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Aligning teams’ day-to-day activities with an organization’s larger strategic priorities is one of the most enduring, and widespread, business challenges. Goals set at the top often don’t successfully translate into well-targeted activity at levels below.
“I probably couldn’t get a C-level executive on record to say this, but I would bet that a lot of them get very frustrated about stuff that goes on in their organization,” said Gavin McMahon, co-CEO and founder of Fassforward, a leadership coaching and consulting organization. “They’re like, ‘Why are you doing that? That’s definitely not what I meant when I said we should do X.’”
One promising solution for this dilemma is an objectives and key results (OKRs) approach to defining teams’ work.
What Are OKRs and What Are They Good For?
OKRs are measurable objectives that are expected to contribute to organizational goals. They are few, short-term, quantifiable and designed to promote specific outcomes.
Some experts recommend allowing a month to complete each objective, while others recommend setting objectives for 90-120 days at a time. Either way, the idea is to push progress quickly with high accountability and a sense of teamwork.
An OKR approach is particularly suitable for today’s fast-paced business environment, where improvement and progress must occur quickly to maintain a competitive place in the market. Organizing work in short bursts for targeted outcomes allows the organization to progress as a whole in an orderly manner.
“What you’re taking is some big strategic move you want to make, and saying, ‘What would be a meaningful, achievable step in that short period of time?’” said Daniel Montgomery, founder and managing director of Agile Strategies and author of "Start Less, Finish More." “That way, you really keep it right in front of you. You’re not like, ‘Oh I’m going to drive to New York.’ You’re like, 'At the bottom of the hill, am I going to turn left or right?’"
Related Article: How to Prioritize in the Workplace: From the Top Down
How to Set and Use OKRs
OKRs will only be effective to guide a team’s work if they are designed well and used in the right context. Here are four best practices for setting successful OKRs.
1. Engage in strategic conversation
McMahon recommends starting with a strategic conversation about the three activities that will move one of the organization’s top priorities forward. Hashing out the relative importance of various tasks can not only define OKRs but also increase team engagement and clarity on direction.
“Organizations are often gunked up with unnecessary tasks,” saidMcMahon. “OKRs are a way of degunking. They should cover 90% of daily work — meaning that if it is not part of the OKRs, then why are you doing it?“
2. Make OKRs simple and actionable
OKRs should be so simple that team members can follow them without a lot of thought or analysis.
“If you want people to operate on them daily, they have to remember them,” said McMahon. “If you make them too complicated, it’s not going to work.”
Creating a situation where employees can be self-directed in alignment with OKRs gives them more autonomy and freedom, a particular benefit in this age of hybrid and distributed work.
3. Apply OKRs to teams, not individuals
OKRs are most effective at a team level. While you can technically have individuals set OKRs, doing so for every position would be a massive project in an organization of any decent size.
Another issue is that holding teams accountable for progress is less stressful and punitive than doing so at the individual level.
“Be careful applying OKRs to individuals,” said Montgomery. In contrast to individuals, if the team fails to fulfill its objectives, “they have an after-action review and nobody feels they’re personally responsible for the failure.”
4. Ensure that results are measurable
An essential feature of OKRs is that those using them can measure their success. It’s important to choose results that can be assessed objectively, preferably quantitatively.
Take the example of a marketing team that is setting OKRs to align with an organizational goal of boosting brand awareness. A team objective may be to increase newsletter subscribers, and a key result for this objective may be to grow the company’s email list to 10,000.
Related Article: Why Goal Setting Helps Improve Employee Well-Being
Pitfalls in Setting OKRs
There are notable errors teams make when setting OKRs. Here are four of the most common ones you’ll want to avoid.
- Confusing OKRs and KPIs: OKRs are different than key performance indicators (KPIs). The key results within OKRs may be KPIs, but not all KPIs are key results. “The truth is that everything becomes KPIs eventually, and you get too many,” said McMahon. “A beauty of OKRs is it forces you to pick a few key results.”
- Disguising tasks as OKRs: Team leaders may have ideas about what needs to get done. “And so, they make it a task and they just call it an OKR,” says McMahon. With that, “what you’re doing there is stripping away all autonomy, agency and empowerment from your team.”
- Not translating the OKRs to the team level: Teams at every level of an organization should translate the larger strategic goals into OKRs that are appropriate for them. OKRs should reflect each team’s particular role as opposed to simply aligning with the larger goal in a generic way.
- Using OKRs in the wrong performance management context: OKRs are best suited to workplaces in which the model is more “manager as coach” versus “manager as taskmaster,” Montgomery said. OKRs won’t function well in a performance management system that ranks and judges people’s performance, especially if that judgment is tied to compensation.
Related Article: OKRs vs. KPIs: Similar, But Not the Same
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OKRs and the Future of Work
An overarching benefit of OKRs is the level of clarity and direction they bring to individuals’ work within their teams. The process of setting them is part of what provides that sense of priorities, and the act of pursuing them enables engagement, teamwork and accountability — three key attributes of today’s distributed workforce.
“One of the biggest roles that leaders have is to create pools of stillness that people can do their best work in,” said McMahon. “If you’re constantly changing things all the same and creating swirl, all people will do is respond to you. OKRs are your way of saying ‘here’s some clear water for you to swim in.’”
