HUAWEI Gave Up on KPI, Took OKR To Reach Business Success. Why?

OKR is the management method advocated by former Intel CEO Grove. In 2019, it was the first year of the transformation of the HUAWEI organization, and it was fully introduced into OKR management.

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Coincidentally, Huawei and other companies also implement OKR assessment?  Why, because the traditional performance appraisal makes the whole company like a primitive arena, full of battles between you and me.

OKR can inspire everyone’s internal drive, everyone up and down together, fight together and fight.

To understand why KPI is no longer effective, you have to start with the framework itself.

In this system, goal setting is the starting point, performance evaluation is the end point, and process management activities interspersed with performance.

The original intention is to make employees clearly understand the meaning and value of a job, set goals, and find directions until they achieve their goals.

However, in the course of practice, due to the following reasons, it often deviates from the original intention, leading to the phenomenon of performances.

1. Performances: Targets are assigned top-down

For employees, the value of the goal is that it helps employees understand the meaning and value of a job.

To be able to play this role as a beacon, the goal requires subordinates to participate in the development of the target.

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If the subordinates only passively accept the goal of the superior allocation, the subordinates will lose the sense of participation.

I think that I am only a tool to complete the goal of the superior, just a chess piece, which is randomly controlled, thus lacking the sense of ownership.

This situation is accompanied by an increase in the size of the enterprise and a deepening of the organizational hierarchy, and its silo effect will be more serious.

The traditional organizational structure is as follows.

Give up the KPI assessment, why did Huawei Xibei introduce the OKR assessment?

If the goal of the first level organization is to build a great church.

Then the goal of the second-level organization may be: to build a prayer room.

By the third grade organization there , the goal might be: to build a very strong foundation.

To the staff there , the target may become: dig a length and width of 20 meters within 10 days, about 10 meters deep in the ground.

Through the decomposition of this level of goals, to the staff, there is no great significance behind the matter.

2. Performance coaching is equivalent to progress monitoring

In performance implementation and performance coaching, supervisors and subordinates should have more interaction.

Supervisors provide counseling and resource support to their subordinates to help subordinates better achieve their goals and improve performance.

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However, more and more enterprises, due to excessive pursuit of efficiency, have turned the entire performance coaching process into one-way progress monitoring and tracking.

The supervisor only knows that he is staring at the progress bar. If he finds that the work of a certain subordinate is lagging behind, he will warn the subordinate to ask him to catch up with the progress by working overtime.

The subordinates are under tremendous pressure to work, and they are constantly driven by the supervisors to meet the progress as the first priority.

They lack the deep thinking and self-awareness of the work and are enslaved for the progress.

3. Mandatory performance ratio

Most companies in the information age have implemented mandatory performance ratio rules and relative evaluation principles.

The mandatory performance ratio rule divides the performance of a team’s internal employees into several grades, and each grade sets a certain proportion distribution requirement.

For example, the employee performance is divided into 5, etc., and the ratio of the first grade is set to 10% to 15%, the second grade is 30% to 40%, the third grade is 30% to 40%, and the fourth grade is 5% to 10%, and the fifth is 0 to 5%.

In this way, both the excellent team and the relatively poor team are forced to apply this proportional distribution principle – forcibly identifying the last 5% to 10% of the team’s personnel and performing the final elimination.

The principle of relative evaluation refers to the performance of employees is compared with people.

A sorting sequence is formed by comparing the work outputs of the employees within the team with each other.

Employees who are ahead of the sequence perform better than the employees who are behind.

Since the result is compared with others, employee A does not need to be more excellent (absolute value), employee A only needs to be a little better than employee B (relative value), and A is safer than B.

In this case, why should A help B? Isn’t B is the equivalent of digging a grave?

Why should A focus on the improvement and cultivation of abilities? A only needs to focus on how to be stronger than B?

Microsoft, which has implemented this system, has an extensive organizational chart on the Internet that describes its internal departmental atmosphere.

4. Strong performance applications

Some companies claim that in order to build high-performance organizations, they reflect the company’s emphasis on performance and apply performance results to all aspects of the company, including compensation, bonuses, and promotions.

In this way, the performance result is actually a code name for material returns.

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The performance results are good, everything is fine; if the performance results are not good, then there is nothing in the enterprise.

This kind of strong performance application seriously ruined the thinking space of employees.

Ren Zhengfei used an image metaphor to describe:

“The pigs are too fat, and even the snoring is gone.

Technology companies are driven by talents. When the company goes through the morning market, a group of people will become millionaires and multi-millionaires, and their work passion will decline.

This is not a good thing for Huawei. It is not a good thing for the employees themselves. Huawei will grow slowly, and even the team will be scattered.

Employees are too rich and too young to become lazy and not good for their personal growth. ”

Therefore, for entrepreneurs, external incentives are like opium. In the early days, employees were tempted, and the stimulating effect was obvious.

But slowly, they found that the same or even greater dose of stimulation, but it is difficult to mobilize the workers to work equally enthusiasm.

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