Draft OKRs

To: Hannah Iyer, CPO Subject: Next-quarter OKRs: focus teams on retention and expansion

The CEO’s objective is clear, but the team proposals do not yet add up to it: Growth is optimizing new logos, while Core HR and Integrations mostly measure shipping. I recommend one objective per team, with a small number of measurable results tied to the company outcomes. Keep delivery plans such as “ship 12 integrations” as initiatives, not proof of impact.

Team recommendations

Core HR — change the objective and replace output KRs. “Build the best HR platform” is too broad. Org-chart redesign, custom fields, and CSAT may be useful, but the pack does not show that shipping them will reduce churn or grow revenue. Prioritize work against the customer problems behind churn—including price/value, which needs a product and pricing response rather than a feature assumption.

Revised objective: Improve retention of core HR customers. - Reduce annualized gross churn for customers without Payroll from 16% to at most 10.7%. This is a first-pass allocation: if Payroll attach reaches 25%, Payroll churn stays at 8%, and the segment rates are customer-weighted, non-Payroll churn needs to be about 10.7% for overall churn to reach 10%. Validate definitions and denominators before locking this target. - Keep CSAT at or above 4.2 as a guardrail, rather than making a score increase the main success measure.

Treat the two proposed launches as candidate initiatives, to be prioritized only if evidence links them to retention or expansion.

Payroll — keep the strongest proposal; clarify the outcome. Payroll directly supports both the company’s attach and churn goals. Payroll customers churn at half the rate of non-Payroll customers, and payroll errors or complexity are the most common reported reason for leaving.

Revised objective: Make Payroll reliable and grow adoption among current customers. - Increase Payroll attach from 18% to 25%. - Reduce payroll-error tickets by 40%. - Keep annual Payroll customer churn at 8% or lower.

Define error-ticket counting consistently, and pair the reduction with a quality guardrail so the metric cannot improve by discouraging customers from reporting problems.

Integrations — keep the problem area; replace “ship 12” as the key result. The evidence supports this area: missing integrations account for 19% of exit-survey responses, and customers with three or more integrations have 6% annual churn. But shipping integrations does not show that customers adopt them or stay.

Revised objective: Reduce integration-related customer loss. - Reduce integrations’ share of exit-survey reasons for leaving from 19% to 14%; treat this as a directional diagnostic, since survey shares are noisy. - Increase the number of customers with three or more active integrations. Establish the baseline in week one and set a numeric quarter target before plans are finalized; the pack does not provide enough data to invent one. - Keep “12 integrations shipped” as a delivery commitment only where customer demand and expected adoption justify it.

Growth — change the objective and stop optimizing acquisition this quarter. New logos and trial conversion do not support the stated company objective. Reorient Growth toward expansion in the installed base, working with Payroll on customer targeting and adoption.

Revised objective: Grow revenue from existing customers. - Increase company NRR from 101% to 108%; Growth is accountable for the expansion motion, with other teams contributing to the shared result. - Set a numeric target, after establishing a baseline, for expansion revenue from existing customers excluding Payroll attach. This makes Growth’s contribution visible without double-counting Payroll’s attach KR.

Process recommendations

• Do not require three objectives per team. Coverage is not a reason to dilute focus. Use one objective and a few KRs per team; capture other responsibilities as initiatives or guardrails. Make cross-team ownership explicit, with one directly accountable owner for each company KR.
• Do not use OKR scores to set PM bonuses next quarter. Bonuses would encourage teams to choose safe targets, avoid shared work, or optimize the score instead of customer outcomes. An average score of 0.95 last year is already a reason to examine target-setting and scoring calibration—not to add financial stakes. Keep performance and compensation decisions separate from quarterly OKR scores.
• Cut planning from five weeks to two. Five weeks consumes nearly 40% of the quarter. Timebox baseline checks and target-setting, then revisit assumptions during the quarter. Use the missing integration and expansion baselines to sharpen targets early, not to prolong planning.

Finally, treat the company’s annual churn and NRR measures as lagging outcomes: review leading indicators during the quarter, but keep the company outcomes as the test of whether the portfolio is working.

To: Hannah Iyer, CPO From: Staff PM Re: Q-next OKRs: making team goals add up, and the process questions

The short version

As proposed, the four teams' OKRs do not add up to the company's. Only Payroll's goals clearly support the CEO's objective. Integrations is measuring output rather than outcome. Core HR is pointed at its own roadmap. Growth is pointed at new customers, which the company OKRs deliberately leave out.

I recommend one objective per team, each tied to one or more of the three company KRs, with outcome-based key results. On process, I recommend no to three objectives per team, no to bonuses tied to OKR scores in their current form, and a two-week cap on planning.

How the company numbers can be reached

The company KRs are linked. Net revenue retention (NRR) is roughly 100% minus churned revenue plus net expansion.

• Churn. Cutting gross churn from 14% to 10% is worth about 4 points of NRR.
• Expansion. The other ~3 points have to come from expansion. Because Payroll is a paid add-on, attach (18% → 25%) is the main lever we control.
• What finance should check. Whether 7 points of attach yields ~3 points of NRR depends on Payroll's price relative to core seats. That is worth checking before we commit to the 108% target.

Where churn comes from:

• Exit reasons (212 surveys, about 364 churned customers a year): payroll errors or complexity 38%, price 24%, missing integrations 19%, moved to an all-in-one competitor 11%.
• Payroll users churn at 8%, versus 16% for customers without Payroll.
• Customers with three or more integrations churn at 6%.

Two caveats shape the recommendations:

1. Attach alone barely moves churn. Moving attach from 18% to 25% at today's segment churn rates lowers blended churn by only about half a point (from roughly 14.6% to 14% on these figures). And that assumes the relationship is causal; engaged customers may simply buy Payroll and stay. Most of the 4-point churn reduction has to come from fixing payroll errors and from integrations.
2. Payroll errors are the biggest single churn reason. They must be fixed before we push attach hard. Selling more Payroll while it still drives 38% of exits could raise churn rather than reduce it.

Team by team

Payroll: keep, with small changes - Objective: keep "Make payroll effortless". - Keep: cut payroll-error tickets by 40%, as a leading indicator. - Add: gross churn among Payroll customers from 8% to 6%. This is the outcome that matters, and tickets can fall without customers noticing. - Change ownership of attach: the 18% → 25% attach KR should be jointly owned with Growth. Payroll can make the product sellable; it does not run the cross-sell motion. - Sequencing: error fixes ship in the first half of the quarter, and the attach push ramps after.

Integrations: change the key result - Objective: change to "Make Quarry the hub customers can't unplug." - Replace "ship 12 integrations" with: share of customers with three or more integrations connected, from [baseline] to [baseline + 10 pts]. The baseline should be confirmed in week one. - Add: activation rate of new integrations within 60 days of launch. - How to choose integrations: prioritise by the systems named in exit surveys and churn-risk accounts, not by count. Four integrations customers actually connect beat twelve they don't. - Test the causal claim: run a controlled push to drive integration adoption in one cohort. The 6% churn figure may reflect selection rather than effect.

Core HR: refocus - Problem: org-chart redesign and custom fields v2 are deliverables, not results. "Build the best HR platform" has no line of sight to retention. CSAT is not a company KR. - Objective: change to "Give customers without Payroll a reason to stay." This is the 16%-churn segment, which is most of the base. - New KR 1: gross churn among non-Payroll customers from 16% to 13%. - New KR 2: a usage-based health score for at-risk accounts, with a target set once the baseline is known. - Existing projects: keep org chart and custom fields only if the team can show they address retention. For example, custom fields v2 could matter if integrations need them for data mapping. - Capacity: if the team can't show that link, I'd lend some of its engineering capacity to Payroll's error work for the quarter.

Growth: redirect - Problem: new logos and trial conversion don't count toward NRR, churn or attach. New customers are excluded from NRR by definition. - Objective: change to "Expand within our existing customers." - New KR 1: Payroll attach 18% → 25%, shared with Payroll, through in-product trials and cross-sell for existing customers. - New KR 2: conversion from Payroll trial to paid among existing customers, from [baseline] to [target]. - Your call before we tell Growth: if the CEO still wants new-logo growth, that is a fourth company KR and should be added explicitly. Otherwise Growth is working off-strategy.

A gap no product team owns

Price drives 24% of exits, and no team can own that through product work alone. Price is also often a polite stand-in for "not worth it", which the work above partly addresses. Packaging and pricing need an owner from commercial or finance. I suggest you raise this with the CEO and CFO rather than assign it to a product team.

Revised OKRs at a glance

Process recommendations

1. Three objectives per team: recommend against. - The company itself has one objective. Twelve team objectives would spread effort thin and reproduce the problem this memo fixes: goals that cover everything and add up to nothing. - Proposal for the CEO: one objective per team, two or three KRs each, all tied to company KRs. - Meeting his real concern: "everything covered" belongs in a health-metrics dashboard (uptime, support SLAs, CSAT) that each team maintains. That separates running the business from changing it, and gives him the coverage he wants without diluting focus.

2. OKR scores setting PM bonuses: recommend against as proposed. - Last year's average score of 0.95 already suggests goals were set to be hit, not stretched. A healthy stretch average is roughly 0.6–0.7. - Paying on scores will push every team to sandbag, just as the company sets genuinely hard targets like churn from 14% to 10%. It also discourages the honest scoring we need to learn what works. - Alternatives for the CFO: - Tie a portion of PM bonuses to company KR results, shared across teams, which encourages collaboration on the shared attach and churn goals. - Base the individual portion on manager assessment of the quality of the bets and the execution, with OKR scores as one input rather than a formula. - If the CFO insists on a formula: at minimum, calibrate targets centrally so teams can't set their own bar.

3. Planning took 5 of 13 weeks: cap it at two, finished before the quarter starts. - Week −3: company OKRs final. This quarter's are already set. - Week −2: teams draft one objective and two or three KRs against them. This memo can be the template. - Week −1: one joint review with you to resolve shared ownership and gaps. Then lock. - During the quarter: baselines marked [TBD] get filled in during week one. They should not reopen the plan.

Decisions I need from you

1. Agree the revised team OKRs above, especially redirecting Growth.
2. Decide whether new-logo growth is in or out. If in, it goes to the CEO as an explicit company KR.
3. Raise pricing ownership, and the process recommendations, with the CEO and CFO.