When working with clients to redesign their performance management frameworks, I often hear feedback from managers and employees about how frustrated they are with parts of the process. One aspect of performance management in particular – goal setting – seems to top the list. Many organizations are not getting what they need from goal setting, either in data or employee performance.
Why? In a traditional process, organizations design broad goals, usually once per year, and then as the business or priorities change, goals are forgotten or become less relevant. What happens next is leaders, who rightly focus on real-time priorities, spend less time measuring and tracking progress against outdated goals. Employees often feel out of sync with the current state when their work priorities shift and their original goals no longer seem like the best place to focus energy or resources.
What can help resolve these challenges? Developed by Google when it was still a startup, a framework called Objectives and Key Results (OKRs) helps bring measurement, accountability, and transparency to the goal setting process. The framework outlines company and team objectives along with measurable key results that define how each objective will be achieved.
Sarah Ghessie, People Operations Manager with Asurity Technologies, explains why their organization shifted to this model. “We had not been in the practice of formally setting goals, at least on the team and individual level. The OKR model was appealing to our team because it helped employees determine what was most important on a high-level (objectives), and then enabled them to analyze and develop an action plan (key results) as a roadmap for how they would accomplish the high-level goals. OKRs allow individuals and managers to track goals methodically, and we wanted to establish a process where managers could easily review OKRs and check in with their direct reports to get a progress update.”
Here are ways OKRs differ from a traditional goal planning process:
- OKRs usually consist of 3-5 high level objectives and 3-5 key results. Each key result has a progress indicator from 0-100%.
- Tactical OKRs are usually only set for a quarter at the team level to account for changing dynamics and market mechanisms, ensuring that the goals are always aligned to current priorities. Longer-term, strategic OKRs can still be set annually at the company-level.
- Instead of goals set from the top and cascaded down into the organization, over half of the tactical (or team-level) OKRs are set by teams in alignment with company goals and then contracted with managers in a bubble-up approach. This process is faster, simpler, and more engaging for teams.
- OKRs are publicly viewable by the entire company so everyone knows what the focus is across the organization.
- OKRs are usually set so that the attainment threshold is around 80%, not 100%. This philosophy is based on the idea that if a company is always reaching 100% of goals, they’re too easy.
- OKRs are not tied to salary and bonuses. This approach clears the path for employees to set ambitious
goals. The fear of losing money prohibits employees from setting ambitious goals in the first place, which only hinders organizational performance. This underlying philosophy also aligns to Daniel Pink’s research on rewards and motivation, which essentially states that “creative excellence comes from pushing rewards to the back of the mind and focusing on intrinsic motivations – such as challenge, learning, flow and purpose” (McGuinness, 2009).
At Asurity Technologies, the use of OKRs have come with benefits. As Ghessie points out, “OKRs have benefited our organization by helping us to develop better goal-setting habits. The visibility into each part of the organization and what specific people and teams are focusing on has enabled us to be more transparent across business units and the company.” At Asurity, managers have monthly check-ins with direct reports on the status of their OKRs where they discuss wins, roadblocks, and changes to the goals. The management team meets monthly to review OKRs and team updates, which encourages a level of accountability that has helped the company realize where they excel and where they can improve as a business.
What do OKRs sound like once fully formulated? The following examples come from Felipe Castro, OKR coach, author, and speaker.
OKR Example One
Objective: Create an Awesome Customer Experience
Key Results:
• Improve Net Promoter Score from X to Y.
• Increase Repurchase Rate from X to Y.
• Maintain Customer Acquisition cost under Y.
OKR Example Two
Now consider a team that wants to increase the engagement with a digital service:
Objective: Delight our customers
Key Results:
• Reduce revenue churn (cancellation) from X% to Y%.
• Increase Net Promoter Score from X to Y.
• Improve average weekly visits per active user from X to Y.
• Increase non-paid (organic) traffic to from X to Y.
• Improve engagement (users that complete a full profile) from X to Y.
As with any implementation, there may be changes or adjustments to the OKR process companies need to make based on feedback from employees or the needs of their business.
Ghessie recalls early lessons learned. One of the first included focusing on the use of technology to facilitate the process rather than perfecting the OKR model itself. “By adding in the technology factor, the focus was less on goal-setting and more on how to use the program, which ultimately led to a lower OKR adoption,” Ghessie recounts. The company now uses a lower-tech option for tracking that still meets the bigger picture objective: it focuses them and their employees on quality OKRs. The second key learning centered on how often employees set OKRs. Asurity began by setting OKRs each quarter, but after analyzing feedback from the team, it determined setting half-yearly goals was the better approach for the company.
As you start designing a goal setting process this year, consider the value it brings to your organization. Will it help motivate performance that can drive the organization forward? Will it give your leaders true, real-time visibility into the work of their teams? How will it bolster accountability? Or will it only serve as a process that employees view as an out of sync, check-the-box activity?
If you are designing a new performance management framework, explore how goals can positively challenge individuals and push the organization closer to its overall objectives. If that is something your organization needs, OKRs may be a goal setting model that’s right for you.
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Shelly Price is the Principal Consultant and President of Human Capital Next, LLC, which focuses on human resources project consulting services and interim support. Shelly specializes in custom training and leadership development and facilitation, culture and engagement survey and assessment, and employee relations. Shelly holds an MBA degree and is certified to use the Myers-Briggs Type Indicator® (MBTI) Instrument, FourSight® Thinking Profile, and DiSC® assessment. She holds a Senior Professional in Human Resources (SPHR) designation from the HR Certification Institute and is an Organization Development Certified Professional from the Institute of Organization Development in Fort Myers, Florida.
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