Draft OKRs

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.

To: Hannah Iyer, CPO From: Staff PM Subject: Next-quarter OKRs: one retention-and-expansion plan, not four roadmaps

Recommendation

Give each team one focused objective, with two or three measurable results. Redirect Growth toward existing customers, replace shipping commitments with customer outcomes, and retain Payroll’s strong alignment.

The evidence favors Payroll reliability and adoption, followed by integrations. Payroll problems account for 38% of surveyed exits; missing integrations account for 19%. Price, at 24%, also needs an explicit response—not necessarily a price cut.

These are priorities, not causal proof. Exit surveys may not represent all churned customers, and customers using Payroll or several integrations may differ systematically from others. We should test whether interventions improve retention rather than assume adoption alone causes it.

Proposed team OKRs

The additional targets below are proposed planning targets, not forecasts. Validate feasibility and missing baselines during the first planning week; do not spend the quarter negotiating them.

Core HR: Make the core product worth staying for

Keep: Improving customer satisfaction, but as supporting evidence rather than the primary definition of success.

Change: “Build the best HR platform” is too broad. Shipping the org-chart redesign and custom fields v2 does not demonstrate retention impact. Keep either initiative only if customer evidence connects it to material retention risk; otherwise defer it.

Revised key results 1. Reduce annual gross customer churn among non-Payroll customers from 16% to 11%. 2. Increase CSAT from 4.2 to 4.5, using the same survey method and a comparable customer population.

Core HR is the DRI for non-Payroll retention, working with Customer Success, Growth, and Integrations—not its sole contributor. Prioritize recurring problems among at-risk customers over broad redesigns. Use CSAT diagnostically: a satisfaction increase without better retention is not sufficient success.

Payroll: Make Payroll reliable enough to adopt and keep

Keep: The objective and both proposed results. This is the clearest connection to the company strategy.

Change: Normalize support tickets for usage, and explicitly measure retention among Payroll customers. Otherwise adoption growth can obscure whether reliability improved.

Revised key results 1. Reduce payroll-error tickets per 1,000 payroll runs by 40%, without reducing support accessibility or increasing severe payroll incidents. 2. Increase paid Payroll attach from 18% to 25%. 3. Reduce annual gross customer churn among Payroll customers from 8% to 7%.

Payroll owns the attach outcome and activation experience; Growth owns the commercial contribution. Treat attach as one shared metric, not two independently credited wins. Reliability must improve alongside adoption: expanding a troublesome product could increase churn.

Integrations: Connect the workflows that make customers stay

Keep: Investment in integrations.

Change: Replace “connect everything” and “ship 12 integrations.” Twelve low-demand connectors could produce no retention benefit. Select work using demand from existing customers, churn evidence, and activation friction; improving an existing connector may beat launching another.

Revised key results 1. Increase the share of the opening customer cohort with three or more actively used integrations by 10 percentage points. 2. Reduce integration-attributed churn events per 100 opening customers by 30%, versus a comparable prior-period baseline, with consistent reason coding.

Both are provisional targets requiring baseline validation in planning week one. Define active use as successful, recurring data exchange—not merely connecting an account. Track connector launches and reliability operationally, not as substitutes for these outcomes.

Growth: Expand retained customers, not just acquire new ones

Keep: Funnel measurement and experimentation capabilities.

Change: Remove new logos +20% and trial conversion 9%→12% from this quarter’s strategic OKRs. They may remain operating metrics, but they do not directly deliver the CEO’s existing-customer strategy.

Revised key results 1. Increase NRR from 101% to 108%, with Growth accountable for the commercial expansion plan and Hannah accountable for the cross-functional outcome. 2. Reduce price-attributed churn events per 100 opening customers by 25%, versus a comparable prior-period baseline.

Growth should focus on eligible existing customers’ Payroll discovery, purchase, and activation, alongside evidence-led pricing, packaging, and value communication. Do not meet the churn target through indiscriminate discounts: measure retained revenue after concessions and monitor contraction and margin. Payroll funnel conversion is a leading indicator; its baseline is not the new-customer trial conversion figure.

Make the results reconcile

The proposed segment targets provide a useful planning check: at 25% Payroll attach, 25% × 7% + 75% × 11% = 10% gross customer churn. This is a directional bridge, not a forecast: adoption timing, customer mix, and cohort definitions matter. The current segment figures imply 14.6%, rather than the reported 14%, so reconcile definitions before locking targets.

At an unchanged 2,600-customer denominator, 25% attach means 650 Payroll customers versus 468 today—182 net additions. The actual requirement changes with acquisition, churn, and add-on cancellations.

NRR needs a separate revenue bridge. Do not assume four points less customer churn yields four points more revenue retention. Finance and Growth should reconcile:

Opening recurring revenue − churned revenue − contraction + expansion = ending retained-customer revenue.

By planning close, show how expected Payroll expansion and revenue saved cover the seven-point NRR improvement, including employee-count changes and discounts. If they do not, the plan needs another expansion lever or a different resource allocation.

Use consistent annual churn and NRR definitions. A quarter cannot establish a full year’s causal retention effect; track the agreed company measure alongside quarterly cohort churn and leading indicators, without silently switching to an annualized quarterly rate.

Process decisions

Reject three objectives per team. Coverage belongs in roadmaps and operating dashboards. OKRs identify the few changes that matter most. One objective per team is sufficient here; maintain service, security, and reliability obligations as explicit guardrails.

Do not tie next quarter’s PM bonuses mechanically to OKR scores. That encourages conservative targets, denominator manipulation, and disputes over shared outcomes. Assess performance using results, decision quality, collaboration, and responsible execution. Distinguish committed from aspirational results before the quarter starts.

Last year’s 0.95 average warrants an audit, not praise or an automatic demand for lower scores. It could reflect excellent execution, easy targets, output-heavy goals, or inconsistent scoring. Review the underlying goals and evidence; do not impose an arbitrary score distribution.

Time-box planning to five working days. Five weeks consumed 38% of the quarter. Hannah should set priorities and trade-offs on day one; teams and Finance resolve baselines, dependencies, capacity, and the revenue bridge by day five. Use brief weekly metric checks and monthly cross-team reviews thereafter. Change goals only for explicit strategic reasons, never retrospectively to improve scores.