Two members of the BetterWorks implementation team from RMS, the world’s largest catastrophe risk modeling company, recently sat down with BetterWorkers for a lunch-and-learn session at our new Redwood City headquarters. Amelia Merrill, Head of People and Talent, and Alex Barnett, VP of Developer Relations, shared what led them to BetterWorks in the first place and what their early success with the pilot project has taught them.

BetterWorks: Would you start with some background on RMS?

Amelia Merrill: As much as we are a natural catastrophe modeling company, which is a lot of big words, the goal of our CEO, Hemant Shah, is actually to make the world a more resilient place. We build catastrophe models, like a flood model, for example, that we sell to insurance and reinsurance companies, which use them to understand their risks. I’ll make it even simpler: we’re like the bookies of risk. We tell you what the spread is, but we don’t tell you where to bet. Then insurance companies take that spread and make the decision on how they want to invest their dollars and how much risk they want to take on different perils out in the market.

Right now, we’re building the first risk platform. Let me give you an analogy. Your grandparents used to call a broker and say, “I want to trade this stock,” or “Tell me if I should be buying or selling these different pieces of the portfolio.” Today, as dangerous as it is, we can all go on to E*Trade and we can trade stocks and do the research ourselves. That’s the difference between today running a model and tomorrow having a risk platform that’s real time. The fact that many more people will be able to get to the data and run risk models will literally change the face of insurance. It’s a super exciting opportunity because it’s rare that you actually get to build a platform that will change an entire industry.

Alex Barnett: At RMS, we have 1,200 employees worldwide, with a number of different offices, and about 250 Ph.D.s. We’ve got some really smart science people. They’re the ones cranking out the models that are then coded in software, which then we license.

Amelia: We have more degrees than employees. You don’t hear that very often!

What led to RMS adopting BetterWorks?

Amelia: We’ve had a pretty massive executive change. For the growth that we want, we needed to improve our ability to execute, to think about our culture differently, to create more focus and clearly state our priorities. The upside of that is it gave us a platform to make some changes—plus people were very open minded about it. We also have some new executives that had used OKRs or are familiar with OKRs, so I had some help to push this through.

Alex: I was looking for opportunities to be able to improve the company, and Amelia and I talked about the OKRs project. Then we kicked off a pilot at the end of September.

How has the pilot been received?

Alex: We’ve run it now for three months, and we’ve done our first quarter of OKRs. We’re still closing that out with assessments, which will happen next week. Based on the success of the pilot, we’ve made the decision to roll it out to all 1,200 employees across the business over the next couple of quarters.

We originally aimed for around 70 people across the business—everybody on XCOM, our executive team—because we wanted to test the vertical and the horizontal component of OKRs. It’s not just enough having the senior leaders, but we also wanted to take a business unit and a set of teams that include individual contributors, managers, line managers, senior directors, VPs and all the rest of it, and understand what that looks like. We included part of the software organization, capital markets, support and a few others. We really wanted to be able to test the up and down side of OKRs. What ended up happening is that as people and leaders were adopting it, they said, “This is really good, can we add some more of my team?” We ended up with 120 people using OKRs, from the original goal of 70.

We also ended up with about 2.5 objectives per user and around 75% of the goals aligned, which is higher than the 50% goal we were shooting for. It’ll be interesting to see what these numbers look like as we start rolling out.

We recommend a 50% goal for OKR alignment, do you feel that’s accurate?

Amelia: I think 50% is accurate, and I’ll tell you why I think we were able to get to the 75%. It’s because we have a lot of leaders at the top that are all aligning with each other, but as you move down in the org to the individual contributor, they’re going to have things that aren’t necessarily aligned to the big four priorities, because their job includes a more broad range of activities including ensuring we keep doing what we do best. There’ll be lots of personal goals or there’ll be, “I want this system to work five times faster”—and while that HR system working five times faster is great for us, it doesn’t, in that quarter, help us directly get the platform delivered or prepare for our big client conference. I think by the time we roll out more, 50% is the number that we want to be hitting.

Alex: Another thing we picked up at a workshop we had, facilitated by you guys, is the ability to mark a goal of a certain type—personal versus not personal – so you can understand that might affect the percentage numbers, just from a metric standpoint. If 20% of goals are personal goals, they’re obviously not going to be aligned, and so that might affect the number. We think 50% is about right.

We also love the software. We think the software is awesome—and we keep getting that feedback. The easiest part of the whole thing, frankly, is getting people to use BetterWorks. They enjoy using it. There’s still lots of learning they need to do, but overall it’s very good.

What’s been important for you in communicating about BetterWorks and the new process for goal-setting?

Alex: I read Kris Duggan’s blog post talking about performance management and how people are just throwing it out, it’s irrelevant. How can you have goals for one year and then not change that after about 30 days or 60 days? That was a problem we wanted to fix. Another was a real sense of transparency and driving accountability. It’s a cultural issue around accountability that we’re really trying to drive. Everybody said they want to be accountable; everybody wants everybody else to be accountable. But how can you really do that if you don’t have a level of transparency about who’s signing off on what commitments, and in what time frame? You can’t have accountability without transparency, and people agree that that’s something we wanted to improve.

The other priority is really ensuring that there’s a connection between the work that everybody’s doing on a day-to-day basis and understanding how that contributes and relates to the high-level goals and priorities of the business. It sounds like common sense, but a lot of people just didn’t know what the priorities were, either for the whole business in that quarter or for that business unit. That’s obviously a problem, and something we really wanted to be able to fix.

This area around performance management, how does a relationship between OKRs work with respect to performance management? How do our performance management processes today need to change given OKRs and the success of that? And how do people understand the relationship between the performance and the output and its relationship to compensation, promotion and all the rest of it?

The idea is that if we are able to go from where we were and the problems that we’re trying to fix to a better state, we truly believe that will provide a better level of alignment and therefore drive high levels of employee engagement. I’m sure you know the data around that. More engaged employees equal better performance. The way that you’re able to do that is making sure that people are aligned, they’re enjoying the work and they understand the contribution that they’re making. And they very clearly understand what the success looks like, which then leads to high-quality effort and speedy execution.

In summary, it’s about alignment of focus, driving real purpose, real transparency and accountability. It’s about getting higher employee engagement through autonomy and commitment to work that they’re doing and driving for awesome, awesome outcomes.