Luis Goncalves
Last updated on | Strategic Alignment

Five OKR Disadvantages that May Affect the Way You Set Your OKR

by Luís Gonçalves
OKR Disadvantages

OKR, a goal-setting methodology that was first used by Intel and Google, has become widely popular in the world of business. Many companies have followed the path taken by these companies and integrated the concept of OKRs in their daily operations, with the hope of achieving their company goals and growing their business. In fact, a lot have seen the benefits of OKRs, from startups to Fortune 500 companies like the Duxter.

This goal-setting framework rests on the principle that your employees have to set their individual goals and key results, and should be responsible for them. Generally, the CEO and the key leadership team will first set the OKR of the company, then the management teams or departments will follow (ensuring that their OKRs are aligned to that of the company’s). This gives employees a clear view of what they can contribute to the success of the company. As you can see, OKRs promote accountability not only among the major stakeholders but among team members too. Everyone in the company has their share of responsibility. However, just like any other management framework, there are some challenges in implementing this framework. I wouldn’t call it disadvantages but learning how to deal with these things is essential in order to get the most out of OKR.

Challenge 1: How Specific OKRs Should Be?

Many managers run into a challenge of determining how specific should employees’ OKRs be. The rule of thumb is that the more specific OKRs are, the better. One of the primary purposes of this goal-setting framework is for employees to know exactly what they need to do in order to contribute to your company’s success, and what they are held accountable for. By creating specific key results, managers can easily make expectations.

On the other hand, some people wonder – would being too specific lead to less creativity of the employee? Great question. Fortunately, for OKRs to be effective, companies need to adopt a “self-managing” approach in which employees have the freedom to decide how they are going to reach their objectives. Basically, it’s about being specific with the “WHAT” and not with the “HOW”.

Challenge 2: How Do You Measure OKRs?

One of the major characteristics of OKRs is that they are measurable. OKRs become vague when you cannot associate them with a numerical value. But it isn’t always easy for some teams, especially those in the highly technical roles, such as developers. In instances like this, however, it is advised that employees put their milestones as their key results. They should break down their objectives into different phases or stages and use them as key results. It is important to not confuse key results with tasks. Key results have to describe the milestones. Meanwhile, the steps needed to recreate the issue are what constitute their action items.

Challenge 3: Setting Challenging Yet Attainable Goals

There’s always a concern when it comes to setting “attainable” vs “challenging” goals. Striking the right balance between the two is a common issue in many companies – big or small. OKRs are meant to challenge members of the company to set ambitious goals. But that doesn’t mean that they need to set unattainable goals. There’s no room to play it safe, but they have to be realistic too. Managers bear the responsibility of encouraging team members to stretch their goals but ensure that they have the resources and support they needed. Otherwise, employees will just feel demotivated.

How do you set a challenging yet realistic goal? For example, if you’re looking at increasing the sales quota of your team members, you don’t just pick a number and say you want them to increase their sales by 90% at the end of the month. Before you determine your sales increase goal, you look at your historical data, understand the trend of your business, and then discuss with your employees why you would want to raise their quota (discuss how it will benefit the company). Listen to their feedback, suggestions, and comments. Openly discuss the potential barriers that your employees think they might encounter along the way.

Challenge 4: Keeping Your OKRs Relevant

By now, you must have a lot of OKRs in mind. But how do you keep them relevant? Experts recommend using the 70/20/10 model when deciding what to put in one’s OKRs. This means that 70% of your OKR should be related to your major duties or role, 20% on projects or initiatives that are directly related to your position, and 10% on personal projects that you are passionate about. Even though OKRs have to be focused on what an employee needs to do at a given timeframe, they should also be given the freedom to pursue their own personal projects for their personal development and growth.

Challenge 5: How Often Should You Set OKRs

For how long should set OKRs retain its validity? Well, it depends on you. Some companies prefer to set OKRs annually, quarterly, or monthly. Some prefer combining different timeframes. You could have an annual OKR and a quarterly one, similar with Google. Experiment on what works for your company and your employees. Remember, however, that setting longer OKRs might affect your team’s flexibility or ability to adapt to changes.

Even with all these challenges, OKR is still one of the most robust goal setting cum management framework that 21st-century companies can ever have. Here are some benefits the totally outweighs the challenges above.

Team Greater Engagement

Rewards and compensation aren’t the major drivers of employee engagement. Studies have shown that people become more engaged in the workplace when they have a clear understanding of their goals and how they can contribute to the company through their roles.

Better Use of Resources

Another great advantage of OKRs is that it avoids creating duplicate objectives, Since OKRs are visible to all employees, there’s a less chance of two or more teams having the same project or initiative. This results in better use of resources, which means less money, effort, and energy. This is especially beneficial for remote teams or those that are working from different geographical areas.

Better Communication, Stronger Connection

The use of OKRs strengthens the connection between departments and teams within a company. In most companies using this framework, there is a systematic approach to cascading individual and team-level objectives and key results. And since employees can see what everybody else is up to, everyone develops an understanding of other team members’ roles and find ways to support them.

Better Performance

Through OKRs, employees would have clearer expectations of what they need to accomplish. At the same time, managers can easily track the progress of their team members. This is a win-win situation, benefiting both the lead and his staff. Coaching and feedback sessions or check-ins can also be more targeted since the manager knows exactly what the employee is working on.

See? With these benefits, your company is better off adopting this framework than not having any structure at all in keeping everyone on the same page in your company.

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Luís Gonçalves

About Luís Gonçalves

https://plus.google.com/u/0/+LuisGonçalves1979

Luis Gonçalves is an Entrepreneur, Author & International Keynote Speaker. He works with Senior Executives to implement his ‘Organisational Mastery’ system so they can greatly increase the effectiveness and efficiency of their organisations; enabling them to become recognised and highly rewarded Leaders.

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