scorecard) and other performance
management system, management means seems to have gradually lost the incentive effect. Aiming at the existing
problems of performance management, this paper puts forward how to improve enterprise performance from the
perspective of Okr, describes the connotation of Okr goal and key result idea, and introduces the development history
and characteristics of this management tool, this paper also discusses the Business performance management model
from the perspective of Okr. At the same time, this paper puts forward some suggestions for enterprises to explore
management by objectives and evaluation tools suitable for their own reality. Finally, it is pointed out that Okr is a
management by objectives tool, which focuses on helping enterprises to set extremely challenging goals and then
realize them through various innovations to help enterprises improve their performance.

Keywords: OKR, Performance management, KPI, Strong organization.

1. INTRODUCTION employees. In addition, with the advent of the Internet

information age, performance appraisal should also
Since the 21st century, the rapid development of undergo changes. Managers need to change their
new-generation information technologies such as big thinking, abandon complex performance appraisal
data, the Internet, cloud computing, and the Internet of indicators, and adopt management methods suitable for
Things has promoted the evolution of human society new types of employees. Judging from the practical
from the era of industrialization to the era of results of domestic and foreign first-class companies
informatization and digitalization. In the vague external such as Intel, Google, Amazon, Huawei, Google,
environment of "Uka Era", the corresponding enterprise ByteDance, Huawei, Didi, Midea, and Vanke, OKR is
management system, organizational position design and favored by more and more excellent companies. Begin
other processes must be updated and optimized on the to implement the transition from traditional KPI
original basis, which puts forward higher requirements assessment to OKR assessment focusing on key target
for the management and operation of enterprises. results. In order to master a management method well,
Traditional management methods regard people as tools one must understand the background, applicable
without subjective initiative, but today, companies situation of the method, and the cooperation of the
whose employees are mainly knowledge workers need system, systems and behaviors that the method requires
to improve their management methods. Under the before it can be implemented in practice [1].
original management assessment system, employees
always felt that their value was not properly measured 2. THE DEFINITION AND ESSENCE OF
and could not establish a "spiritual contract" for OKR
common development with the company, resulting in a
poor sense of belonging and the prevalence of The concept of OKR can be traced back to the
"egalitarianism". Judging from the current situation, management thought proposed by American scholar
most enterprise management "manages for Mary Parker Fleet in 1926. She systematically applied
management's sake, supervises for supervision's sake, the research results of psychology to the practice of
and assesses for assessment's sake". Enterprises have management. Based on the integration of unified theory,
not mobilized the subjective initiative and creativity of she pointed out Interconnections and integrations in
employees, and have not really regarded employees as behavior can make a huge difference. In 1954, Peter
assets of the enterprise, but regarded employees as Drucker first proposed the principles of "Management
"expenditure" items that are opposed to their own by Objective" (MBO) and "self-control" in "The
interests, resulting in more self-interested behaviors of Practice of Management". Afterwards, Intel President
Andy Grove optimized this theory, emphasizing the

Copyright © 2022 The Authors. Published by Atlantis Press International B.V.

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criticality of quantifying target factors, and finally enterprises inevitably have many shortcomings in
improved MBO into a brand-new target management strategy and target management:
method covering the two parts of target and key result,
Take indicators as goals. In the process of
which is the development of OKR. A practical
implementing KPIs, managers only pay attention to
foundation has been laid. At the same time, it also made
indicator data, and do not communicate with employees
Intel the first company to implement the OKR
the degree of achievement of business goals and the
management method on a large scale. In 1999, the
significant impact that environmental changes may have
famous venture capitalist John Doerr officially named it
on the achievement of goals. The essence of KPI
OKR in order to avoid confusion between this
indicators is just the measurement indicators formed
management method and management by objectives.
after the multi-level subdivision of the corporate
Subsequently, OKR was applied to Google and
strategy, and implemented as basic digital indicators.
successively promoted to internationally renowned
Employees only care about the completion of indicators,
Internet companies such as Facebook, LinkedIn and
ignoring the real contribution of jobs to corporate
Oracle. Since 2005, especially in some Internet
strategy. This is the root cause of the difficulty in
companies, OKR has experienced a process from being
coordination between departments. KPIs do not
introduced as a pilot to becoming popular and gradually
periodically review strategic goals. After a period of
developing in China. In 2013, Rick Crow recorded a
development, the company gradually becomes
training video of OKR, and the core management
immersed in a stable rhythm and "loses its original
framework and ideas of OKR became popular all over
intention". As a result, there are two bad results. One is
the world and also spread to China [2].
that the indicators of performance appraisal have
As an objective management system, OKR achieves nothing to do with the company's strategy. The score of
the established objectives through the setting and performance appraisal is getting higher and higher, and
achievement of key results. Based on Andy Grove's core the deviation of the company's strategic direction is
point of view on the organization, to truly apply OKR to getting bigger and bigger. The other is that the score of
a traditional enterprise, it also requires a flat performance appraisal is getting higher and higher, the
organization, an incentive mechanism for sharing cash flow is getting smaller and smaller, and the
benefits and risks, an agile and elite team, and company's loss is getting more and more serious [4].
project-based operations. Only by implementing
When an enterprise adopts KPI, it often leads to the
transformation in multiple dimensions of ability and
fact that the lower-level employees may still execute
result-oriented culture can it be truly realized. In the
correctly because the upper-level objectives are not
book "OKR: Management by Objectives Tool from Intel
clear, and even the quantified indicators do not play a
and Google", the author defines OKR as a set of
role in the performance of the enterprise. Under the
rigorous thinking framework and continuous discipline
traditional assessment method, it is required to
requirements, designed to ensure that employees work
accurately determine the index value in advance, and the
closely together and focus their energy on promoting the
change of the external environment, especially in the
organization and increasing measurable contributions.
innovative and changeable business field, makes it more
Among them, O (objective) is more of a reflection of
and more difficult to set the index value in advance, and
leadership and direction, and KR (key result) is a phased
even the phenomenon of "shooting arrows and then
result or landmark business event that the team may
drawing targets" appears.” jokes that lead to ineffective
achieve in this direction. The logic of OKR is to first
performance management. Regular annual performance
clarify the value and meaning of what you do, and then
reviews are time-consuming and mostly futile. OKR
plan the measurement method of how to achieve the
also emphasizes the quantification of goals, but this is
goal, that is, the key result [3].
the precise requirement for quantification by indicator
3. PROBLEMS EXISTING IN management, which ensures that performance standards
MAINSTREAM PERFORMANCE have greater flexibility and tolerance for changes. In the
MANAGEMENT MODELS actual operation process, many companies gradually use
OKRs as KPIs. But there are still many differences in
In recent years, the business environment at home essence, which cannot be simply same.
and abroad has been greatly improved, whether it is the
Employee goals are not challenging and
regulation of policies, the subversion of emerging
insufficiently focused. Modern companies are
technologies, the upgrading of cross-border competition,
accustomed to formulating KPIs for their employees
or the reform of internal business models, business
from the top down, and linking the final results directly
structure adjustments, and talent structure
to employees' compensation. However, excessive
transformation. It makes the enterprise's strategy
pursuit of fixed indicators and forced results, and
formulation, target management and implementation
forcibly linked with employee performance, will lead to
face higher complexity and difficulty. At present,
managers ignoring market laws and making mistakes,

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employees will not only be unable to exert their company's overall strategy, follow the basic principles
expertise, but also take the blame for decision-making. of OKR application, and construct OKR scientifically
OKR is not the case. It is to keep the work direction of and reasonably. Secondly, 2-5 goals are set for each
all employees in the same direction and to help period, and the setting of key results corresponds to no
employees understand the progress of the completion of more than 4 goals for each target. If necessary,
the goal, and is not used as a direct basis for brainstorming method can be adopted. Once set, it will
compensation and promotion. Domestic enterprises be publicized to ensure fairness and transparency.
adopt the KPI model. On the one hand, the target Furthermore, the setting of goals should be multi-level
acceptance is insufficient, and it is difficult to ensure the and multi-faceted. For example, OKR can be
real realization of the enterprise's strategic goals. determined from four dimensions: financial goals,
Therefore, employees will pay more attention to the internal management goals, customer goals, and
completion of the indicators, and ignore the actual value learning and growth goals. The final OKR score is set
to the company and the real contribution to the between 0.6-0.7, but there is not much difference
company's development. On the other hand, there are between 1.0 and 0.7. The score is not the most
differences in the understanding of the specific important, and only plays a role of direct guidance and
implementation of indicators and standards between review. In addition, key results are tunable, and there are
employees and managers, which leads to difficulties in different levels of goals and key results from the
coordination between levels and positions, and causes company, team, and even individuals, all of which
employees to question the final evaluation results [5]. ensure that the company operates as planned.
The application level of OKR is single. In practical (2) Grasp qualitative and quantitative logic. OKRs
applications, some business leaders do not set goals are a good balance between qualitative and quantitative.
from the company's mission and vision, and many Qualitative goals can serve as traction, and quantitative
companies even lack formal strategic goals. When they results can be used to check whether actions are on the
set goals, they will directly take the short-term business right track. Quantitative results are data-driven, with
performance of the company as the goal of OKR. Even regular inspections, objective scoring, and continuous
after many department managers learn about OKRs, re-evaluation—all based on a spirit of accountability
they are eager to implement them within the company, that does not require emotional judgment. Compared
resulting in a lack of leadership support, and they end up with other performance management tools, OKR
being limited to their own “territorial” experiments. emphasizes the close integration of qualitative and
However, the implementation of OKRs must rely on, or quantitative, and the close integration of goals and
even exceed, the company's resources and capabilities. results. Through the visualization of goals and the
This means that simply implementing OKRs in the traceability of results, it helps enterprises to effectively
departments under their leadership cannot effectively improve their execution.
realize value, and companies have no reason to waste
(3) The cycle of OKR. OKR is usually a quarterly
resources implementing OKRs.
cycle, and a smaller part of the enterprise is a yearly or
The indicator system is too rigid, emphasizing monthly cycle. Taking the OKRs in the first quarter as
"results" rather than "processes". On the one hand, an example, a complete OKR implementation cycle can
because the indicators are mostly assessed at the end of be divided into the following five stages: the first stage
the month and the quarter, the progress of the indicators is to prepare for the conception. Before the end of
is often not reviewed regularly and frequently; on the December, start to conceive and sort out the
other hand, the indicators often involve multiple systems OKR-related data of the first quarter of next year; the
of the company, such as production, sales, research and second stage , determine the content of OKR, hold an
development, etc., data collection And proofreading OKR group meeting at the beginning of the first quarter,
requires more effort, and there may even be situations describe the vision strategy, coordinate, communicate,
such as "surprise at the end of the month", "borrowing and discuss in groups, and formulate OKR projects,
the profit of the next month this month", etc., making it content, indicators, and data; Each member has a
difficult to understand the specific situation of the consistent understanding of the proposed goals, key
implementation and progress of the indicators. As a results and sub-tasks, fully understands the role and
result, KPI gradually loses its function of rewarding the value of OKR-related content to the company, and
good and punishing the bad. In addition, the defines the work tasks and key results that they need to
"eggitarianism" is rampant, and the enthusiasm and complete; the fourth stage, the implementation of
cohesion of employees are harmed [6]. OKRs, the key point of implementation and
implementation is that regular inspections must be
4. MAKE PLANS AND EXECUTE carried out, and the inspection process should cover
(1) The basis and requirements for constructing "completed/in-progress goals, current progress of each
OKR. First of all, the maker must proceed from the goal, difficulties and problems encountered in the
implementation process, causes, required In the fifth

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stage, the OKR review meeting will be held at the form an individual OKR. Therefore, in the process of
beginning of the next quarter, which is also the end of a OKR formulation, top-bottom integration and horizontal
complete cycle. The main content is the analysis, coordination are very important.
summary and Review the entire implementation
process. Therefore, the OKR meeting generally has two 5. CONCLUSIONS
components, one is to review the OKR of the previous We believe that performance management will
cycle, and the other is to determine the OKR of the next gradually simplify complexity and return to the origin of
cycle [7]. performance management - improving organizational
(4) Establish a systematic promotion system. As a efficiency and promoting employee growth. At this
systematic project of target management and evaluation stage, the OKR operation mode is relatively simple, and
tool, OKR should be comprehensively designed from it is suitable for industries with volatile business
the perspective of corporate culture construction and environments. But it does not mean that OKR is without
value reshaping. To be a "first-in-command" project, problems, "suitable is the best", any performance
emphasizing the purpose of the "first-in-command" management system needs to choose suitable
project, arousing great attention from the enterprise management tools according to the actual situation of
management, and forming an OKR management the enterprise.
committee by each department, can make OKR be First, the emergence of the OKR management
promoted from partial to full; at the same time, for OKR concept and its application to the performance
such a The promotion of management tools with the management system would have a relationship of
sole purpose of stimulating the enthusiasm of all mutual integration, coexistence and co-prosperity with
employees requires the understanding, participation, the traditional KPI performance management system.
support and efforts of all employees. For the selection of The application principle of KPI and OKR management
the OKR promotion department, the enterprise can concepts is to use the two in combination, integrate
determine the internal system and the functional innovation, let KPI be responsible for the assessment,
positioning of the department. Everything is to ensure and let OKR be responsible for the process, but choose
the promotion effect and maximize the company's value one based on the actual situation or scenario of the
as the first priority, to avoid the phenomenon that OKR enterprise, and integrate it into enterprise performance
is simply regarded as a project promoted by a specific management to achieve organizational goals of
department to other departments. The success of OKR employee growth and development.
requires promotion and publicity at all levels and
departments. At the same time, through the internal Second, from the perspective of the development
network platform, a questionnaire was sent to company trend of performance management, the concepts and
employees to ask company-level and department-level tools of performance management are constantly being
OKR goals and key results to be set. optimized and upgraded under the drastic changes in the
market environment. The second is to provide more and
(5) Coordinate the working method of combining more positive encouragements timely for employees to
top and bottom. In management practice, the overall provide process basis for evaluation to achieve more
"alignment" of OKRs must be adhered to, and the full humane and more effective incentives; the third is to
integration of top and bottom is an important means to avoid conflicts, promote collaboration and guarantee
achieve "alignment". The hierarchical nature of OKR is Goal Alignment - the emergence of the OKR
not a simple list. The KR of the upper level cannot management model represents exactly this trend. OKR
simply become the goal (O) of the next level. The OKR advocates the use of project management to manage and
of each level is reflected in the vertical penetration and track the setting and implementation of specific goals,
horizontal coordination, and the OKR of each individual feasibility research and evaluation before goal setting,
is unique. , and thus fully reflect the unique contribution multi-dimensional thinking in goal setting, data
to the overall business. For the formulation of team recording and analysis feedback for the specific
OKRs, the team supervisor should put forward implementation tracking process, and when key
improvement directions on the premise of summarizing problems are encountered, rather than the evaluation of
past performance and deficiencies. Team members put traditional KPI assessment, it cares more about the
forward OKR suggestions based on their personal decomposition, tracking and process evolution of stage
understanding of the team's goals. The supervisor results based on the premise of goals, and also pays
summarizes and convenes all members for full attention to the iteration and accumulation of various
discussion and combines the OKRs at the upper level. outputs in the process of goal realization.
The goal is perfected to form a team OKR that is fully
recognized by team members; when an individual Third, in the era of knowledge economy and
formulates an OKR, he or she should invite team intelligence, individuals have risen and pursued
members to evaluate the individual OKR while self-realization. Work and occupation are means rather
completing the team OKR, and gradually improve it to than ends. Organizations are designed for people and

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become a platform for empowering people. As a new [3] Subtraction for performance management: Okr
management method, OKR achieves consensus and Mechanism and localization method [j]. Zhao
forms sharing through transparent communication; Zhen, Ma Ke hang. Journal of Lanzhou University
through more open information flow and establishment of Finance and Economics. 2020(01).
of individual voice channels, it allows everyone to focus
more and form resonance. From this perspective, OKR [4] Okr, a management tool for excellence [J]. Chen
is nothing more than an application of people-oriented Dejin. Tsinghua Management Review. 2019(12).
empowerment management. Confucius said: "A [5] Application of OKR in small and medium-sized
gentleman should do the basics, and the basics should be Business performance management [j]. Leung Wan
based on the Tao." Behind the application of any Yin. Journal of Shanxi Coal Management Cadre
management method and tool, there is a set of College. 2019(03)
underlying codes and a deep logic. If an operating
system does not understand this, no matter how good [6] Christina Walker. OKR work method. Mingdao
methods and tools are, it is difficult to the application team, translated. Beijing: CITIC Publishing House,
works, and sometimes it backfires. 2017.
Fourth, there are subjective factors, objective factors [7] John Doerr, This is OKR. Cao Yangfeng/Wang
and human factors that affect OKR. Constantly Yonggui, translated. Beijing: CITIC Press, 2018.
identifying and responding to the influencing factors are
[8] Chen Lei. Goal and Key Results Method. Beijing:
the keys to ensuring the successful realization of OKR
Machinery Industry Press, 2017.
goals during the setting and operation of OKR.
Subjective factors: the overall goal is set too high; the
key result is set too high and too much; the team lacks
communication, the goal driving force is insufficient,
etc. Objective factors: adjustment of policies and
regulations, improvement of competitors, changes in
customer needs, emergence of new technologies, force
majeure factors, etc.
To sum up, from KPIs to OKRs, behind the
evolution of management methods is the development
of enterprise needs. Regardless of whether the company
decides to introduce OKRs at the beginning of its
establishment or after it has grown, managers must fully
consider whether the corporate culture is compatible
with OKRs. After all, no management method is
universally applicable. In addition, the path of
implementing OKR needs to be fully balanced with all
aspects of the enterprise, and OKR can guide the
enterprise and team to the top. OKR mainly emphasizes
very challenging goals, clear direction, what to do and
what not to do very clearly. If the OKR system is still
emphasizing a certain stable growth rate, it is not in line
with its soul. Therefore, OKR is a goal management
tool, which focuses on helping companies formulate
challenging goals, and then achieves goals through
various innovations [8].
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