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 Product OKR Alignment & Planning Governance

---

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.

---

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%.

---

OKR Alignment Matrix

---

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.

---

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.

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.