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OKRS for Company Success

When combined, efficiency and growth separate successful companies from the rest.

That said, “efficient growth” is one of the largest challenges companies face, as growth often comes at the expense of efficiency. As more employees become involved in the organization, additional strain is placed on managers to hold employees accountable and ensure that the work of each individual is aligned with the overall business strategy. To promote an engaged workforce, it is imperative that employees not lose sight of the way their contributions affect the organization despite times of change and growth.

Management by Objectives (MBOs), a popular 1950s goal setting model created by well-known author and business thought leader, Peter Drucker, focuses on the objectives of the company but lacks in helping to create a path to reach them. In the early 1980s, SMART goals built upon MBOs by placing emphasis on the measurement and attainability of goals. SMART goals stand for:

Specific – target a specific area for improvement.

Measurable – quantify or suggest an indicator of progress.

Assignable – specify who will do it.

Realistic – what results can realistically be achieved given available resources.

Time-related – specify when the result(s) can be achieved.

As managers continued to learn and appreciate the value of goal setting, the late Andy Grove (CEO of Intel) expanded upon the principles introduced by MBOs and SMART goals with the idea that goals should not only revolve around attainment, but towards stretching employees to achieve something they didn’t know was possible. Groves proposed two simple concepts: The aspirational quality these two questions inspired provided the foundation for the OKR methodology of business management, which was made popular by its adoption at Google in the early 2000s.

WHY OKRS?

Having an open and connected goal process makes a company better aligned and coordinated, focused on the right things, and tuned in to all of its employees.

Many large and successful companies have engaged their employees by using a goal setting framework called Objectives and Key Results (OKRs).

MANAGING GOALS WITHIN THE ORGANIZATION

1. TRANSPARENCY

Historically, goal setting would occur with managers setting MBOs for their staff and communicating to their teams what they needed to accomplish. These goals would then be filed away until the next performance review. This system of management by goal setting is highly flawed and prevents organizations from obtaining the benefits that effective goal setting provides.

In order for goals to appropriately motivate employees, employees should be frequently reminded of what they are striving for and their responsibility to evaluate the work they have completed in reference to the goals. Providing employees with constant access to and reminders of their goals results in a focused and driven workforce.

When managing goals within the organization, it is imperative that goals are transparent, frequent and aspirational.

OKRs consist of 3-5 high-level objectives, under which 3-5 key measurable results are listed. While the key results still have to be achievable, the aspirational quality of the objectives mark the main difference between OKRs and other goal setting frameworks, such as management by objectives (MBOs) or SMART goals. 

Providing an element of ambition within the goal setting framework empowers employees to strive for more and push themselves and the company in pursuit of the goal. OKRs are designed to drive tactical activities while simultaneously encouraging aspirational initiatives. The OKRs framework also benefits productivity, focus and company culture by facilitating discussions between employers and team members on how the work of the individual supports the business’ strategy.

Goals within an organization should also be transparent, in that employees should be able to see what others are working on. Granting visibility into other team members’ goals builds trust, fosters collaboration and promotes team success. Transparent goals support employee engagement and retention, making it easier for employees to understand how their work contributes to the overall goals of their team, department and company. Goal transparency facilitates alignment between the employee and company objectives.

2. FREQUENCY

Frequent Goal Review is the key to creating an organization that is adaptable to market changes and quick to capitalize upon new opportunities. Reviewing past goals and setting new goals on a monthly or quarterly basis enables companies to calibrate and realign around present opportunities. A frequent routine centered around goal setting and review also works to motivate employees by ensuring constant alignment with changing company objectives.

3. ASPIRATIONAL

OKRs differ from other goal setting frameworks in that key results must still be achievable but objectives can be aspirational. This aspirational component is the driving force behind a company’s success with the OKR framework and therefore, is a crucial aspect to effectively manage by goal setting.

Employees are most motivated by the potential to work towards meaningful progress and the ability to share said progress with the broader group. Establishing a goal setting model that’s transparent and aspirational results in harder-working employees who are more engaged and aligned with the company’s objectives.

TOP COMPANY OKRS AND GOALS BY DEPARTMENT

OKRs play an important role in strategic planning, as they require top management to identify and break down the strategy by objectives. Understanding how each of the 5 main business departments contribute to the strategy provides organizational clarity and allows appropriate objectives to be set. Below are some examples on how to set a variety of Objectives and Key Results for each departmental strategy:

FINANCIAL AND SALES:

Objective – Achieve goal for financial commitments of revenue, book, expense, cash and head-count each quarter.

Key Results

Achieve 40% more revenue every quarter

Develop 2x pipeline of previous year

Develop sales capacity at least 150% of plan

Stay within approved budget for expenses and cash

Finalize fundraising process

Increase revenue per employee

PEOPLE AND ORGANIZATION

Objective – Hire, develop, engage and retain talent. Improve communication, transparency, alignment and focus on metrics within the organization.

Key Results

Define and implement standard talent management and review process

Implement a world class onboarding system and follow up template for all new hires

Complete company-wide compensation analysis and define plan to remediate issues

Fill key gaps in cross functional leadership areas

PRODUCT AND DEVELOPMENT

Objective – Continuous improvement to delivering quality products on time.

Key Results

Achieve a consistent product release cadence

Develop a product road map for next 12-18 months

Release next module with only 5% known defects

Reduce product backlog by 20%

CUSTOMERS

Objective – Continuously improve our customer experience and increase referenceability in our customer base.

Key Results

75% of our top 50 strategic customers referenceable by EOY

Implement and develop a customer renewals process

Improve NPS score by 20%

Improve customer success metrics by 25%

Improve customer support ticket closures by 10%

Organizations that make it easy for employees to set clear goals and have ongoing management of those goals are four times more likely to score in the top 25% of business outcomes.

We’re not done yet!

We’ve got plenty more resources on building the best workforce from the bottom to the top. Take a look at our e-book on Mastering the Employee Experience, or our analysis of Gallup’s 12 Elements of Employee Engagement. All of our resources can be found in our Library – check them out here! To see HelloTeam in action, click here — and to set up a meeting with us, go here!

WHY HELLOTEAM?

The HelloTeam platform facilitates the expansion of the OKR methodology, promoting a culture of transparency and collaboration and providing support that high growth companies need to collaborate effectively, work efficiently and hold employees accountable. Structured around five components of engagement and talent management, HelloTeam is designed to empower and intrinsically motivate a workforce, giving employees the ability to frequently set, edit and track goal completion while staying informed of goal progress across the organization.

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