Draft OKRs

To: Hannah Iyer, CPO From: Staff PM Subject: Align next quarter’s product goals to retention and expansion

Recommendation

Give each team one focused objective, supported by two or three measurable results. Replace acquisition and shipping commitments with customer outcomes that support 108% NRR, 10% annual gross churn, and 25% Payroll attach.

The strongest signals favor fixing Payroll and improving useful integration adoption. Payroll errors or complexity account for 38% of surveyed departures; missing integrations account for another 19%. Price, at 24%, also warrants attention to perceived value and commercial policy.

Payroll customers and customers with three or more integrations churn less, but these are correlations—not proof that attaching either product causes retention. We should improve adoption and reliability while testing their effect on retention, not force adoption to hit a number.

Revised team OKRs

Core HR: Help existing customers realize enough value to stay

Keep: CSAT improvement as a supporting indicator. Change: “Build the best HR platform” is too broad. Remove the org-chart redesign and custom fields v2 from the KRs; retain them as candidate initiatives only if evidence connects them to renewal risk or meaningful customer value.

Revised KRs: 1. Reduce annual gross churn from 14% to 10%, as a shared company result. Core HR is the coordinating product owner, not the sole contributor. 2. Raise CSAT from 4.2 to 4.5, using the same question, sampling approach, and customer population. 3. Improve retention at renewal by 10 percentage points in a pre-defined price/value-risk cohort, versus its baseline. Lock cohort criteria before intervention, include every eligible account, and establish the baseline in week one.

The third target is a proposed stretch target, not a forecast. Core should work with Customer Success and Finance on value realization and price objections. Product improvements alone may not address price sensitivity; unrestricted discounting would also undermine NRR.

Payroll: Make Payroll reliable and easy enough to adopt and keep

Keep: The objective’s intent and the focus on errors. Change: Make the error measure volume-adjusted, add a direct measure of complexity, and move accountability for attach to Growth. Payroll remains responsible for readiness and activation quality.

Revised KRs: 1. Reduce payroll-error tickets per 100 payroll runs by 40% against the previous-quarter baseline, with consistent ticket classification. 2. Reduce median customer time to complete a payroll run by 20%, comparing similar payroll complexity; establish the baseline in week one.

Track error severity and support-contact behavior alongside ticket volume. Fewer tickets are not success if errors persist or customers stop reporting them. Growth should not scale attach ahead of Payroll’s ability to deliver a dependable experience.

Integrations: Make the connections customers need dependable and useful

Keep: Investment in integrations. Change: Replace “connect everything” and “ship 12 integrations.” Twelve low-demand releases could satisfy the proposal without retaining anyone. Prioritize missing connections linked to renewal risk and demand among existing customers.

Revised KRs: 1. Increase by 20% the share of active customers using at least three healthy integrations, relative to a week-one baseline. “Using” must require successful recurring data exchange, not merely installation. 2. Reduce failed scheduled syncs per 1,000 sync attempts by 30%, versus the previous quarter.

Treat both numerical targets as planning proposals to validate against the baseline and capacity. Report retention for newly adopting customers against a comparable cohort. The observed 6% churn rate among customers with three or more integrations is a useful signal, not a guaranteed outcome for new adopters.

Growth: Expand revenue from existing customers through successful Payroll adoption

Keep: Experimentation and conversion discipline. Change: Replace “win more customers,” new-logo growth, and trial conversion. They support acquisition, not this quarter’s stated company objective. Necessary acquisition work can continue as business-as-usual; it should not dominate these OKRs.

Revised KRs: 1. Increase Payroll attach from 18% to 25%, measured on the same active-customer denominator as the company metric. 2. Increase NRR from 101% to 108%, as a shared company result, with Growth accountable for coordinating the expansion plan.

Growth owns targeting, commercial conversion, and the adoption funnel; Payroll owns product readiness. Track successful first payroll and subsequent usage so paid-but-unused attachments do not masquerade as progress. Evaluate incentives against margin, cancellations, and net retained revenue.

Make the goals add up financially

In week one, Finance and Analytics should produce a single retained-revenue bridge: opening recurring revenue, churn, contraction, expansion, and closing retained revenue. Size Payroll expansion and other expansion opportunities against the gap to 108% NRR.

We cannot infer that moving churn down four points and attach up seven points automatically achieves NRR. We lack account revenue, Payroll pricing, contraction, and the precise churn definition. Do not treat customer churn and revenue churn as interchangeable.

Preserve the company metrics’ existing definitions and reporting windows. Annual churn and NRR will respond slowly; review renewal outcomes, payroll quality, and adoption weekly without substituting those leading indicators for the company targets. Shared KRs should appear once on the executive scorecard, with named coordinating owners—not be counted repeatedly as independent contributions.

Process decisions

Reject three objectives per team. Coverage belongs in roadmaps and operating plans. A mandatory count encourages teams to invent goals and dilute attention. One objective per team is sufficient here.

Do not tie next-quarter PM bonuses mechanically to OKR scores. Teams share outcomes, annual metrics lag, and direct compensation linkage encourages sandbagging and metric manipulation. Use OKRs as evidence in a broader performance review covering impact, judgment, collaboration, and learning. Keep incentive decisions separate from stretch-goal scoring.

Investigate last year’s 0.95 average. It may indicate conservative targets, output-heavy KRs, or generous scoring—not exceptional performance. Calibrate committed versus stretch goals and review supporting evidence rather than imposing an arbitrary desired average score.

Time-box planning to two weeks. Five weeks consumed 38% of the quarter. Use week one for baselines, the revenue bridge, dependencies, and target feasibility; week two for trade-offs and Hannah’s approval. Review progress monthly and adjust initiatives as evidence changes, without quietly rewriting targets or definitions.

MEMORANDUM

TO: Hannah Iyer, Chief Product Officer FROM: Staff Product Manager DATE: October 24, 2023 SUBJECT: Q1 OKR Review & Planning Process Recommendations

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Part 1: Strategic Alignment of Team OKRs

The CEO’s company-level OKR is clear: Grow by keeping and expanding the customers we have.

Our current metrics show the path forward clearly. Customers without Payroll churn at 16% annually, while those with it churn at 8%. Integrations act as a powerful retention anchor (churn drops to 6% for those with $\ge 3$ integrations). Exit surveys pinpoint our vulnerabilities: 38% leave due to payroll errors/complexity, and 19% due to missing integrations.

To hit a Net Revenue Retention (NRR) of 108%, gross churn of 10%, and a Payroll attach rate of 25%, our product teams cannot operate as independent feature factories. Their proposals currently suffer from output-focus (shipping lists of features) rather than outcome-focus.

Below is my assessment of what each team must keep or change, along with revised Key Results (KRs).

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#### 1. Core HR * Current Proposal: Obj: Build the best HR platform. KRs: Ship org-chart redesign; ship custom fields v2; raise CSAT from 4.2 to 4.5. * Critique: "Build the best HR platform" is a vague umbrella. Org charts and custom fields are outputs, not outcomes. They do not directly map to NRR, churn reduction, or Payroll attach. * What to Keep: The focus on CSAT. Core HR is our baseline; low satisfaction bleeds into overall retention. * What to Change: Core HR must directly support the retention of non-Payroll customers (who churn at 16%) and lay the groundwork for Payroll discovery. * Revised OKRs: * Objective: Make Core HR indispensable to mid-market operations. * KR1: Raise Core HR CSAT from 4.2 to 4.5. * KR2: Increase 30-day post-signup feature adoption for accounts without Payroll from 40% to 65%. (Drives engagement to lower baseline churn). * KR3: Increase Payroll feature discovery interactions (clicks on Payroll upgrade prompts in Core HR) by 50%. (Supports company attach-rate goal).

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#### 2. Payroll * Current Proposal: Obj: Make payroll effortless. KRs: Cut payroll-error tickets by 40%; raise Payroll attach from 18% to 25%. * Critique: Excellent start. It directly addresses our #1 churn driver (38% leave due to payroll errors) and the company attach-rate goal. * What to Keep: Both KRs are exceptional. They tie directly to business metrics. * What to Change: The team needs a third KR focused on expansion revenue or reducing the complexity cited in exit surveys, rather than just error ticket volume. * Revised OKRs: * Objective: Make payroll effortless, reliable, and irresistible. * KR1: Cut payroll-error support tickets by 40%. * KR2: Increase Payroll attach rate from 18% to 25%. * KR3: Reduce time-to-run-payroll (median minutes per run) from 18 minutes to 10 minutes. (Directly attacks "complexity" cited in 38% of churned exit surveys).

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#### 3. Integrations * Current Proposal: Obj: Connect everything. KR: Ship 12 new integrations. * Critique: "Ship 12 integrations" is a classic output trap. We could ship 12 unused integrations and see zero impact on churn. Customers with $\ge 3$ integrations churn at just 6%; 19% leave due to missing integrations. * What to Keep: The expansion of our ecosystem footprint. * What to Change: Pivot from counting shipped integrations to measuring active connection rates and their downstream impact on customer retention. * Revised OKRs: * Objective: Embed Quarry into our customers' existing tech stacks. * KR1: Increase the percentage of customers with 3+ active integrations connected from 22% to 35%. * KR2: Drive integration adoption in the top 5 most-requested categories (Accounting, Time-Tracking) to 40% of our customer base. * KR3: Reduce churn among customers missing key integrations by 30%.

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#### 4. Growth * Current Proposal: Obj: Win more customers. KRs: New logos up 20%; trial conversion from 9% to 12%. * Critique: The company OKR explicitly shifts focus from pure acquisition to keeping and expanding what we have. A 20% increase in new logos conflicts with our need to fix retention and payroll friction. Furthermore, acquisition velocity without solved payroll/integration churn just feeds a leaky bucket. * What to Keep: Trial conversion optimization (efficient acquisition). * What to Change: Drop the new logo quota. Shift focus to acquiring the right logos (companies predisposed to adopting Payroll) and improving land-and-expand motions. * Revised OKRs: * Objective: Acquire and land high-LTV customers efficiently. * KR1: Increase free-to-paid trial conversion rate from 9% to 12%. * KR2: Increase trials starting with Payroll bundled or selected from 15% to 25%. * KR3: Reduce Day-90 logo churn for new cohorts from 5% to 3%.

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Part 2: Recommendations on Process Questions

#### 1. The CEO’s request for three objectives per team * Recommendation: Push back firmly. * Rationale: Requiring three objectives per team (across four teams = 12 objectives) creates cognitive overload and diffuses focus. It forces teams to invent tertiary goals just to fill quota, leading to the exact output-driven KRs we are trying to eliminate. One sharp, outcome-oriented objective per team—tightly wound to the company’s NRR, gross churn, and attach-rate goals—is far more effective. If the CEO insists on structural symmetry, permit sub-objectives, but ensure each team has only one primary North Star objective for the quarter.

#### 2. The CFO’s proposal to use OKR scores for PM bonuses * Recommendation: Strongly advise against this. * Rationale: Tying OKR scores directly to compensation induces the "sandbagging effect." PMs will lobby for hockey-stick inputs disguised as KRs or set artificially low baselines to guarantee a 1.0 score (as evidenced by last year's suspicious 0.95 average). Furthermore, product outcomes depend on engineering execution, market conditions, and sales—factors outside a PM's absolute control. * Alternative: Use OKRs strictly for learning, strategic alignment, and performance calibration (what habits and rigor were applied), separating them entirely from bonus calculations. If bonuses must be tied to metrics, tie them to lagging company-level outcomes (like NRR or ARR), not team-level OKR self-assessments.

#### 3. Planning timeline (last quarter took 5 of 13 weeks) * Recommendation: Institute a strict 2-week timebox for Q1 planning, utilizing a Top-Down/Bottom-Up framework. * Rationale: Spending nearly 40% of a quarter on planning is a massive waste of R&D capital. The paralysis last quarter came from teams guessing what mattered because company goals weren't translated early enough. * Proposed Rules for Next Quarter: * Week -2 (led by CPO/CEO): Company OKRs locked and communicated (done). * Week 1 (led by PMs): Draft team OKRs against company constraints in 5 days. No multi-round negotiations. * Week 2 (led by CPO/Finance): Final cross-functional review, dependency mapping, and sign-off. * Pencils down by the end of Week 2. Any missing alignment is resolved by you (the CPO) rather than endless consensus-seeking.

MEMORANDUM

TO: Hannah Iyer, Chief Product Officer FROM: Staff Product Manager DATE: October 24, 2023 SUBJECT: Q1 Product OKR Alignment & Planning Governance

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Executive Summary

The CEO’s Q1 mandate is clear: grow through retention and expansion (NRR 101% → 108%, Gross Churn 14% → 10%, Payroll Attach 18% → 25%).

However, our product teams have largely proposed business-as-usual, output-driven goals. Most critically, Growth is running in the opposite direction (hunting new logos instead of retention/expansion), Integrations is measuring shipping volume instead of adoption, and Core HR has defaulted to feature delivery.

Below is an analysis of what each team must keep and change, their revised OKRs, and recommendations to resolve the three executive governance bottlenecks.

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Part 1: Team-by-Team OKR Revisions

#### 1. Payroll * Keep: Focus on error reduction. Exit surveys show payroll errors/complexity cause 38% of all churn. Cutting error tickets is directly tied to saving revenue. * Change: Remove pure attach rate as Payroll’s sole downstream KR. Product cannot own GTM distribution alone; Payroll must focus on the product friction that unlocks adoption and prevents churn within the first 90 days. * Revised OKR: * Objective: Deliver a zero-defect payroll experience that drives expansion and retention. * KR 1: Reduce payroll-related support tickets / error reports by 40% (churn mitigation). * KR 2: Reduce time-to-first-run for newly activated payroll accounts from X days to Y days (activation velocity). * KR 3: Maintain monthly payroll run success rate at 99.5%+ across all active payroll customers.

#### 2. Integrations * Keep: Focus on ecosystem connectivity. Customers with 3+ integrations churn at just 6% (vs. 14% company average). * Change: Kill the output metric ("Ship 12 new integrations"). Integrations have zero ROI if unadopted. The team must optimize for depth of adoption—specifically pushing accounts to the 3+ threshold—and target the specific missing integrations driving the 19% churn response. * Revised OKR: * Objective: Deepen customer stickiness by embedding Quarry into the customer’s core toolstack. * KR 1: Increase % of total customers with 3+ active integrations from X% to Y% (driving toward the 6% churn cohort). * KR 2: Deliver the top 3 requested integrations identified in churn exit surveys (accounting/time-tracking). * KR 3: Increase weekly active sync volume / data exchange by 25%.

#### 3. Growth * Keep: Growth's experimentation velocity and funnel mechanics. * Change: Completely pivot away from top-of-funnel acquisition (new logos / trials). Acquisition is GTM-heavy and contradicts the company’s explicit retention/expansion strategy. Growth must be deployed against in-app cross-sell (Payroll attach) and per-seat expansion. * Revised OKR: * Objective: Accelerate revenue expansion across the installed customer base. * KR 1: Drive self-serve/assisted Payroll attach rate from 18% to 25% (CEO target). * KR 2: Increase in-app expansion qualified leads (PQLs) for Payroll passed to Sales by 35%. * KR 3: Increase customer employee invite/seat-activation rate from X% to Y% in accounts with >100 employees.

#### 4. Core HR * Keep: Focus on platform satisfaction (CSAT). * Change: Eliminate roadmap feature-shipping milestones ("Ship org-chart", "Ship custom fields v2") as Key Results. Features are inputs; the outcome is reducing platform-switching churn (11% leave for all-in-one competitors) and protecting the base. * Revised OKR: * Objective: Establish Core HR as the indispensable daily system of record for mid-market admins. * KR 1: Increase core platform CSAT among HR Admins from 4.2 to 4.5. * KR 2: Increase WAU/MAU engagement of company admins on core workflows (org management, employee records) from X% to Y%. * KR 3: Reduce voluntary logo churn of non-payroll accounts from 16% to 12%.

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OKR Alignment Matrix

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Part 2: Governance & Process Recommendations

#### 1. CEO Request: "Three Objectives per team to cover everything" * Recommendation: Decline firmly. * Rationale: A product team with 3 objectives across 4 teams creates 12 competing product priorities for 420 staff. When everything is covered, nothing is prioritized. Objectives are strategic shifts, not operational check-lists. * Counter-Proposal: Enforce one single Objective per team with 2–3 measurable, outcome-based Key Results. Day-to-day maintenance, technical debt, and minor bugs should be managed via standard SLAs and operational run-rate dashboards, not masqueraded as quarterly OKRs.

#### 2. CFO Request: Tie OKR scores to PM bonuses (Historical avg: 0.95) * Recommendation: Reject this proposal. * Rationale: A historical average of 0.95 is an alarming indicator of extreme sandbagging. Healthy OKR frameworks target an average score of 0.70 ("stretch goals"). If bonuses are linked to OKR achievement: 1. Teams will negotiate unchallenging, output-based metrics (e.g., "Ship custom fields" or "Ship 12 integrations") to guarantee 1.0 payouts. 2. Cross-team collaboration will break; teams will refuse shared accountability for complex metrics like Attach Rate or Churn. * Counter-Proposal: Separate evaluation from OKRs. Measure OKR outcomes as a lagging input into broader performance reviews, but assess PMs on holistic impact: strategic execution, product discovery quality, and business outcome delivery. Reset the target score expectations so that achieving 0.70 is celebrated as exceptional execution against ambitious goals.

#### 3. Planning Cadence: Reducing the 5-week overhead * Diagnosis: Spending 5 out of 13 weeks (38% of the quarter) planning is an unsustainable productivity drain. It signals an overly bottom-up, consensus-driven process with insufficient top-down constraints. * Prescription (2-Week Maximum Planning Cycle): * Week -2 (Day 1–3): Top-Down Mandate. Exec team delivers locked company OKRs and operational boundaries. * Week -2 (Day 4–7): Draft Team OKRs. Product squads define 1 Objective and 3 outcome-based KRs directly mapped to executive metrics. * Week -1 (Day 8–10): Cross-Dependency & CPO Review. Hannah and tech leads conduct a single cross-functional review to resolve dependencies (e.g., Growth ↔ Payroll attach). * Week -1 (Day 11–14): Final Approval & Lock. OKRs published before the start of the quarter; zero changes permitted thereafter.

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Immediate Action Items for Hannah

1. Schedule an Executive Alignment Session with the CEO: Present the unified 1-Objective model, demonstrating how 4 hyper-focused product goals cover Gross Churn, NRR, and Attach Rate far more effectively than 12 diluted objectives.
2. Align with the CFO: Share the risk analysis regarding metric inflation (the 0.95 score reality) and present the alternative performance compensation model.
3. Issue Directive to Product Leads: Reject Growth, Core HR, and Integrations' current drafts. Instruct them to submit revised KRs based on the outcome targets above by end of week.