Objective and Key Results: A Tool To Engage Your Employees
Objective and Key Results: How to engage your employees to commit to the company goals
It is a real challenge to keep everyone in your team concurrent, especially if you don´t keep your team members engaged with the vision of your company. It is common in corporate world that many feel lost about the direction of the company they are working for.
This happens often to millennials. A study by Gallup in 2016 demonstrates that only 40% of millennials feel connected to the visions and goals of the company they work for. It is important to note that a few years from now, the entire workforce will consist of millennials. With that being said, this should be one of your priorities in transforming your company into a high performing company.
The question is – how do you keep everyone on the same page? The answer is by involving your employees in the goal setting. Employee performance increases by 12-15% of those who are involved in the company goal setting, a study from 2015 shows.
To do the same, OKR framework will help you tremendously. OKR can lead your company into an allied transformation and mind-shift if implemented the right way.
This is exactly the level of transformation and evolution that what I offer to my clients in my Organisational Mastery Program. If you want to know more about it, feel free to take our Organisational Mastery Test. It won’t take you more than 5 minutes
Back to OKRs . . .
OKR, which stands for Objective and Key Results, is a simple management tool designed to promote engagement among team members as well as ensure that everyone in the organisation is aligned to the primary objectives. Nowadays, it is used by many companies, including Google.
OKR – a Framework to Goal-Setting
One of the main benefits of OKRs is that everyone in the organisation is aligned with the company goals. This keeps everyone on the same page and with clear priorities.
The OKR concept originally came from Intel, which quickly spread to many startup and companies all over the world. It has a powerful impact on both small and large organisations, and it has been popular by companies like Spotify, LinkedIn, Twitter, Airbnb, and Google. It is not only used in tech companies, but also by other companies in other industries, for example Walmart, Bradstreet, ING Bank, The Guardian, etc.
OKRs Key Components
As mentioned above, the concept of OKR came from Intel, where John Doerr, an American Investor and venture capitalist, who also worked at Google, introduced the idea of OKR. Below is Doerr´s Goal-Setting Formula:
I will (OBJECTIVE) as measured by (SET OF KEY RESULTS).
This simple formula describes 2 things:
- What one has to achieve
- How is he going to measure this achievement
Remember that OKR involves measurable results. Without scaling it, a goal is not a goal. It is simply a desire.
As given in the formula, OKR consists of two aspects: the Objective and Key results. Objectives are basically the person’s goals which are qualitative descriptions of what he or she wants to achieve. Objectives are short, engaging, and inspiration statements that are supposed to motivate and challenge the team.
On the other hand, Key results are set of metrics that measure an individual´s progress in achieving his or her goals.
Each Objective should have 2-5 key results. The idea is to keep the Key Results as few as possible as having more would be difficult to remember.
Examples of OKR
Objective: Create a positive customer experience
I believe one of the most important goals of every company is to provide a positive experience to their customers. This statement is engaging, motivating, as well as challenging. This objective is great, but without key results as a way to measure how far a team or individual has gone through in terms of achieving the Objective, it remains just a goal.
This is where Key Results step in. As a leader of your company, how do you know that your team is delivering a great customer service? You take into account how people perceive your products through various measurements like the Repurchase Rate and Net Promoter Score.
You want to know how the customers feel about your products or services, you also want to know whether they would buy again, and if they will recommend your services or products to other people.
However, looking at the NPS and repurchase rate alone might not be enough to assume that you are providing an great customer experience. On contrary, it could even encourage you to make customers happy and satisfied at any cost, which could later on harm your business.
What other Key Results can you take into consideration? For example, Customer Acquisition Cost is a good Key Result to measure. Good thing about it is that it keeps the balance between making customers happy and keeping the cost under control.
So, your Objective and Key Results can look something like this:
Objective: Create an awesome customer experience
- Maintain Customer Acquisition cost under Y
- Raise Repurchase Rate from X to Y.
- Improve Net Promoter Score from X to Y.
You´re leading a digital company and one of your annual objectives is to delight your customers. Your OKR can look like this:
Objective: Delight our customers
- Lower order cancellation from A% to D%.
- Increase Net Promoter Score from A to C.
- Improve average daily visits per active user from X to Y.
- Increase Organic traffic from X to Y.
Remember that the Key Results, as shown in this example, should be clear and specific. You have to identify the numbers to measure the results. While the objective is a high-level statement of what you want to achieve, the Key Results are specific, measurable actions. Key Results are very important. They just don’t measure your goals, they also define what your goals are.
How To Apply OKRs In Your Team
Objective and Key Results is a comprehensive tool. There is no standard way to use it, you can adjust it depending on your needs. However, I want to present some of the core concepts that should always remain the same:
Your goals should be agile
OKRs are never static or definite. These goals should be adapted according to the organisation’s needs. OKRs are created and reviewed between shorter periods. They can also be changed as needed.
OKR is a simple tool
OKRs are considered among the most effective organisational tools mainly because it is so simple and straightforward. Objectives are set briefly, as well as the key results. This is to avoid confusion and ensure that everyone in the team or organisation is aligned.
It is set on a quarterly or annually, sometimes even on monthly basis. As a result, organisations invest more in achieving their goals, not just in setting them.
OKR promotes transparency
OKR´s main goal is to promote transparency, they should be visible to anyone in the organisation. Everyone across all teams or departments should have access to what other people are doing, what their goals are, and how well they are performing.
OKR is dynamic
Organisations are ever-changing. Change is critical for a company to keep up with the competition. OKRs are flexible. They can be changed to adapt to the company’s changing needs.
It involves bi-directional goal-setting
Unlike the traditional top-down model, OKRs are more time-efficient. Former VP of Google People Operations Laszlo Bock mentions in his book, World Rules: “Having goals improves performance.”
However, spending hours cascading goals up and down the company does not. It takes too much time to make sure all the goals align. This kind of cascading method drives engagement and makes the process even simpler and faster.
OKRs have ambitious goals
The idea is that if your team is reaching goals 100% every time, it means that your goals are not ambitious enough. This means that the perfect score is not a proof of success, rather, a sign that you have to motivate your team to do better. OKRs are meant to help teams set challenging goals.
Setting ambitious goals is very important. Google mentions, in the book “Ten Things We Know to Be“: ““We set ourselves goals we know we can’t reach yet because we know that by stretching to meet them we can get further than we expected.”
OKRs promote a safe ground for employees to blossom
Companies that use OKRs provide a low-risk environment for their employees to experiment and set challenging goals. Individuals will not be punished or lose money if they set ambitious goals. This makes them more motivated to aim higher. They are rewarded for their impact on the business.
OKR is a continuous process
OKR is a process, not an event. It involves cultural transformation and it changes over time.
Common OKR Mistakes
Here are the top 5 OKR mistakes that many organisations do and how to avoid them:
- Using OKR like a task list: OKR measures how you deliver value, not how you perform tasks. There is a difference between value-based and activity-based key results.
- Setting too many OKRs: OKRs work best when done one at a time. OKRs include high-level goals per quarter, especially your top priorities.
- Not aligning your OKRs to the company goals: Teams and individuals should align their goals the organisation as a whole.
- Setting goals and forgetting them
- Setting goals without measurable actions
How to Write Good OKRs
There is a compact way to help your team get started.
The most effective OKRs are short and easy to understand. They should be challenging and not boring. Most of all, they should fit the organisational culture.
OKRs don’t have to be formal statements. Feel free to use the language that is common to use in your organisation when you set your Objective and Key Results. Moreover, separate metrics from initiatives. There are usually 2-5 Key results per Objective so your team won’t be overwhelmed.
Don’t forget to take our Organisational Mastery Test so we can accurately diagnose the improvements we can implement in your company.
We have developed a free assessment in the form of a Scorecard to help you establish which areas of business you need to focus on to achieve your particular Organisational Mastery.Take The Test