How effectively are you setting and communicating goals for your company or team?
While you may believe you’re very effective, those under you may not agree. Only 16% of employees said their company is good at setting and communicating work goals. And only 26% understood how their work contributed to the company’s goals. Ultimately, these disconnects result in confusion about where to focus efforts, lack of alignment, and difficulty working as a team.
The right goal-setting framework can alleviate these issues.
Goal-setting models commonly used by companies include:
● OKRs (Objectives and Key Results)
● KPIs (Key Performance Indicators)
● SMART Goals (generally used for individual goals)
Many people confuse KPIs and OKRs but they are not the same thing. So let’s first clear up this confusion by examining the key differences.
OKRs vs. KPIs: Key Differences
KPIs are generally about measuring the performance of standard processes (business as usual). They are cascaded down to the teams with the aim of achieving 100%.
OKRs are more aspirational, so 75% attainment is great, and they can be tailored to meet the needs of each team. OKRs are more suitable for an environment that promotes learning and innovation.
The two frameworks are not mutually exclusive and even though KPIs serve a clear purpose, I find the OKR framework to be the most agile and effective. This may be why it’s gaining so much popularity. Companies like Google, Amazon, and Adobe use it. And various platforms like Workboard have built OKR software solutions for companies of all sizes.
This article will explain the OKR framework, how to develop an OKR, five key OKR benefits, and my best OKR tips.
OKRs Explained
Venture Capitalist John Doerr created OKRs to align a goal with how you’ll measure results. Essentially, it’s a strategy to set and track aspirational goals. OKRs can be used individually, at the team level, or company-wide for all teams.
They are easy to use and incredibly flexible, allowing maximum agility at any point.
You can set up an OKR with this deceptively simple template:
I/my team will achieve ___________ (objective), as measured by (key result).
OKR Example
● Objective: “Grow the company’s online presence to attract new customers.”
● Result: “Customer enquiries increase from 100 to 250 per month.”
Do’s and Don’t Do’s when Setting OKRs
Objective: This is your statement of intent. It’s a top-priority goal that’s aspirational and meant to create purpose so refrain from using numbers here.
Key Results: These are also aspirational. They represent the best possible results you can realistically attain, not the most probable. It is the perfect moment to get people out of their comfort zones as they envision and articulate outcomes. You can introduce numbers here but don’t just list action items as key results.
What’s the difference?
The key results focus on the outcome, the way you will measure success. Actions are what you need to do to achieve these results. The action is the output. When you have a clear set of key results, your actions are purposeful and intentional.
How Many OKRs?
The OKR framework doesn’t have a built-in time frame to accomplish a goal. It is recommended that you set your OKRs quarterly.
Set between 3 and 5 OKRs during that timeframe. Too many, and you lose focus. Too few, and you don’t achieve enough momentum toward your most important goals.
Track them regularly to monitor progress (ideally, fortnightly).
5 Benefits of OKRs
- When OKRs are set at the executive level, managers can filter them down and tailor them to teams. This down-current motion addresses the issue of team members understanding how their work contributes to the overall goals. OKRs allow teams to connect to aspirational goals and know how they contribute while allowing them appropriate flexibility and autonomy. Teams can adapt or interpret what’s most important to them.
- The tracking mechanism of OKRs, especially if you use an online platform, can trigger lightning-fast response times and pivots. This also helps build transparency and accountability at work.
- Companies are working leaner as conditions change. Particularly when the economy is uncertain or in a downturn. This leanness can translate into too much to do and too few people to do it. OKRs can keep people focused on priorities and specific results for a targeted time.
- OKRs break a large, abstract objective into small, manageable chunks.
- OKRs promote seamlessness and cross-functionality among teams.
OKRs in Action
To give you an idea of how to develop and begin using OKRs, I want to tell you about an OKR workshop I ran for a leadership team in the Professional services industry.
About half of the participants were unfamiliar with the OKRs, so I started by orienting everyone and getting them on the same page. To differentiate between good and bad OKRs, we analysed a few examples.
Then, we discussed which areas should be the focus of the team’s OKRs over the next 90 days. We landed on three: employee engagement, sales, and profit maximisation.
I split the room into small groups and had each define an objective in one of these categories. Once they were done, they shared it with the rest of the group and worked together on what the key results would look like in the next 90 days.
OKRs Tips
- As my workshop shows, when setting OKRs for the first time, allow extra time to help people understand what OKRs are and how to form a good one. It would help if you also had extra time to percolate ideas and productive conversations.
- Don’t get hung up on perfectionism. The OKRs will likely be flawed the first time around. But, like any skill, the more people practice them, the better they’ll get.
- The initial OKR goal-setting session is only the beginning. Review fortnightly. You don’t want to make the process overly cumbersome, so you need a system to monitor it. You’ll find a variety of software platforms that can be used to simplify the administration and oversight process.
- Don’t be tempted to adjust your results, during the 90-day cycle, if they don’t go as planned. Instead, let the OKR run its course and integrate your learning into the next 90-day OKR cycle.
- Use the framework to engage teams and build shared purpose. It may be tempting to keep OKRs within a small group or to yourself. However, sharing them can help meet goals and create a culture simultaneously.
If you want support using the OKR framework, Change Aligned, strategy consultants in London, can help. With proven tools and methods, we help organisations and leaders create the conditions for change today to achieve sustainable success tomorrow. Learn more.
About the author
Olga Valadon is the Founder and Director of Change Aligned. She is a strategist, leadership mentor and corporate empathy expert with three decades of experience in global corporates. Her company specialises in culture design and leadership development. Olga is on the board of the University of Cambridge Primary school, advisor to Equal Employer®, and associate management lecturer at BPP University.
