The key to any successful organization is the ability to turn plans into reality—specifically, getting employees to turn plans into reality. The best way to do that? Employing OKRs. Objectives and Key Results (also known as OKRs) is a management methodology that connects the work of employees to the company’s overall strategic plan.
Here’s an example:
Objective: Improve customer service scores
- Have 100% of employees attend “How to Deal with Difficult Customers” training by the end of Q1 2017
- Track customer compliment and complaint letters (goal: 2 to 1 ratio)
OKRs are more than a fancy name for goals. The rigor used to create OKRs gives them unique benefits that address challenges many organizations face today, including employee engagement, performance management and retention:
- OKRs enable open, two-way communication between managers and employees, creating engagement. In turn, engagement fuels the accomplishment of OKRs.
- In today’s business market, organizations need to react quickly. It no longer makes good business sense to meet once or twice a year about goals. OKRs clarify company performance expectations so employees can achieve results.
- Employees stay with companies where they contribute to the bottom-line. OKRs create clear alignment between employee goals and organizational strategy.
OKRs aren’t new to the business world. The reason they’re rising in popularity is because the way we do business is changing. OKRs fit the way business happens today.
A Little History and the OKR Trend
In the 1970’s, Peter Drucker introduced Management by Objectives (MBOs). It took ten years for MBOs to become mainstream within the Fortune 500. While many organizations still use the approach, critics say the MBO process is lengthy and hasn’t evolved to align with modern management.
Since then, we see much quicker growth with OKRs. Several organizations like Google, Intel and LinkedIn have adopted OKRs. At this pace, OKRs will be mainstream within the next 3-4 years, in businesses of all shapes as sizes, as the world realizes tying goals directly to compensation is not optimal, and encouraging stretch goals is better for results.
Case in point: Google attributes part of their success in growing from 40 to 40,000 employees to the effective use of OKRs. As more organizations share their best practices, OKRs have the opportunity to be every company’s operational standard for the next 30-50 years.
4 Steps for Preparing Your Business for OKRs
This post only scratches the surface of OKRs. Like any valuable endeavor, OKRs should be properly introduced to the organization. It’s worth noting that OKRs are not exclusive to large organizations. OKRs provide flexibility so organizations of any size and in any industry can use them successfully. Below are four easy steps you can take to prepare your business for the OKR revolution:
- Download the BetterWorks e-book, Getting Started with Objectives & Key Results (OKRs): Best Practices for Implementing OKRs in Your Business. The e-book provides examples, links to video content and resources to measure results.
- Discuss how your organization will benefit from OKRs. Get senior management support and buy-in. When venture capitalist John Doerr introduced the idea of OKRs to Google, he used a football analogy. That may or may not work at your organization. Find the story that fits with your culture.
- Think incremental change. OKRs are a long term commitment. While there’s a benefit to making the full transition to using OKRs, don’t dismiss implementing OKRs in phases. Small changes in the right direction still have tremendous value.
- Draft a transition plan. OKRs fit well with the S.M.A.R.T. acronym (i.e. specific, measurable, aspirational, relevant, and time-bound.) Use S.M.A.R.T. as a framework for setting good OKRs to document the plan for change and hold team members accountable for results.
OKRs are the Future of Business
When it comes to delivering results, some of the old ways of doing business just aren’t keeping up with today’s organizational needs. Many companies are adopting OKRs to build the high-performing teams they need to remain competitive. They can use OKRs to create the highly engaged workforces that deliver results.
If you’re considering OKRs, the key to success is education. OKRs must be supported at every level of the organization, implemented correctly, used regularly and communicated effectively.