In this article, we'll explore how OKR helps organizations. If you're not familiar with OKR methodology yet, check out this article.
Thanks to the unique approach OKR is designed, adopting OKR methodology positively impacts how the team sets and tracks goals. Below are key benefits of OKR.
This is the main goal and benefit of OKR. They connect the team and individual goals and activities towards the company strategic mission. Top managers set company-wide OKRs (preferably collaborating and syncing with all the team before finalizing them). Based on them each team/department sets their own OKRs to help achieve company-wide objectives. And based on the team Objectives, each individual sets their own Objectives. Objectives and Key Results ensure that everyone is moving in the same direction.
Unlike traditional long-term strategic planning, OKRs prefer shorter goal cycles, which allow teams to adjust and adapt to change, reducing risks and waste. Strategic OKRs are usually set for 1 year, and tactical OKRs — for a quarter. At the end of each cycle, everyone analyzes the results and adjusts the strategic OKRs if needed. For younger companies, it might be better to adopt even shorter tactical OKR cycle, for example, 6 or 8 weeks.
Regular and short cycles reduce the time for planning, and team members don't need to place bets about what will be in 2-5 years.
Simplicity and reduced number of Objectives and Key Results allow each employee to focus on what really matters. It's recommended to have 2-4 Objectives for each team/individual, with not more than 3-5 Key Results for each Objective. Anything that is not about the current Objectives can be freely moved to the backlog for the next cycle.
Bottom-up goal setting allows companies to leverage their frontline expertise of the problems to make improvements. Since top management knows only about 4% of the frontline problems. Such methodology helps melt this iceberg of ignorance. A good rule of thumb is that at least 60% of OKRs are set by team members themselves, not by their managers. With such an approach everyone has personal accountability for their Objectives and are more motivated to achieve them. This approach is supported by the modern theory about motivation (Daniel Pink, "Drive").
Transparency, alignment and bi-directional gives a sense of contributing personally to the higher purpose, which increases the engagement and motivation of team members. This is an important factor since only ⅓ of employees are engaged worldwide (according to Gallup). Higher employee engagement results in higher job satisfaction and higher productivity.
Moonshot Objectives encourage everyone to think beyond the threshold of what seems possible, find creative and innovative solutions and achieve remarkable results. OKRs are structured in a way to help teams think out of the box. That's why the average score for achieving them should not be higher than 70-80%. Be aware though, that the company should be mature and experienced enough to understand and accept such results and not get upset. For people new to OKRs methodology it might be disappointing at first not reaching your goals all the time!
Taking into account all the benefits of OKR above, it seems that Objectives and Key Results are too good to be true. For sure, such goal setting is worth trying. Most likely your colleagues would fall in love with the approach. However, they're also not that easy to adopt them effectively and would require a lot of effort from your team to get it right. Check out this article on how to get started with OKRs.
Check out a free OKR tool Plai that will help you manage OKRs in your team.