To be successful, businesses must be able to manage and track performance. While there are many ways to do that, one of the most powerful models is objectives and key results (OKRs). Deceptively simple, it requires just four steps:
- Defining the objectives quarterly
- Implementing tools to measure progress toward objectives
- Communication with team members
- A discussion revolving around achieved and missed objectives
In this post, we will explore what business owners and decision-makers must know about OKRs, what they are, and how this model can be used to facilitate growth and profitability.
What Are OKRs?
An objective is nothing more than something that matters to a business. For instance, it could be reducing errors in the manufacturing process. It might be an increase in customer satisfaction, or it could be the launch of a new project. Most objectives are qualitative or subjective.
Key results are related to objectives. If the objective is the end of a path, then key results are the stepping stones that form the path that leads to successfully reaching the objective. For instance, if the objective is to increase customer service, then examples of key results could be:
- Training for phone support personnel
- Installation of a new CRM
- Customer case studies to determine the cause of dissatisfaction
Whereas objectives can be subjective or qualitative, key results must be concrete, actionable, and measurable. They are hard, yes/no achievements. Did the team attend the number of tradeshows this year? Did the company reach the number of newsletter subscribers necessary? Did the business see the number of new online reviews needed this quarter?
Setting Up OKRs That Matter
The OKR framework is a powerful facilitator of growth and success. However, the key results and objectives must be relevant to the business in question. Generic OKRs do little good. To set up OKRs, decision-makers, managers, and even employees must follow a specific set of steps, outlined below:
- The business must define three to five priorities for the year and each quarter.
- Those priorities must guide the creation of departmental objectives and employee objectives.
- Managers and employees must work together to set up to five objectives and key results that support company objectives, as well as team objectives.
- Managers must track results for each employee weekly.
- Individual employees must update performance metrics so that decision-makers can determine performance across the organization at a glance.
- Individual and team performance-related meetings must be paced correctly to support success in reaching key results and objectives.
Tips for Successful OKRs
While OKRs can guide the organization to success, managers must get everyone on board with the platform. Doing this can be challenging. However, making OKRs transparent will help ensure that all employees can easily see not only the value of the key results but their individual role in helping the organization reach key, meaningful objectives. It helps them understand how the massive web of actions ties together, propelling everyone forward.
It’s also important that employees are empowered. Doing so is deceptively simple. Managers only need to make employees responsible for evaluating their own key results, scoring their performance and progress, and then reporting them quarterly. Not only does this empower them and encourage better performance, but it helps improve engagement on a deeper level by providing a sense of autonomy.
It is also important to allow people to fail when necessary. OKRs do not create a “to do” list. Key results should not be part of any sort of annual review and failure to reach them should not result in punitive action of any type. This further empowers employees. When they are free to fail, they are also free to pursue key results with greater fervor and ardor. After all, if failure is seen as part of the path of growth and success, there are no negatives and employees are more willing to experiment and innovate (grow).
Avoid the temptation to set too many OKRs. Forget you’ve ever heard that idiotic adage, “go big or go home”. Never exceed more than six OKRs – doing otherwise will overload the team. The results here can be staggeringly negative, even going so far as to create disengagement and discontent.
Managers should also remain intimately involved in the progress of reaching goals. Check-in with individual team members and leaders regularly to stay apprised of progress and to help provide real-time feedback and course corrections. This is not a “set it and forget it” process.
It is also important for managers to ask deeper, more probing questions. “How was progress this week” is simply not enough. Instead, as questions that help to qualify employee performance, challenges, and hurdles. “What challenges are you encountering,” or, “Do you have the right tools”, are both good examples.
Help employees and team members manage progress by breaking larger goals into smaller steps. This makes things more actionable and essentially builds a ramp that leads from where an employee is now all the way to achieving a specific objective.
Finally, managers and decision-makers should remain flexible. The unexpected can and will happen. New competitors will arise. Unforeseen products will come to market that dramatically affect the company. Remaining flexible will help ensure that the company can adapt, evolve, and still thrive despite those changes.
Connecting the Dots
Ultimately, OKRs provide an invaluable map that takes a business from A to Z, hitting each point along the way. However, understand that OKRs are just the map – they’re not the land the business is traversing. They must remain flexible and adjustable.
It is also important to remember that progress toward objectives is everyone’s job. An organization’s mission-critical objectives must be translated into actionable steps for each department, team, and then individual. Forward progress can only occur when everyone’s efforts tie together and help to achieve the same goal.