Objectives & Key Results (OKRs) is a goal settings framework championed by Andy Grove at Intel in the 1970s. It was later popularised by John Doerr when he implemented it at Google in 1999 and it’s still being used successfully to this day. In fact some of the top management at Google attributes their disciplined execution to this performance management technique.
OKR- the next stage of evolution of MBO, follows a simple method. You define 3-4 objectives at individual, team and/or company levels using S.M.A.R.T principle i.e. set objectives that are specific, measurable, attainable, relevant and timely. Each objective has 3-4 key results that are quantifiable and lead to objective evaluation. While MBOs are still used by a number of companies, OKRs are gaining traction rapidly.
When OKRs are set up and used regularly, they provide a clear picture to the organisation. Everyone involved knows exactly what is expected of them and how it will fit in the bigger picture.
However, you need to avoid a few common mistakes while setting up goals based on OKRs:
Keeping OKR private
OKR are not meant to be a private affair between a manager and his employee. Unlike MBOs, they need to be shared with all members of the team.
If these are created in isolation and kept private, the team or the company will not know what is being contributed by individuals. There could be redundancy of key results or some might be completely ignored.
Setting too many OKR
OKRs are not a to-do list of tasks. Set up too many of them and you will be overwhelmed trying to achieve them. Remember, each objective has 3-4 key results. Prioritise on the 2-3 most important objectives and stick to them. The lesser important ones can be carried forward to the next quarter or may be they are not important enough to warrant your attention.
Set unmeasurable results
Peter Drucker rightly said, “If you can’t measure it, you can’t manage it.”
Every key result has to be measurable in a quantitative manner. If it is qualitative, you cannot determine whether you are achieving the target or not. Measurability is the fundamental difference between OKRs & MBOs.
Forget to align OKRs
You don’t just set your OKRs and forget about them. You need to align them with team & company objectives. This is a vital step in order to create a feeling of contribution amongst all the stakeholders.
Setting up easily achievable OKRs
It is tempting to set up easily achievable OKRs to prove you are a consistent performer. But the hallmark of achieving 100% of OKRs is that you have not really challenged yourself. Your key results should be such that you are able to achieve 60%-70% of these. They should be difficult not impossible.
OKRs set only from top down
Traditional performance management dictated a top to bottom cascade of objectives. However, this should be a more collaborative process, where employees can share their views. Teams can determine their own tasks and communicate to their superiors how they will contribute to the overall objective.
Confuse tasks with results
Many times it happens that employees confuse tasks with results. Task is the process that needs to be carried out to meet the objectives. The outcome of this task is the key result.
So you should clearly identify what will be the outcome of your tasks as that is the metric against which you will be measured.
Making OKR a part of performance review
The purpose of setting up OKRs is not to evaluate the performance of employees. It is not a tool to be used by HR to determine their compensation. OKRs are intended for Operational excellence.
Thus, if used as an HR tool, employees will not get their due compensation because in OKRs ratings typically lie at 60-70%. It might backfire though when employees intentionally set achievable goals so that their compensation is not affected.
What other common mistakes have you encountered when setting OKRs?
