Is your performance stuck at OK? Upgrade to OKRs
At D&I, we faced an interesting dilemma – over the course of a few years, our organization had grown so rapidly that our team had doubled in size. While we were, of course, thrilled with this development, growth brings its own challenges. In our case, I worried about how I could ensure that every member of our newly expanded team was properly aligned with my vision for the company.
What’s more, I wanted to take my goal setting to the next level. I agonized over what I could do to be sure that every employee was reaching his or her full potential, and that their collective hard work added up to enough to meet our very high ambitions.
But I also didn’t want to micromanage my colleagues. I talked to clients and friends who told me quite frankly that keeping enthusiastic employees aligned to their vision often felt as if they were herding cats. They often complained about disengaged employees who weren’t performing up to their potential.
When I looked at my own stellar team, I knew the latter was not the case, but I wanted to make certain that whatever strategy I used wouldn’t inadvertently push them there. I wanted to find a method of measuring performance that was objective but didn’t tear people down. I wanted something completely different. Something that inspired my employees not only to excel but to step outside of their comfort zones to take my company to the next level.
The answer, I discovered, was goal setting.
I know what you’re thinking right now. “Oh no! Not another article that tells me to write things down and check them off my list as I achieve them!”
I promise: this is much, much different.
I’m not talking about not just any type of planning. What we implemented at D&I was a very specific strategy called OKR.
What are OKRs?
Unlike traditional goal setting, OKRs break down your strategic planning into something larger, yet at the same time more achievable.
You see, the “O” in OKR stands for Objectives and the “KR” stands for Key Results.
Objectives are the big picture items that you want your team to achieve. When you ask your team (or yourself) the question, “Where do I/we want to go?”, your answers will become your objectives. But good objectives are not overly broad – like being the very best employer in the world! Solid objectives are concrete and achievable – such as increase our employee engagement and job satisfaction.
Key Results are how you reach your objectives. They are your markers on the road, your measuring sticks that allow your team to see where they are now and to guide them to where they need to be. As such, key results must be measurable. In our prior example, two key results would be: Reach monthly employee satisfaction score of at least 4.7 points; celebrate “small wins” by increasing number of bonuses given from 91 to 120 by the end of Q1.
So, you might be saying, that’s all fine and good, but do companies actually do this – and does it work?
A small company that you might have heard of – named Google – has been using OKRs since 1999. Twitter, Sears, LinkedIn, and Oracle either have used or are still using them.
But what makes OKRs different than other goals? Rather than the broad type of plans most companies set, OKRs are measurable and achievable. They provide clarity and tend to get all your employees working together to meet shared objectives. When introduced and implemented correctly, they build teams up, instead of pulling them down.
How do you do it correctly? Let me share our story.
How we use OKRs
At D&I, we believe it’s critical to get the entire team involved in establishing both our broad vision and our OKRs, but we don’t do both at the same time.
We begin the process in July when we hold an offsite retreat to reflect on our vision and values and to make certain that every employee is aligned with our vision. This retreat is solely focused on taking care of our people; we talk about motivation, values, and shared vision. We do not discuss strategy. (I’ll share more on this in a future next article.)
In November, we set aside one day to define our Big Bold Steps for the next year. We do this by getting our team together and establishing a vision for what our company will look like in the future, and then defining 5 Big Bold Steps to get us there. The steps then become our objectives for the next year.
We set no more than five objectives that should be aspirational and personally meaningful. We draw inspiration from Google's 10X thinking and Larry Page, who notes: “If you set a crazy, ambitious goal and miss it, you'll still achieve something remarkable.”
But that’s not all. During this visioning session, we also complete a team retrospective of the year to determine what we will continue doing, start doing, stop doing, do more of, and do less of. It is based on everyone's shared input that we then determine actions. We look at our objectives and mesh them with the efforts to develop key results for each objective. So we don’t have a laundry list of entirely forgettable items, we limit key results to 5 or fewer per objective.
These key results are developed each quarter; they are smart, specific, measurable, attainable, realistic, time-bound and are cascaded to our team’s personal OKRs. But we don’t just hang our OKRs on the wall. We encourage each employee to create their personal OKRs in line with company OKRs. This promotes internal buy-in and allows them to gauge their own development. To ensure proper financial support, our budget is developed with our OKRs in mind.
How do we measure success? Every week, we report on our OKRs during our Friday Shipping Meeting. During this meeting, we have an agenda item called "Metrics Review," where we report on OKR progress. Using a visual dashboard our team can see how we're moving along and whether we need to change focus, direction or re-assign priorities. Since we set and gauge OKRs quarterly, we conduct a retrospective at the end of Q1 that informs and helps establish OKRs for Q2, etc. We then follow up by grading each OKR, aiming for 70% attainment. Why? The “sweet spot” for an OKR grade is 60% – 70%. If you consistently reach 100% of your objectives, they’re probably not ambitious enough. Score lower, and you’re probably not achieving what you should be.
What we’ve learned
After two years of using OKRs, here are the lessons we learned so far:
- They should be open and available for all employees to see. If you want your people to be aligned and engaged, they should be able to see our compass, and how we are moving along the journey.
- Grading OKRs and reporting is crucial.
- Initially, we set yearly OKRs. Nowadays we use quarterly OKRs; which are agiler. With them, we see our team more engaged and excited to deliver on these shorter-term goals.
We hope that our story of how we use OKRs at D&I will inspire you to shake things up in your organization. Let us know how you set goals, and if you use OKRs, please share your experiences with us!