Goals. We all love achieving them whether it’s at work, at the gym or a hobby. But, have you ever felt more motivated when they’re broken down into smaller, more attainable chunks?
In today’s knowledge economy, goals often leave a sour taste in our mouths. It’s easy to underestimate the time involved, and it’s even easier to procrastinate a week away or get distracted by more ‘urgent’ activities.
That’s why Key Performance Indicators, or KPI’s are often a poor fit for today’s workplace. They’re meant to make measuring goals simpler over a year, but they usually become irrelevant in a matter of just a few months.
Employees feel pressured to decide whether to work towards their KPI’s, because that’s what they’re measured on, or to work on what the business really needs. Surely there’s a better way to measure goals?
Enter OKR’s, or Objectives and Key Results, which narrow down the focus of objectives to quarterly, rather than yearly intervals. They consist of a descriptive objective and key results, which are a way of measuring progress towards that objective over a quarter.
OKR’s have a number of benefits which include boosting team focus, productivity and success rates. Since they were popularized in the 2000’s, they have been taken up by thousands of SMEs as well as larger companies like Google, Sears, LinkedIn and Oracle.
Quarterly goals form one of 3 key routines in the more modern, continuous approach to performance development .
The good news for managers is that implementing OKR’s requires less effort than you might think. The process is flexible and largely driven from the ground up to build a true sense of ownership, and a tool such as Crewmojo can help your team stay aligned with company level goals.
Keep reading to see why shifting to OKR’s might be the right move for your team and the best way to do it.
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- The problem with KPI’s
- Why use OKRs?
- How to make the shift to OKRs
- Best Practices of OKR’s
- Are you making these mistakes when setting OKR’s?
- Final Thought: Getting on board with OKR’s
1. The Problem with KPI’s
Before we get into the benefits of using OKR’s, it’s important to understand why KPI’s might be a poor fit for the modern workplace.
The KPI model began during the Industrial Revolution, when performance was measured by the efficiency of a production line; and from year to year not much changed.
It was relatively easy to see your progress because metrics were very tangible, for example the number of widgets produced and the number of hours worked. However, in today’s more complex workplace, there are a number of compatibility problems with using KPI’s:
- Top Down - Since KPI’s are usually cascaded down, if you haven’t been involved in the process it’s hard to feel a sense of ownership over your work. It’s particularly fraught in a knowledge environment, where creating employee goals in isolation can erode trust or setup a path of failure.
- Annual - Unlike the industrial era, the pace of change is far quicker now, and only getting faster. KPI’s are usually set in stone for a year and likely to become detached from reality in just a few months. An annual cycle doesn’t allow a business or individuals to respond to environmental changes unless they deviate from their performance KPI’s.
- Disconnected - Not having a part in the goal setting process can leave employees feeling isolated or disconnected from the organization’s purpose. They become a cog in a machine that doesn’t understand the meaning or importance of their work, leading to low engagement or performance.
There is also prevailing wisdom for attaching financial incentives to the achievement of KPI’s. There are numerous studies (and a great TED talk ) that show this is effective for manual based work.
There are two issues when you apply this wisdom to knowledge based work:
- It encourages employees to negotiate the lowest possible KPI target, in order to guarantee their bonus.
- The fear of missing a financial incentive can cloud our ability to think creatively toward solving the complex cognitive problems we’re working towards.
There’s got to be a better system for today’s workforce…
2. Why use OKR’s
If you’ve encountered any of the problems with KPI’s listed, it might be time to consider the advantages that OKR’s can have for your workplace. OKR’s have been found to dramatically increase individual impact, team alignment, and business performance.
In fact, a study by Sears Holding found employees who regularly used OKR’s were 11.5% more likely to move into a higher performance bracket.
The key behind this is culturally making the switch to OKR’s, shifts the focus from outputs to outcomes. You’re not just measuring end results, you’re measuring value and impact.
Still not convinced? Here are the fundamental benefits of using OKR’s in the workplace:
- A year is a long time and it can be hard to keep your goals in perspective. By breaking up objectives into quarters, your team will have greater focus by working towards more achievable key results.
- More effective goal setting. With shrunken time frames, you’ll increasingly be able to set goals which fit better with the company’s vision, strategy and top priorities.
- Everyone likes to feel their work has purpose and OKR’s assist this by encouraging your team to set objectives from the ground up.
- More chance for success. Weaving a goal discussion into your regular 1-on-1 meetings ensures team members stay focused and any challenges can be dealt with before the end of the cycle.
- People have a tendency to assume we’re either ‘working hard or hardly working’, but with OKR’s everyone in your organisation can see what’s being worked on.
3. How to make the shift to OKR’s
For any team, changing the way you measure performance can be daunting. Team members might feel uneasy, managers have to learn a new system and there could be teething problems while making the switch.
It’s normal for things to be clunky in the first quarter, but be confident that the results will be worth your while. Just set 3-5 objectives and start to build the cadence.
Remember, it’s not all about perfectly written OKR’s, it’s more about the transition from a backwards-looking assessment to forward-looking conversations that will make sure your goals are achieved.
It may surprise you that implementing OKR’s is actually less daunting than you might think. The following tips may help to ensure your team gets the most out of them:
Communicate with your team
So you’ve decided OKR’s are the right fit for your team, what now? Firstly, make sure to communicate that it’s a new process and we’re all learning together how it will work best in the team. Highlight the process is much more collaborative, with each person having a big say in their goals, and an aim to empower employees with more autonomy and trust.
It’s natural to feel uncomfortable about a new processes, so reassure your team they won’t be penalized for not being perfect or missing an ambitious goal.
Brainstorm with your team what they see as the highest impact objectives for the next quarter. Take some time to write ideas and stick them to a board. Then narrow them down to 3 to 5 aspirational priorities. You’ll want to look for objectives which are aligned with company-level goals, have a high positive impact and a short time frame.
Encourage the process to be collaborative with other team members. People can be quick to assume their co-workers aren’t as productive as they really are and this is a great opportunity to build trust. You could set fortnightly meetings to give some accountability on what’s been set at the beginning of the quarter. Your team members could share their own goals and open themselves up for feedback.
Choose key results Now that you’ve chosen your objectives, it’s time to brainstorm key results. These will allow you to more accurately measure qualitative goals. For each objective, think about the results you would like to see. Ideally your key objectives need to be:
- A measurable (and uncertain) outcome
- Not an activity or initiative
Plan outcomes Think of a factory line – if the goal is to pack 700 boxes in a day, you might aim to pack 70 boxes an hour. It’s easy to see how your activities directly lead to the end goal.
However, in today’s knowledge economy it’s a little more complex. Your goals need to be based on outcomes (rather than activities), because not every activity will lead to an expected outcome. For example, you can’t be certain that the activity of meeting 50 prospects will result in 10 contracts. The point is to trust your people to come up with activities, that they believe will achieve their key results.
Ultimately, it’s not about micro-managing activities, today’s definition of performance is employee impact and outcomes.
4. Best practices of OKR’s
If you’ve decided to make the shift to OKR’s, great! But there are a few things you may want to consider to get the most out of OKR’s.
Time is the constraint (not scope) Before you dive into setting OKR’s, you may need to re-think the role time plays in setting objectives. Instead of asking ‘how much time will a goal take?’ you’re asking ‘what can be done in this time?’
It sounds like a simple shift to make, but it’s refocusing your team on exactly what can be done in a set period of time. Think of it this way, with OKR’s you’re asking ‘what are the biggest impact items I can achieve this quarter?’, rather than simply ‘what would I like to achieve?’
No financial attachment Like we said earlier, one of the key problems with the KPI model is its link to financial rewards. In a perfect world, this would inspire us to work diligently to exceed our KPI’s. Instead, we negotiate easier KPI’s to guarantee a bonus.
This is why it’s a good idea to keep your OKR’s at arm’s length from financial rewards. Your employees will be motivated to set loftier goals, plus there’s less anxiety around not reaching a big goal.
Ask employees to set goals
Chances are your employees know their work best, so why not let them set their own goals? They’ll feel more connected with the activities required to achieve key results, and will likely be more productive in the process.
If your employees are confused about what kinds of goals to set, that’s okay! People often think goals need to be a single, tangible output, but with OKR’s they can be anything related to outcomes. For example, a goal could be to identify the most effective sales tactic for next quarter.
Reset: New Goal or Roll Over?
You’ve reached the end of a quarter, how do you evaluate your objectives? Now’s the time to consider:
- How far you’ve come with an objective,
- Whether enough has been done, and
- Examine other priorities.
If you’re happy with your progress (or even completion), it’s time to set new objectives for the next quarter. If you didn’t make as much progress as you hoped, and the objective is still a priority, it’s best to roll that objective over to the next quarter.
5. Are you making these common mistakes with OKR’s?
As with any new process, there can be pitfalls with changing over to OKR’s. The good news is that most of the mistakes can be avoided with these simple tips.
Too Many Objectives
It can be easy to overestimate what can be achieved in a quarter. This is especially true if you’ve just started with OKR’s. If your team members are overloaded with too many objectives, not only will this cause them to lose focus – there’s less chance any objectives will be completed at all.
A key element of OKR’s is to keep the objectives manageable and focus on impact. Aim to have no more than five objectives per quarter, with up to 3-5 key results.
Losing track In all the busyness of the office, it can be far too easy to set and forget any goals. Make sure to set aside a time each week or fortnight to discuss progress in your one-on-one meetings , these forward-looking conversations are crucial to staying on task. You and your team member can review progress, discuss challenges and keep each other in the loop. Crewmojo make it a breeze to bring a goals discussion into your one-on-one meetings - just tick it on the agenda, and you’ll see your interactive goals tile appear.
No measurable key results
Key Results are most effective when they can be measured, which means they need to be numeric (including percentage, dollars, people, etc).
This is important so you can keep your larger, more descriptive statements for objectives. For example, a measurable key result could be “improve website traffic by 10%” within the larger objective to “Increase brand awareness”.
Level of challenge
Because OKR’s aren’t linked to bonuses, there’s no incentive for team members to under-promise and over-deliver. But what’s the right level of challenge? We’ve found the best key results straddle the middle ground between being too challenging and not challenging enough.
If you are scoring a 100% completion across all your OKR’s, it’s probably an indication you could set goals that are more challenging for the next quarter.
6. Final Thought: Getting on board with OKR’s
It’s pretty likely that a fair few of us have had bad experiences with goals. Maybe it’s because they’ve become meaningless to actual work or because we fear having those irregular discussions around achieving them.
Goals shouldn’t be like that, and it’s been proven the modern way of more regular conversations around progress is linked to increased success. At its core, OKR’s are about making goals part of the everyday way of working, rather than something that gets looked at once a year. Forward-looking goal conversations instead of backwards-looking KPI assessments are far more productive.
It might seem like a big undertaking to change your goal-setting strategy to OKR’s, especially if you’re used to only setting KPI’s once a year.
But here’s the thing: It’s actually a much more natural way of working…
Instead of seeing goals as an administrative process that gets done to you each year; you’ll see them as a real-time reflection of your working reality that’s engaging, rewarding and connected to the bigger picture.
You’re also separating performance improvement from assessment… giving your employees an environment for growth and allowing your business to grow through their success.
Most importantly, the structure of OKR’s helps aligns employees and their strengths with the successful execution of your company strategy.
Learn how Crewmojo can help bring OKR’s to life in your team. Request a product demo