As companies grow and scale, the need to keep teams aligned with the organization’s larger mission becomes more and more challenging. Every team in the company has a different set of roles and responsibilities. Thus, driving unified results is anything but a straightforward process. This is where OKRs (Objectives and Key results) come in.
Ever since the OKR framework originated in the Silicon valley, it has gained much traction in businesses around the world. While it is a reliable way of ensuring growth in the right path, HR teams constantly face numerous questions about the role of OKRs in employee goals and performance reviews. Today, we’ll be looking at what OKRs are, how they help businesses manage their performance, and whether individual OKRs are a good idea -
What is OKR?
The term OKR stands for Objectives and Key Results. It is a framework that companies use to set, share, and track goals to keep various teams aligned to the same overarching company goal. Various mega organizations like Intel, Spotify, and Amazon have sworn by the efficiency of the OKR framework. However, it was Google, in a 2013 Video about How Google Sets Goals that popularized OKRs for organizations around the world.
Due to its widespread use and open-sourced nature, approaches to OKRs vary across organizations. However, the basics of the framework remain the same throughout - focusing on the big impact tasks, clear priorities, and alignment across various teams. Companies usually decide on 3-5 high-impact objectives for the year. These objectives are like mission statements for the organization. Each objective then has about 3 key results which are quantifiable actions that help measure the success of the objectives. The different teams then do the same for every quarter of the year. They set objectives in line with the company-wide OKRs, and decide key results accordingly.
How does the OKR framework help businesses manage their performance?
The primary aim of using the OKR framework is to optimize and manage company performance. This happens in several ways :
Accountability: OKRs are a great way of ensuring accountability. With a clear set of objectives and key results, you can avoid the grey area of deciding whose responsibility is to meet what goal.
Transparency: Having team priorities and their impact across the organization out in the open is one of the defining features of OKRs. Therefore OKRs are a great way to foster a transparent aim and growth culture across the company.
Empowerment: OKRs help employees witness the impact of their responsibilities and their contribution to the larger goal of the organization. This helps encourage a sense of ownership and drive towards performance.
Alignment: One of the most important aims of OKRs is to ensure the alignment of various teams with the goals of the organization. OKRs help ensure that everyone is on the same page and aware of their roles and responsibilities.
Priorities: With the OKR framework, teams can see how their day-to-day tasks align with the company’s broader goals. This helps them prioritize tasks for long-term growth.
Main Characteristics that OKRs should have:
Keep them Public: The OKR objectives and key results must be kept public for teams, and employees across the organization. This helps in collaboration among different teams, brings clarity across the organization, and helps keep accountability.
Set a date: Decide on a time period within which each OKR must be completed. At the end of the year or a quarter, mark the progress of the OKRs. For each objective, keep a note, along the lines of “Not even close to completion”, or “Objective achieved”
Keep them Quantifiable: OKRs must be quantifiable. Vague key results like “Get more Sales” aren't measurable and will be hard to qualify as a success or failure. Key results need to be set in terms of numbers, percentages, or date of completion. This ensures that your results are measurable.
Aim ambitiously: The purpose of following the OKR framework is to aim big and fearlessly. Remember that it is always better to fall a little short than aim for unambitious objectives. OKRs are a way to challenge your company and teams and to push them out of their comfort zones.
Things to keep in mind about OKRs -
To focus on meaningful change, try keeping ‘Business as usual’ out of the OKRs
Maintenance work and standard procedures are carried out as usual but not reflected in the OKRs.
Using stretch goals is a good idea to push for big achievements. For example - 70% progress can count as a good result.
Do not couple OKR completion to bonuses and compensation. This avoids sandbagging and encourages ambitious targets.
Are individual OKRs a good idea?
The short answer is - no.
While company and team OKRs have proven to be great for productivity and alignment, experts have advised against individual OKRs. Individual OKRs tend to add undue complexity, blurring the lines between organization goals and the personal development of employees. They also facilitate less autonomy for employees, which in turn hinders basic tasks and outcomes.
Companies like Spotify have reported that they only use company-wide OKRs. Their HR revealed that individual OKRs slow them down without adding any value. (source) Their plan of action for individual employees is different from the OKR framework. We suggest the same to all HR teams for their employees - employee goals that allow for autonomy and ensure agility.
Employee goals must be set independent of the direction that the organization is taking. This helps employees’ personal growth and ensures that they keep the organization running, instead of keeping the OKR process running. Rick Klau, the person responsible for popularizing the OKR framework with Google’s 2013 video himself reconsidered individual OKRs and decided to advise against them :
Tweet: “Skip individual OKRs altogether. Especially for younger, smaller companies. They’re redundant. Focus on company and team-level OKRs.”
How are employee goals different from OKRs?
When your organization is not using individual OKRs, they stop being relevant for employee evaluations. This is a good thing. An employee’s growth and performance are not limited to their contribution to team objectives. OKRs cannot be used synonymously with employee evaluation. Thus, the lack of individual OKRs allows other criteria of assessment to be taken into account. Lack of OKRs also allows you to have a holistic approach to employee evaluations. You can then use tools like the Zimyo Employee Evaluation tool to identify highly proficient employees and increase your productivity by analyzing the real-time performance of your employees
Thus, OKRs must be limited to company goals and alignment, while employee goals help assess employee performance. Setting employee goals instead of individual OKRs ensures that evaluations are fairer. Goals tend to set clearer expectations, enable accountability, and consider personal development. For example -
While OKRs look like :
Reach sales target of $150 Million in Sales.
Raise the average deal size for the company by 35%
Employee goals must look like :
Complete 10 training modules before the next performance review.
Raise the hourly unit production by 7% between each quarterly performance review
Benefits of setting employee goals instead of individual OKRs
OKRs are only a part of what goes on in an organization. There are still several tasks that need to be taken care of, without being a part of the yearly/quarterly OKR. This is where employee goals prove beneficial. For example, while getting new clients is a common OKR objective, retaining old ones is not. Yet, retaining old clients is an important part of running a business, and some employees must be assigned for looking after existing clients.
Instead of measuring individual contributions, OKRs measure outcomes. However, most outcomes are a result of joint efforts. Employee goals help keep individual contribution and performance.
The learning and development rate of an employee is important to assess their place in the organization. However, while an employee learns a new skill, their contribution to the OKRs with those skills will be negligible considering they’re just starting. Employee goals help you take these metrics into account, while OKRs do not.
In conclusion, we have looked at what OKRs are, and their benefits for company alignment and growth. However, HR teams must keep in mind that company and team-level OKRs are only one aspect of an individual employee’s growth and performance. To make the most of this distinction, employee goals must be different from OKRs. We hope this was helpful! For further questions and feedback, reach out to us at :
