Objectives and Key Results (OKRs) methodology is gaining popularity in the business world. More and more organizations are following the path of Google by applying the concept of OKRs to their own businesses. Companies ranging from Fortune 500 to startups such as Duxter have encountered great success using OKRs. The methodology encourages the all employees to set their objectives and the key results which they are held accountable for. Ideally, the CEO and Executive team will set the OKRs for the organization as a whole; the management team decides on the departmental objectives based on what the organization wants to achieve. Employees then have a clear line of sight of how they can contribute to the bigger picture. Setting OKRs and holding your employees accountable for them has led to these advantages:
- Higher employee engagement – Employees have a sense of accomplishment when they can clearly see how they are contributing to the departmental and organizational objectives. Employees are more likely to be motivated and highly engaged when they are empowered to make an impact.
- Efficient use of resources – By sharing OKRs publicly, managers can prevent duplication of objectives; hence, helping your organization use its resources in the most efficient way. It is particularly useful when you have teams working in different geographical areas.
- Connecting your organization – Cascading of OKRs from organizational level to individual level creates a stronger connection among every member of your company. Employees can see their peers’ objectives and be proactive in supporting them whenever necessary.
- Better picture on performance – Employees have clear expectations of what they have to achieve and managers can track the progress of each objective. When it comes to having 1:1 coaching sessions on an employee’s performance, managers know exactly what the employees were focused on.
As an OKRs consultant for 7Geese, I have the pleasure to work with many clients on how to set effective OKRs. Researching on potential drawbacks of using the methodology, I have found no results at all. Being in constant contact with my clients, some recurring issues have come up and this blog post is the perfect opportunity for me to share what they are, and how we dealt with them.
Specific vs. Broad
“How specific do objectives and the key results have to be?” The more specific, the better your OKRs are. One of the main purpose of setting OKRs is for your employees to know exactly what they are held accountable for. By setting specific key results, you are indicating the level of expectations you have for them. Clients often ask whether making OKRs too specific will lead to less creativity from the employees. I would argue that for OKRs to be the most effective, you have to embrace a self-managing culture i.e. set what you want the end results to be with your employees and give them the freedom to decide how they want to achieve the objectives. Be specific for the WHAT, not the HOW.
“How do I set a measure for objectives that are not quantifiable?” OKRs become a bit more complicated when you cannot assign a %, $ or a number to measure your key results. A common concern is setting OKRs for highly technical positions such as developers. In these situations, I recommend clients to put their milestones as their key results. Employees should break down their objectives into different phases and use them as the key results. For example, one of your developers’ objectives is “Solve issue X that our users have been facing”. The key results may be “Recreate the issue” and “Send for Code Review”. Be careful not to confuse task list with key results. For key results, you are describing a milestone. The steps to recreate the issue is what forms your action items.
The issue of setting attainable vs challenging objectives is very common. Striking the right balance between attainable and challenging is hard and I always tell clients that this issue needs to be addressed from the start with the input of the employees. If you are setting a stretch goal for your employees, be honest about it. You want to explain to them that you believe that they have the skills and knowledge to achieve the objective. Employees will be demotivated if you keep setting unrealistic objectives. For example, if you are going to set a sales quota, do not arbitrarily pick a number. Look at your historical data. Understand the trend of your business. Then discuss with your employees on why you want their key results to be such. Listen to the potential barriers employees fear they may encounter and adjust accordingly.
I like to use the 70-20-10 model to decide on what OKRs I want to set. Following that model, 70% should be related to your core duties, 20% should consist of projects that are directly related to your position, and the last 10% should be personal projects you are passionate about. Although one of the main purposes of OKRs is to help your employees be focused on what they need to do given the time frame, you should also allow for them to have their own personal projects. At 7Geese, our VP of Product Design, Kevin Fales will always have couple of side projects he is truly passionate about. Whenever he has some free time, he will work on them. The amazing part of this is that many of his side projects are implemented in 7Geese because they are awesome.
“How long should the objectives be?” is a common question many clients ask me. The answer is “it depends”. Some companies like to set shorter objectives due to the fast pace of their business. For example, at 7Geese, our main OKRs are set for the month. Being a startup, we are constantly innovating our product. Setting longer OKRs may not reflect our flexibility to adapt to changes. Regarding how to set as organizational objectives, I encourage managers to set both their short term and long term objectives. For example, a short term objective can be “Reach $100,000 sales revenue for this quarter” while a long term objective can be “Be the top selling social performance management software”. The reason to add both is to give more information to your employees on where your company is headed.
The OKRs methodology is not perfect; you will definitely encounter some barriers during the process. However, the pros outweigh the cons. At 7Geese, we use our own product to set our OKRs and the process has made the team more engaged and focused. I would encourage you to watch the Rick Klau’s video on how Google set its OKRs and to sign up with 7Geese just to see how we help you get to that stage.Tags: advantages of OKRs, benefits of OKRs, cascading objectives, Google OKRs, Google ventures OKRs, how to deal with OKRs, Issues with OKRs, objectives and key results, OKRs, Rick Klau, SMART model