Combining OKRs and performance reviews leads to the problems of understated targets, overstated accomplishment, and low collaboration.
One friend of mine developed her rule for success after working in the corporation. "In the beginning, I was setting bold Objectives and, naturally, missed some of them. And didn't get the bonus. Now I set as unambitious goals as possible, finish them in a few hours, and spend the rest of the day for myself. The most important is that everyone seems to be happy, and I get my bonus every time" — she shares.
This is a kind of behavior that happens when you combine OKRs and performance evaluation. To avoid this, you should separate the two processes
and avoid formulas. However, you'd still want to use OKRs as one of the inputs for performance evaluation (but not the only one and not the most important one). Also, accept that all performance reviews are subjective.