The more you link OKRs to performance reviews, the less effective both become.

During my time running my own OKRs program and consulting with organizations on theirs, I saw leaders make the same mistake repeatedly: tying OKRs directly to individual performance reviews. It seems logical on paper — if people set goals, why not evaluate them based on achieving those goals?

But something felt off.

Tying OKRs to reviews or other performance evaluations should boost accountability.

In practice, it kills ambition. And if there’s anything you’d rather not lose in an organization, it’s that.

The Hidden Cost of Linking OKRs to Performance Reviews

You may have found an efficient way to reduce “operational overhead” by combining the two, but you’re doing more harm than good by trying to blend them. Heres how:

1. It Encourages Playing It Safe

When OKRs influence performance reviews, employees naturally become risk-averse. They aim for safe, easily achievable goals rather than stretch targets that drive meaningful progress. Innovation requires risk-taking, but tying OKRs to evaluations makes risk feel too costly. And if you’re willing to review and approve every OKR in your organization to avoid this, you’re focused on the wrong problem.

Example: A marketing team might set a goal to “increase leads by 50%.” If their bonus or promotion depends on hitting that number, they might lower the target to 20% to ensure success — sacrificing long-term growth.

My Take: I’ve seen this play out in real organizations. Employees, afraid of being penalized, quietly scale back goals that could have driven significant business impact. They aren't lazy — they’re protecting themselves in a system that punishes risk.

2. It Creates a Fear of Failure

If failing to hit an OKR can hurt a career, teams will avoid ambitious goals altogether. This fear undermines psychological safety, the foundation of innovation and learning.

Reality Check: Sometimes OKRs miss the mark due to factors beyond anyone’s control — market shifts, budget cuts, or unexpected events. When failure is punished, people become defensive, hide issues, and resist transparency.

My Experience: I’ve seen leaders who genuinely wanted innovation unintentionally create a culture of fear by tying OKRs to reviews. Employees stopped sharing struggles and focused only on showcasing wins — limiting growth.

3. It Turns OKRs into a Scorecard

Linking OKRs to reviews leads to transactional thinking: hitting a number equals success; missing it equals failure. But OKRs are about learning what’s possible, not delivering guaranteed results. I’d bet you’d rather see teams fail, learn what mistakes they made, and continue improving from that experience going forward than continually set bad OKRs that don’t change any of the underlying fabric of the team.

What Happens: Teams might sandbag targets, manipulate data, or avoid cross-functional collaboration to “protect” their metrics — defeating the purpose of OKRs entirely.

My Perspective: If hitting an OKR is the only metric of success, you miss the context — the hard lessons learned, the creative pivots, and the valuable failures that often lead to bigger breakthroughs.

The Power of Decoupling OKRs from Reviews

When you separate OKRs from reviews, something remarkable happens:

You unlock ambition. Teams set higher goals because they’re free from the fear of missing targets. Learning accelerates because failure becomes an opportunity, not a liability. Setting and aligning OKRs becomes easier as they have one clear direction to look for - your company strategy, not their performance evaluations.

A Better Way to Evaluate Performance

Focus on Engagement, Not Just Results

Instead of using OKRs as a pass/fail metric, evaluate employees based on their engagement with the OKR process:

• Commitment: Did they proactively try to drive progress on the right priorities?

• Initiative: Did they tackle obstacles on their OKRs with creativity and persistence?

• Collaboration: Did they support teammates and share accountability?

• Learning Mindset: Did they reflect on what worked, what didn’t, and how to improve?

Shift the Conversation: Ask, How did you show up for the team’s goals? rather than Did you hit the target?

What I’ve Seen Work: When leaders focus on how people engage with OKRs, teams become more energized and willing to take on ambitious projects because they know they’ll be recognized for effort, not just results.

Separate OKRs from Career Growth

Performance reviews should focus on long-term career development, role-specific achievements, and personal growth:

• What skills has the person developed?

• How have they contributed to the broader mission?

• What impact have they made beyond key metrics?

Use Metrics Wisely: Data from OKRs can inform performance conversations but should never be the sole basis for evaluation.

My Advice: Use OKRs as a lens, not a verdict. Talk about how someone grew, what they learned, and how they contributed beyond the numbers.

The Path Forward

Decoupling OKRs from performance reviews empowers teams to set bold goals, take smart risks, and learn without fear of punishment. It shifts the focus from perfection to progress — unlocking the true potential of OKRs. Organizations that embrace this mindset create a culture where innovation thrives, failures become learning moments, and employees feel supported to do their best work.

Ready to create an OKR-driven culture that inspires bold thinking and continuous improvement? Start by rethinking how you approach performance reviews today.