One of the latest (but not necessarily new) trends sweeping the digital scene at the moment is the embracement of OKRs, or ‘objective key results’, as a means to drive performance and progress through teams.
But what are OKRs all about? And why are they any different to normal goal setting and appraisal processes?
Why are goals and appraisals needed?
As businesses grow, and for that matter, the number of people in the team increases, ensuring everyone understands and takes accountability for their part in the wider business’ goals is crucial.
The ‘start up’ days of day by day direction by founders are no longer sustainable as more and more faces arrive. And every business clearly wants to ensure that per employee ‘value add’ doesn’t reduce as the business grows.
So, traditionally, firms will set goals or objectives for individual employees at the start of a financial year, stemming from the board or leadership team. A process of negotiation, often termed ‘you, me, agree’ takes place between said employee and their Manager, before they’re locked down in writing. 6 or possibly 12 months later, they’re dusted off ready for the dreaded appraisal meeting, a review of whether the employee has achieved their goals or not. Thereafter, pay and bonus awards are made (assuming the employee has performed of course) and the whole cycle starts again.
What’s wrong with the traditional approach?
We could write about this all day long! Experience and research shows that traditional annual appraisal processes just don’t work anymore. Not in a world that is advancing as quickly as ours is anyway.
In fact, it’s been proven that traditional appraisal processes, shy of motivating people and securing progress for the firm, can actually be counter-productive. The potential for seemingly un-achievable goals, or the impact of external factors such as market conditions, can disillusion people from day 1.
And a lack of agility in processes and frameworks mean goals don’t always keep up with what’s needed in a business throughout the year.
As for linking pay to performance? Well, that debate is for another blog.
Why are OKRs different?
Instead of being just another appraisal system, OKRs are actually a fundamentally different approach to driving performance and accountability. They’re more than just a process or framework to set and monitor goals. They rely on empowerment and coaching to succeed.
In a nutshell, traditional appraisal processes are top down. Goals are set by the board or leadership team, and a ‘waterfall’ approach creates ‘SMART’ (Specific, measurable, achievable, relevant and
timely) objectives for every member of the team. It’s an approach that focuses on the ‘what’. What the employee needs to deliver. Not ‘why’.
OKRs are bottom up. They’re about employees understanding where the business is going and why, and recognising their own role in that journey.
Whilst the leadership team still set the ‘direction of travel’, their focus initially is on ensuring everyone truly understands and buys in to the strategy of the business for any given quarter or year. And then empowering and enabling their teams to go away and think about how they themselves can support that strategy or plan, returning with a set of proposed goals that they believe in, and are much more likely, therefore, to take responsibility for, given they themselves own them.
After being agreed, the focus shifts on to leaders helping their employees to deliver their goals successfully and on time. And doing this in real time, not just when the appraisal calendar says they need to. Be it support with development. Coaching and support. The provision of resources. Whatever it takes to remove obstacles to progress to truly empower their people.
The other crucial difference with OKRs vs. more traditional set ups is that they’re designed to be agile. Rather that sitting down at the end of the year and highlighting how irrelevant the goals now are (as times have changed and different priorities arose), leaders are able to reset the direction of travel regularly, say every quarter. Thus allowing the business to respond to unforeseen events or opportunities, and ensure the whole ship is steered towards them.
How can businesses ensure they implement OKRs successfully?
Well, in the same way that I could make an ‘ok’ Victoria Sponge by asking Alexa for instructions, I could just implement OKRs tomorrow. But I wouldn’t be sure of executing the recipe well unless I was certain I had the right ingredients, the right skills and a clear understanding of what good looked like.
The transition from traditional appraisal processes (or from having nothing at all in place) to a world of OKRs needs to be planned and thought through, and crucially, people need to be engaged throughout. The journey of change, after all, is as important, if not more, than the destination.
Taking the time to explain why OKRs are being implemented, to educate on how they work and to ensure everyone understands what role they play in their success is essential.
And ensuring any leaders in the team are comfortable with coaching is vital, as the success of OKRs relies on leaders leading by example. No more dependence on top down dictatorial management styles (though in certain circumstances this style will still be needed). Leaders need to empower. They need to enable. They need to coach. And they need to lead their people as the business continues to grow.
Get it wrong and OKRs are just another appraisal process. Get it right, and they can transform a firm’s performance, productivity and agility.
Want to find out more? We run sessions and workshops on OKRs, together with projects to help businesses to make the transition to OKRs a successful and sustainable one. So get in touch!