OKRs or Objectives and Key Results are now a widely followed performance management framework that has allowed organizations all over the world to implement strategy at scale. The advantages of this framework have been attributed to an increase in the overall company alignment, visibility of goals, and an increase in focus. The OKR framework helps modern organizations achieve this by bringing the employees and their responsibility under a single umbrella of common objectives. The structure evolved from Goal setting, where you now split the goal into Objectives and Key Results. The Objective here signifies the goal to be achieved, while key-results serve as periodic markers that help one understand how far along have they come together in achieving these goals. The framework also advocates several pre-defined structures that support your people to understand, prioritize, align, and measure their output.
OKR allows businesses to effectively align overall business strategy with employees in a scalable, actionable, and measurable way. It also will enable organizations to adopt an outcome-based approach as opposed to an output-based approach.
What is an Objective?
An Objective is the narrative form of the goal that is to be achieved at some point in the future. The Objective defines a clear directionality and motivates the employees toward it. The aim of establishing the Objective is like a marker on a map that pinpoints the exact location. The Key-result however, is a measurable marker that helps your employees discern progress throughout various points in their goal completion. It acts like a signboard that displays how for are near you are from the destination to be reached.
What is an Initiative?
The initiative is a set of actions that you took to influence a particular Key-Result. Borrowing the previous analogy, if OKRs show you the destination on the map, and Key-Results are the signboards, then initiatives are everything you did to reach every passing milestone including picking up your car, filling it with gas, driving it and more.
What are the benefits of OKR?
The most significant impact of implementing an OKR process in most organizations that do not involve an existing goal-setting practice is the remarkable change in the organizational culture from the emphasis on the output to a focus on outcomes. OKRs instills overall directionality, visibility, and global alignment for the workforce within the organization. These three become major contributing factors to a significant increase in employee engagement.
Modern research illustrates that when multiple clusters of employees that followed OKRs were compared with those that did not, the group which used OKR proved to be much more efficient and had a grasp of their specific responsibilities, that could directly be mapped to increased performance and revenue. Moreover, the cluster that did not follow an OKR process even volunteered to do so in the upcoming goal cycle.
The benefits of OKR process are many, as they mainly help managers and employees help orient themselves toward a single common cause, thereby ensuring a pinpointed focus of everyone’s priorities toward a common objective.
How does OKR ensure alignment?
The continuous performance framework not only helps modern managers and employees align the work they do but also helps them prioritize on what’s most important by prioritizing only the work that has the most prominent business impact. With directionality and alignment, your people start achieving remarkable results when their engagement is combined with a purpose. OKR helps communicate and execute strategy in a way everyone understands.
However, before you start adopting the OKR process, it is imperative to have a clear understanding of the specific issue that you are trying to resolve, to put it in simpler terms, the clarity of Business Objective for which you’re trying to leverage OKRs. For most businesses, OKRs help in the execution of their company strategy that provides transparency of operation, hierarchy, and metrics to track progress clearly. However, in some businesses, there warrants the requirement of an internal champion who takes it up to drive the OKR adoption amongst his peers by explaining to them the advantages that follow. This champion ensures that people receive training, engagement as well as guidance within their team. The OKR process is easy to grasp but harder to implement without being aware of the nuances within an organization. It requires a significant shift in the way people learn and process information, tracks their progress, and measure their overall performance. That’s why the executive management deals with strategy, while the internal champion drives adoption.
What is the North star OKR?
Many businesses have a brand that directly corresponds with their mission and vision; however, these often get misinterpreted interchangeably. That’s why the modern mission statement is integrated into an OKR plan with what’s called a North Star metric, which serves as the pole star for the entire organization to look up to and gauge their progress. The North star OKR defines the long term plan of the business under which all of the other objectives align towards. This north star Objective should be around 10-25 years.
Most organizations have a mission and vision, but often these are difficult to understand and can be confused with one and other. We recommend turning your mission and vision into an Ultimate Goal or when using Perdoo, an Ultimate OKR. Your Ultimate Goal defines your organization’s long-term purpose and acts as the north star to which all other OKRs align. An Ultimate Goal should aim for a point at a considerable distance in the future; 10, 15, even 25 years is reasonable.
What is Company OKR?
This vision then creates the next highest level of strategy that corresponds to your Company OKR, which are the four most top priority goals, that your organization wishes to achieve in the next year. It is imperative that the company OKR follows a democratic process, as opposed to a Unilateral decision making. The key stakeholders in the organization are addressed first before they gather inputs from their people lower on the organizational hierarchy. Then the overall company OKR gets drafted and passed down.
Achieving this consensus can be accelerated by having open conversations and maintaining a free flow of communication across all levels of management. Every Objective that is after the company OKRs should not exceed 3 to 5 in number. To do this, you can leverage a free-to-use and intuitive app like Upshotly or adopt google sheets.
The Objective of the exercise is to come to an agreement on what the organization should have achieved by the beginning of the following year.
Once the company objectives are decided, the department objectives that cover specific departments should be drafted in alignment with these company objectives. Ultimately if you observe all these objectives are aligned towards the North start OKR. These department objectives should be boiled down to 4-5 essential statement, that includes the most significant achievements that are possible until the next evaluation cycle. These achievements on accomplishment should have a drastic change across the organization.
How much time Should I give for OKRs?
Though there is no strict time that is prescribed within the framework as written by john Doerr, defining a timeframe between 3 months to a year will help you quickly identify what works and what does not. Doing this helps you promptly adopt course correction in the case at a later stage, you realize that these OKRs are not contributing to your company.
How do I know my key Results work?
Typically your Group Key Results should reflect a change in some metric that’s brought your team towards 70% to 80% of your target, the rest of your organization will notice. If this metric becomes too easy, then your Key results are not ambitious enough, while if this below 70-80% then they’re either too hard or too easy and your team’s performance is not at their maximum potential.
How many Key Results per Objective?
The best practices dictate that one should not exceed more than 3-5 key results for every Objective. For focusing on too many things, leave you vulnerable to be not focusing on anything at all. These KRs should have a scop that’s clearly defined, and the metrics should be laser-focused. Group Key Results should be focused and have a clearly defined scope through influence and not a result of direct action. E.g., close 100 deals as opposed to making 500 sales call in a month.
Initiatives tell the work that is warranted to influence these kids. As opposed to Key Results themselves, which measure the progress toward a particular milestone, initiatives provide directionality towards the best sequence of steps that are to be followed and will help you achieve the KRs as early as possible. Actions are any task or activity done in direct correlation towards influencing a particular key-result. Frequently revisiting these Key-Results will help you gauge whether your initiatives are delivering the desired KRs.In case they do not, these initiatives can be updated and reassigned.
How to set an initiative?
The initiative should be specific and clearly defined. The person that is assigned an initiative should have no room for ambiguity in interpretation. Sometimes initiatives tend to be vague and might cause performance disruption unless further clarification is provided. The best way to define an initiative should be to use action verbs which leave no room for misinterpretation.
Should Objectives be specific?
No, objectives can be vague as they point a location, on the map, hence they can contain as much room for generalization as allowed in a GPS circle that shows the area on a digital map.