OKRs, expanded as Objectives and Key Results, are a set of goals that are set at the start of a performance cycle. OKRs are also related as Key Performance Indicators (KPIs). Often OKRs and KPIs are used interchangeably. But there are some subtle differences. OKRs, unlike KPIs, also include an employee’s personal aspirations as an objective.
OKRs are expected to be accomplished. OKRs not being accomplished in one cycle are readjusted for the next cycle. OKRs provide a way to assess an employee’s progress, speed of accomplishment, knowledge, and skill level.
Leapsome has a great free template
for setting OKRs. It will help organizations build the right set of OKRs that encapsulate their larger vision for themselves and their employees. The template also provides guidance on the theories, principles, practices, and methodologies to leverage OKRs for effective personnel and stakeholder management.
What are objectives?
By definition, an objective is a course of action. It is something that is expected to be achieved. Objectives can be categorized as key objectives and stretch goals. Key objectives are expected to be met.
Stretch goals are accomplishments in addition to accomplishing the main objectives. An employee’s strengths, areas for improvement, and chances of promotion are assessed from this. Therefore, it is essential for an employee to properly estimate their objectives.
What are key results?
Every objective has at least one or many key results. A key result is an indicator that the objective has been met. A key result can be partitioned into multiple key results or phases.
The way objectives and key results are set up depends on the organizational structure . A flexible OKR policy is sometimes viewed as the best way to assess performance. But, there could be situations when each department requires its own OKR system.
Are OKRs only for employees?
OKRs are also for management. In an organization, all stakeholders may be required to participate in a performance review cycle. Technically, the management professionals are also employees. But, their OKRs could be different and oriented towards people management, sales, revenue, and even seemingly abstract OKRs such as to increase organizational culture.
OKRs can be taken up by vendors, suppliers, and third-party personnel, including contractors. Therefore, OKRs are for anyone and everyone whose performance directly impacts the company’s performance.
7 benefits of implementing an OKR for a company in 2022
There is no doubt that the top companies have realized innumerable benefits by implementing OKRs. Not only have OKRs boosted efficiency, but also increased engagement. There is better interaction and collaboration between employees and employers. Both parties know and understand their stipulated roles and responsibilities. Both agree on the nature of their interaction and on what lines.
Here’s a look into 7 of the main benefits of implementing an OKR for a company.
1. Align employees to the overall corporate vision
OKRs of an employee need not be team or project-specific. But they should never reflect a personal aspiration outside of the company’s business. There have been many cases where OKRs were set and misaligned to the company. For example, a personal objective to complete training in a particular technology could be an OKR. But if the technology is a competitor, it has to be turned down or flagged by the employer as not a good OKR. This type of granular check of OKRs may not exist in current OKR systems.
2. Set micro-goals
One of the main problems with OKRs is scoping. A goal can be part of a bigger one. Such a goal is a micro-goal. In a performance cycle, an employee can set a few micro-goals. If they achieve these micro-goals, it brings them closer to fulfilling their bigger goal. Micro-goal management is one of the best tools for progress. Because with micro-goals or milestone planning, progress is assured. It also helps the goal seeker to assess their goal after some time. For various reasons, the goal that they set might not be relevant. And they have the flexibility to stop pursuing it.
3. Usher a culture of accountability
Goal orientation makes an employee or manager create value. Because when the goal is achieved, an organizational objective is achieved. When a personal objective is achieved, indirectly, the employee or manager becomes a part of the corporate vision’s larger goal. Goal orientation creates a culture of accountability. It makes all stakeholders conscious of their efforts, time, and action. They ensure to have meaningful conversations. They ensure to take the help of peers and colleagues. A culture of accountability also creates a collaborative environment.
4. Boosts employee morale and reason
Employee morale is a combination of many factors. If the work they are doing is meaningful for them, it creates positive action. If good colleagues and managers surround them, they tend to be collaborative. A participative environment functions as a cohesive unit does not create lone wolves. Instead, it makes a pack of wolves ready to attack goals, accomplish them together, and get forward. OKRs give employees a reason to perform. Objective accomplishment then serves as a basis for the increase in compensation and potential for promotion.
5. Root cause analysis of objectives not met
Some departments function differently. For example, research and development departments. Objectives could be set differently for the people working in such departments. Experimental objectives could be set. An experimental objective has a different kind of key result. The measurement of the objective is based on fact-finding, the amount of data collected, the research progress, etc. Such objectives are made to fail. Because such objectives come up for root cause analysis. This activity provides insights into the courses of action taken thus far. And it serves as data to set further objectives in the research area.
6. Improve resource management
Objectives and their accomplishments provide the management insights into employee strengths and areas for improvement. It helps managers shuffle employees around. So that employees get the objectives that are suitable for them. By doing this, a high-performance-oriented system is developed. Tasks are taken up only by those who have an aptitude in them. The rest can develop their skills to take them up while doing their tasks. The management can suggest to an employee that a particular role and responsibility is suitable for them. It creates awareness in the employee. Something that they might not have considered before.
7. Increase productivity
Instead of splattering productive time and spraying them everywhere, OKRs provide direction and purpose. They serve as effective guides for time management. OKR participants invest their time in fulfilling objectives. Their overall productivity increases. Their sense of fulfillment increases too. As a whole, the organization becomes productive as well. Because the organization is simply the sum of many moving parts. And when all the parts start working their portions, the giant organization wheel moves without a hitch.
Why do some OKRs fail?
Scoping issues
OKRs fail because people don’t scope them. They either set unachievable goals or goals that undermine their ability, both of which are counterproductive. Chasing unachievable goals diminishes the quality of output. Underperforming is a waste of resource time, labor, and cost.
Value realization issues
OKR participants sometimes don’t realize value from OKRs. Their OKRs are not aligned to their larger goals and aspirations. Either their OKRs are too team-specific, current job-specific, or not directed to any purpose at all. OKRs should have a mix of everything. It should cater to a person’s professional and personal development.
Not enough employee engagement/productivity tools
OKR failure can also result from an organization’s inability to provide enough tools or resources for an employee to fulfill their OKRs. Either the tools or resources are hard to access, or the employee must undergo extensive training to use them. Either way, this information has to be known to an employee.
How can an automated OKR system help?
An automated OKR system should be part of a larger suite of applications. The suite should have learning, human capital management, and employee development applications. Ideally, an automated OKR system should provide the following levels of automation.
Goal and process flexibility
Irrespective of the changes in the process, workflow, or organizational framework, goals or objectives should be portable. The system should support this flexibility. The system should allow goals to be formatted as per the current trending process of the framework. An OKR application can also provide a high level of personalization. So that companies can set specific goals for specific individuals.
Facilitate goal collaboration
An objective could be a collaborative effort and may require brainstorming sessions. It could be the result of concerted action. An OKRs application or goal-setting system should support such collaboration. Everyone who participates in the objective should be able to update progress. They should be able to put in their comments, provide contexts, and set up meetings around the OKRs.
Map goals to issues
One of the use cases for OKR systems is to provide a one-to-one mapping between a task management system and the OKR system. So that an objective that tracks task completion can automatically update as and when the task is set to complete in the task management system.
Conclusion
OKRs are designed to make individuals, groups of people, departments, business units, and companies become productive and resourceful. So, it is important to set OKRs those measure activities that matter. OKRs provide a reality check because generating ideas and roadmaps are easier than executing them. OKRs therefore bridge the gap between fact and fiction.