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Why Your Business Should Incorporate OKRs

Road to a Mountain

5 min read

You've likely heard of the SMART goal-setting process, and are aware your goals should be specific, measurable, attainable, relevant and timely.

OKR stands for “objectives and key results,” and is another way to set and manage goals for your business. OKR is another method to help you get the results you want, and you can use it in conjunction with SMART goal setting.

One study divided participants into five different groups and asked them to set goals. Those in the most successful group completed a process of writing out their goals, rating them and figuring out the actions to take to achieve those goals.

This group achieved more than the other groups because they understood and agreed upon goals fully from the get-go.

If you haven’t yet used OKRs in your business, incorporating this form of goal-setting allows you to take the actions that will help you realize those goals. There are several benefits to setting OKRs, including the following.

1. Focus on Employee Behavior

Setting objectives and key results puts the focus on employee behavior. To achieve those key results, employees must take very specific actions. OKRs provide a way to track behavioral metrics so employee behavior is easier to track. If employees complete the tasks needed to achieve objectives, then the key results will appear.

For example, if the objective is to create a positive experience for the customer, customer satisfaction is one way to track how well sales staff is doing. One salesperson behaving poorly can harm a company's reputation, so the results of positive reviews and high ratings from customers on service is an excellent way to measure how well you are meeting those goals.

2. Find Performance Issues

Objectives are easy to divide into quarters on the calendar and tag with key results the company expects to see after putting forth specific effort. OKRs allow leadership to see issues with performance.

If one salesperson consistently fails to meet objectives, or one person in the marketing department fails to follow through on the objective to gain media coverage, it will become readily apparent.

Address any performance issues immediately with employees. Instead of an annual review, consider quarterly reviews, where each employee presents the key results of their work for that quarter and how those results align with the objectives of the company.

Point out what is working and what needs improvements. Employees who are team players will adjust to ensure the company meets its objectives quarter after quarter.

3. Get Organized

If your company sells a lot of different products or services, focusing on the objectives for each department can get complex. With so many different areas, it's hard to know where to focus exactly.

OKRs allow department heads to break down complex processes and see what their team members need to accomplish to achieve the objectives they've set. A variety of objectives also allows each department to home in on team goals that align with company-wide goals.

Set objectives for each department and key indicators of what it looks like to achieve those objectives. Write out your goals and put them up for everyone in the department to see and review regularly. Talk about what key results the team has achieved, and what you still need to accomplish.

4. Review Your Year

At the end of each year, take the time to review your key results and see how they line up with company objectives. Were you able to accomplish the results you wanted? Where did you go above and beyond? Did one team or individual achieve results you didn’t expect? If so, check to make sure those results align with company objectives and aren’t out in left field.

Even though you'll likely discover some groups or individuals fell short of the mark, refrain from blaming a specific person or department. Instead, ask for ways they can either adjust goals or take different actions to get better results.

For example, if the team failed to write out their key results, reiterate that those with written goals are three times more successful in achieving them than those without written goals.

5. Set Top Priorities

Placing a focus on OKRs forces a company to look at top objectives for the year. The way OKRs tend to work is that the company overall has a couple of main objectives. Each department then creates objectives and key results that align with the company objectives, but are more specific.

Finally, each employee sets objectives and key results, again aligned with company and department objectives.

Top-down, highly specific goal setting allows employees to understand better what management wants. Only 5 percent of employees understand the strategy behind their company’s goals.

With OKRs, the objective is clear, and so are the expected results. Everyone’s performance improves, from upper management to entry-level workers. Accomplishing goals as a team is empowering to employees and allows the company to provide rewards for behavior.

6. Increase Clarity

About 70 percent of employees in one study said they were part of a dysfunctional team at work. This friction creates a lot of frustration for the entire team, and much of the time is the result of poor communication between team members. Fortunately, better communication is often as simple as getting everyone on the same page.

OKRs help everyone connect and move toward the same goals. Because OKRs get more specific as they trickle down from the company to the team to the individual employee, everyone in the company works together better and understands what's expected of them.

If there is a miscommunication, management just steers workers back to the objectives and away from personal conflict.

Trying OKRs in Your Company

Increasing productivity and employee performance is never an easy task, but OKRs help everyone see expectations and give them a general map on how to get there. Goals should be achievable, yet still challenging.

Adding the elements of SMART goal setting to outline objectives and key results allows you to better define the reason for the goal and how to know when you've achieved it.

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Published on July 4, 2018


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