Why you should choose OKRs for your team
Objectives and Key Results (OKRs) provide the benefit of a performance management framework that brings company core values and objectives together. Transparency also plays a big role in creating OKRs. With the increase in visibility, teams can create goals and expectations for company interactions. Therefore, cross-functional teamwork increases.
OKRs help teams spend less time being distracted by trivial tasks, and more time achieving team and company goals successfully. It is easier to achieve the objectives through measurable and specific factors when they are broken down into OKRs.
OKRs across the board – a top-down strategy
It is important to say that OKRs are set on company, team and personal level. Company OKRs have to be created with the big picture in mind and a top-level focus on the business strategy. These OKRs should be easily available to the entire company and made a commitment from top to bottom. Only then will OKRs help everyone in the company understand how their efforts are making a bigger impact on the overall team and company success.
The key result of an OKR from one level will become the objective for the next level down which means company key results become team objectives. That is why team OKRs have to match your company’s culture and team priorities. Team OKRs define priorities for a team and not just a collection of all individual OKRs. Personal OKRs define what an individual person is working on.
Where do we want to go?
Objectives set in OKRs are the desired outcomes of what you want to achieve. You can define the objectives more easily by asking your team “Where do we want to go?”. While creating objectives, you should feel a tad uncomfortable. Think big, be ambitious! The best objectives are the most ambitious ones.
The Key Results (KRs) are the measurements that help you know you’re on track. You can help find them easier by asking your team “How will we know we’re getting there?”. KRs have to make the objective clearly achievable. They are quantifiable and lead to the objective grading.
Any metric defined in KRs should follow the S.M.A.R.T model – Specific, Measurable, Attainable, Relevant and Time-bound. KRs are most likely very different from team to team within a company and for each functional position. Hence, it is difficult to present a ‘top 5 OKRs’ list for different teams and companies. To structure the process on what OKRs your team should track, you can follow the metric classification: baseline metrics, positive and negative metrics, and threshold target metrics.
Baseline metrics are numbers that are considered as “acceptable”. For example, your customer support team has a reaction time of 30 minutes or less: the baseline metrics is 30. Any number above 30 is unacceptable in this case.
Positive and negative metrics
Positive and negative metrics are used to either increase or decrease your baseline metrics. For example, a positive metric for your sales team could be to sell 5 more contracts during the next quarter. This increase is a move in a positive direction.
A negative metric, on the other hand, would be a decrease in your baseline metrics. For example, you want to change the customer support team reaction time from 30 to 20, you are moving the metric in a negative direction.
Threshold target metrics
Threshold target metrics have to specify acceptable low and high values. The threshold target metrics create a range of metric-centric objectives that are acceptable.
An example here would be: the sales department needs to make a minimum of $100,000 in monthly recurring revenue for the business to be cash flow even. For the business to be cash flow positive, the recurring revenue has to be over $120,000 monthly.
Measurement and grading of your teams’ OKRs
OKRs are traditionally set quarterly and annually. As described before, your OKRs have to be measurable. It’s important to consider the difficulty of each OKR when grading and assessing. You should have 2 to 5 objectives with 2 to 7 key results for each objective.
One example for OKRs can be:
Objective: Improve your sales analytics process
- Implement a sales analytics and Business Intelligence platform
- Set up sales cycle and average deal size triggers to email your VP of Sales
- Review sales activity metrics and send a weekly summary to the team
- Check sales pipeline metrics and send a weekly summary to the team
- Analyze retrospective sales results metrics and send a weekly summary to the team
- Track general sales and company’s revenue
Each key result will then be graded after one quarter on a scale from 0-1. The 0.0 – 1.0 scale created by Google shows the expectation of an average of 0.6 to 0.7 for each OKR. 0.6 to 0.7 is for Google the “sweet spot”. Scoring lower than that means the organization may not achieve enough of what they could achieve. Scoring consistently 1.0 may mean the aspirational goals are not being set high enough.
However, it is still up to the company itself how they want to set and define the score range per OKR. In the end, the average of all KRs will give the overall objective grade. To meet all the team objectives in an easy and efficient way, it is important to assign KR owners within the team.
OKRs create transparency across entire organizations
OKRs increase the clarity, focus, and collaboration in your organization, especially in different geographies and time zones. It is an investment of time and resources to continue monitoring but it will pay off positively by increasing the chance of your company’s success. The main focus in the execution of the OKRs is on your company’s core values what is of high importance.
Have daily reminders in your teams that show everyone why they do what they do each day, regardless of their role. This will help teams achieve their objectives and key results. When choosing the right OKRs for your team, remember to be inspirational and challenge the entire team to be innovative, creative and aligned with the organizational values.
Atlassian. “Objectives and Key Results”. (Source)
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Whittick, Simon. “6 tips for setting OKRs with your team and other lessons we learned”. Aug 11, 2016. (Source)
7Geese. “a practical guide to getting started with objectives and key results”. (Source)