Old-fashioned goal-setting frameworks have often involved creating big-picture plans for an organization — like sweeping intentions to grow the business, boost sales, or bolster brand awareness. But often these targets were simply broad-stroke statements with no direct tie-in to the work of individual departments, teams, or employees. This might have been a sufficient strategy a generation ago, but today’s world and workers are different. Global events, as well as a subsequent decrease in customer loyalty, are forcing companies to quickly shift their business strategies. And employees are demanding more than a paycheck — they want to see that what they do on the job daily matters.
Amid all this upheaval, it’s no surprise that the objectives and key results (OKRs) framework is growing in popularity. This methodology spells out a company’s big-picture goals; aspirational objectives, such as growing the business; and the specific key results, or milestones, required to meet them, such as increasing revenue by $1 million and expanding into a new sales territory.
As Lattice reported in our latest eBook, The COO’s Guide to OKRs, global interest in the term ‘OKR’ has quadrupled in the last five years, according to Google Trends. That’s in part because, when done right, this strategy can better address the needs of today’s organizations than simply setting key performance indicators (KPIs) or listing goals with no clear path for achieving them. OKRs allow for nimbleness as business needs change, and provide a clear view into the responsibilities of every employee — from the C-suite to entry-level new hires — in the work of an organization.
The task to implement the OKR process often falls on the Chief Operating Officer (COO), as they operationalize the CEO’s vision and strategy, said Marc Snyderman, COO of the Apolline Group, where he provides outsourced COO and strategic services.
“There is an investment of time and energy to get there,” Snyderman said of building out OKRs. “But the payoff is huge because, especially from a COO’s perspective, [it gives you] operational clarity that you [wouldn’t otherwise] have.”
But even as the concept grows in popularity, Snyderman said he still encounters leadership teams that aren’t familiar with OKRs. If you’re a COO just learning about OKRs or considering implementing them at your organization, here’s what you need to know about this goal-setting framework and how to set it up in your workplace so employees are aligned and focused on the right outcomes.
4 Things COOs Need to Know About OKRs
1. OKRs highlight the “why.”
Traditional goal-setting methods often don’t drill down into the role that each employee will play to meet company objectives. The power of OKRs, Snyderman said, is that they highlight the “why” behind what teams and individuals are doing.
“That’s the beauty of it — getting [junior employees] to understand how they fit into the organization and how they fit into meeting that goal,” he said.
As noted in our eBook, The COO’s Guide to OKRs, what makes OKRs different from other methods is that they mark gains and calculate achievements in a unique way, focusing on these four areas:
- Alignment: With OKRs, every member of the organization is on board with the objectives, and every team is on the same path. OKRs can be developed with either a top-down or bottom-up approach. But in all cases, a feedback loop of advice, input, and direction from all levels should be incorporated to ensure all perspectives are considered.
“One of the biggest [benefits of] OKRs is [that] people are aligned, ” said Tarun Somani, COO of Boxhub, a Toronto, Canada-based tech startup that streamlines shipping container purchasing. Employees understand the goals and how the organization plans to achieve them, and OKRs provide transparency so teams and departments can see what everybody is working on, he said.
- Prioritization: When OKRs are in place, all employees understand what the organization’s priorities are and are able to judge whether tasks are moving them in the right direction. This framework also makes it easier for employees and teams to push back when a manager or leader begins to guide them away from the plan. “Especially in tech companies, you’re always going to follow the new shiny object,” Snyderman said. “Having those set objectives and key results keeps you from veering too far off.”
- Accountability: With OKRs, each employee and team has key results, or KRs, and is responsible for meeting them. Progress on these key results is considered in performance reviews or when new initiatives are proposed. “It forces focus,” said Jessica Donahue, founder and consultant at HR consulting firm Adjunct Leadership Consulting.
That focus on accountability can also help get teams aligned. Employees know that, individually and collectively, everybody is accountable for the same company objectives, said Donahue. “It touches on that element of helping people feel like they’re part of a bigger effort,” she noted.
- Outcomes: Instead of focusing on outputs — the actual work each employee is completing — OKRs look to the results of those outputs, the outcomes, instead. And if the planned outputs aren’t achieving the desired outcome, the process can reveal where changes need to be made. “[OKRs] give you a very clean way of knowing [if you accomplished something] or not,” Donahue said.
2. OKRs allow for flexibility.
While some goal-setting methods focus on a timeframe of a year or longer, OKRs are often much shorter-term — typically quarterly. There is power in that shorter timeline, said Somani, especially for fast-growing startups and companies.
“We are growing and moving at such a fast pace, anything beyond a quarter is very difficult for us to predict and know what we should be focusing on,” Somani said of Boxhub. “We work on projects on a quarterly basis, see the outcomes and the things we’ve achieved and the things we haven’t, and build our next quarter plans accordingly.”
What’s more, Snyderman said, quarterly OKRs can give employees a sense of accomplishment as they check off company and team objectives. “It gives [people the outlook of], ‘We achieved this, what’s next?’” he said.
3. OKRs drive employee engagement.
Amid the COVID-19 pandemic, as teams continue to work in hybrid, remote, and distributed workforces, company OKRs provide a clear approach to how employees — regardless of their location — are working together on business strategy. In fact, the move to these non-traditional work arrangements is likely driving some of the interest in OKRs, Donahue said.
“It’s forced companies to be more intentional [about] how they are communicating everything, and goals and what everyone should be focused on driving toward over the course of the year,” she said.
That deliberate work to communicate in a clear and transparent way with employees can drive employee engagement and motivation over time. “That alignment really gets the culture to a point where [employees] are saying, ‘I understand where we’re going and how we’re going to get there. And I see why we’re doing it, and I believe in this,’” Snyderman said. “You start to band that together, and it’s pretty powerful.”
4. OKRs come with a few misconceptions.
Some COOs shy away from OKRs for a variety of reasons. Here are three common misconceptions about OKRs:
- We don’t need OKRs; we have KPIs. According to Lattice’s OKR eBook for COOs, the two are not the same: OKRs are “action-oriented goals and measurable steps that support them,” while key performance indicators (KPIs) are “metrics that track the operation of your business.”
However, the two can work hand in hand. When a KPI is flagging, an OKR can be designed to shore it up. “KPIs are much narrower [in] focus than OKRs and [they] work well together,” Snyderman said. “As you establish [the] key results you will need to achieve in a quarter or year to meet an objective, you will most certainly be defining the key performance indicators to measure if you are meeting your key result targets.”
- My organization is too small for OKRs. Yes, huge corporations, including Spotify, Amazon, LinkedIn, and Intel, where the methodology got its start under the direction of former CEO Andy Grove, use OKRs. But even the smallest company can take advantage of OKRs, Snyderman said. In fact, the strategy can be especially useful as small companies scale.
When new team members come on board, OKRs provide them with a clear view into their responsibilities and the work of the other teams and departments around them. “People are coming in, and they don’t know where they fit,” said Snyderman. “The OKR setup or paradigm gives them a really good place to fit right from the very beginning.”
- All OKRs must be met in order to achieve success. To keep everybody on task, organizations should review and celebrate milestones periodically, Somani recommended. He advised end-of-quarter town halls to highlight the progress so far. But it’s important to note that OKRs aren’t a failure if not every objective and key result is achieved. In fact, if they are, it might be a signal that you need more ambitious goals. “I think 70% goal achievement is the sweet spot on OKRs,” Somani said.
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The best OKRs are shared widely, so employees across an entire organization can track how everybody is doing and have buy-in. Some companies use rudimentary spreadsheets to do it; others, like Boxhub, are deploying Lattice’s goal-setting tools to streamline the process, measure performance, and provide transparency. Whatever method is used, the key with OKRs is capitalizing on their ability to ensure everybody is working toward the same goal.
“This alignment of people and getting that sense of importance — that everyone, no matter what their role, [is working toward the same objectives], is a strong motivator to get people behind a cause [and show them] that what they’re working on actually means something,” Somani said.
Ready to learn more? Download our latest eBook, The COO’s Guide to OKRs.
