This is a guest post from our friends at Oboard. They know a lot about OKRs and have built a great product about them. Feel free to reach out to them at firstname.lastname@example.org
Just hiring a great team is not enough — you also need to motivate them, engage them, and make sure that they are satisfied with their job. Otherwise, you end up with a team that is technically capable of great things but somehow ends up underperforming to a ridiculous degree. According to Gallup research, the difference in profitability between an engaged and disengaged employee can reach 23% — and companies worldwide pay 34% of their annual salary to actively disengaged employees.
Now, engagement depends on many factors, some of which are outside effects. For example, economic stability correlates with a general uplift in people’s spirits — the job satisfaction rate has increased from 81% in 2013 to 88% in 2016. However, keeping your team’s mood and engagement levels high will require more effort as we enter a period of economic recession. And this is where the Objectives and Key Results (OKRs) come into play.
OKR as a Solution to Employee Engagement
The Objectives and Key Results is a suite of project management practices that makes goal-setting and communication easier. It grew from Peter Drucker’s MBO (Manage by Objectives) approach and was further developed by Intel’s CEO, Andrew Grove. Later, with a bit of help from John Doerr, OKRs became the go-to management approach at Google and eventually across Silicon Valley as a whole.
And this isn’t just some “corporate culture” fad — OKRs have been proven to work in many industries. For example, if you refer to the Sears case study from 2015, implementing OKRs has improved their sales department’s performance by 8.5% on average.
What are OKRs
On the very basic level, the OKR approach can be described as “I will [OBJECTIVE] as measured by [KEY RESULT].” Therefore, it consists of two parts:
- A strategic goal.
- The metric that shows your progress towards the goal.
For example, you are an artisan baker without any marketing for your business, and the only customers you have come through word of mouth. You want to fix this and put your business out there — ideally, have a functioning marketing funnel with online ads and a website. Therefore, your OKR would be “I will have a successful marketing funnel by March 31, as measured by having 100 customers that ordered cakes after seeing my ads”. Now that you have an ambitious goal, you are motivated to come up with ways to reach it — build a website on Wix, learn how Google Ads work, etc. — and you have a metric that tracks your success.
Now, let’s scale it up a little bit. Imagine that you are running the Toyota branch in the Middle East, and your goal is “to be the leading automobile manufacturer in the region by the end of the year.” There won’t be a single metric that you can trace, but you can come up with multiple Key Results — selling 10 000 cars each day, having 50 awards from the local trade shows, having 5000 affiliated dealerships, bringing the customer complaints down to 3%, etc.
You can now use these Key Results to align all your departments towards this goal, and they can come up with their OKRs that will help them achieve it. Some companies even set OKRs on the personal level, but most consider this to be excessive and stop at teams.
OKRs are not KPIs
KPIs — or Key Performance Indicators — are a visually similar practice of assigning performance metrics to your employees and using them to determine salary bonuses. It can be used alongside OKRs as another tool for employee motivation and performance tracking. However, certain companies use OKRs as KPIs — and this is a mistake.
OKRs are, by definition, ambitious. They should grow each time you even come close to your Key Results because this is a mark that your OKR was not ambitious enough. KPIs, on the other hand, are measures of success and should be achievable regularly by an average employee. Otherwise, they will feel unfulfilled and eventually disengage from the company by either quitting or not performing to their best abilities.
By mixing up OKRs and KPIs, companies are undermining two systems that are meant to increase performance and turn them into one that actively decreases it. In the wise words of Dexter Holland, “keep them separated.”
How to Establish OKRs Without Breaking Morale
Most people are a bit reactionary and do not do well with sudden workflow changes. Especially if said change comes from the very top of the company and its benefits are not well explained. So, here are some tips on how to properly introduce the concept of OKRs to your team.
- Explain yourself. Before you break existing workflows with OKRs, you need to make sure that your employees understand why this is happening. You need to explain what it is, how it works, and how everyone will benefit from it. Have a meeting with department leads, convince them of the benefits of the approach, receive their feedback — and only then start rolling out changes.
- Find the correct focus. All goals must be aligned with the company’s overall Vision and Mission. Suppose you are running a bespoke tailoring business with a long legacy. In that case, you should not set “increase profit margins” as your strategic goal without understanding that it will inevitably lead to a loss of quality and identity for your brand.
- Ensure your goals are realistic. While OKRs should be ambitious, they should also be theoretically achievable. If you are an indie game development company of 20, and your strategic goal is to “outsell Rockstar Games in this fiscal year,” you are not going to have a good time. At best, your employees will consider this a joke. At worst, they will try to pull it off and, after failing miserably, turn sour on the whole concept of OKRs.
- Set goals with employees. While a strategic company goal can be decided on the executive level, goals on the department and team levels should be set by employees themselves. First of all, they probably know better what their day-to-day work entails and how they can help in achieving your objective. Second, they will also be more motivated to achieve the goals that they set for themselves. You are running the risk of them setting the bar too low, but this issue will fix itself during your first OKR review.
- Stay Agile. OKRs need to be constantly criticized, reviewed, and, if needed — updated. So having a monthly meeting where you make sure that all the departments are working together and nobody has misinterpreted anything is a good idea.
- Consider staggered roll-out. People tend to learn by example — and having a successful example already working in your company will do wonders for implementing a new workflow. So if you have a department or a team that seems more accepting — consider implementing OKRs among them first and then slowly expand the practice across the company during the year.
Managing Your Team’s Wellbeing as OKR
Imagine that you are a C-level executive in the middle of rather heavy and massive layoffs. Honestly, you might not need to imagine too hard. In this situation, your team’s wellbeing and morale should be your top priority — and it would make sense to codify this priority into an OKR. And since you are already using Teammood, it should look like this:
[O] Improve the team’s morale in the aftermath of the layoffs
- [KR] Request and collect regular feedback from at least 75% of employees
- [KR] On a score from 1 to 5, ensure that the team’s morale averages at 4
- [KR] Develop encouragement programs to lift up people’s spirits
Using this strategic OKR, your Human Resource department should be able to figure out their objectives and key results for the following quarter, building up on your ideas. You can even add the team leads as stakeholders — this way they will be more inclined to cooperate.
However, keep in mind that implementing a new system in the middle of the layoffs might cause additional friction — and you do not want to antagonize your team, since this would not improve their morale. Consider your messaging carefully and try not to come across as callous — otherwise you will have an excellent report of your team’s mood plummeting straight down.
OKRs in a Continuous Tense
OKRs bring many benefits but also require quite a bit of maintenance. On a smaller scale, you could do it in a spreadsheet or two — but as the scale grows, you will end up with a lot of needless bureaucratic work on all levels. Instead, you should integrate all your OKRs directly into your workspace — and this is exactly what OKR Board does for Jira and Salesforce ecosystems (OKR Board for Jira and OKR Board for Salesforce, respectively).
The OKR Board integrates into your project management software and automatically tracks your OKRs by linking Key Results to tasks and metrics. It also automates reports with real-time Dashboards that can be focused on any individual, team, or department. With the OKR Board, your employee’s workflow is almost unaffected by the OKRs, yet you get to reap all the benefits nonetheless.
Over 2 000 companies — including S&P 500 companies — have already adopted Oboard’s OKR Board, and we are making it better every day based on their feedback. If you have any questions about this topic, contact the Oboard team at email@example.com.
Header photo by Ash from Modern Afflatus