The Problem with OKR's and How to Fix Them
New performance management fads come and go, but OKRs remain one of the most popular. They’re everywhere. Google adopted them, Medium uses them, and they’re even standard practice at startups like General Assembly. The logic is simple: If you set measurable objectives and key result indicators (OKRs) with your team members up front, you can track their performance more easily. Technically speaking, an OKR is a metric that measures whether or not an employee has successfully completed their assigned tasks in a given period of time. Put simply: OKRs are qualitative objectives with associated quantitative indicators that measure the success of an organization or company as a whole on pre-defined metrics. These metrics should align with the larger company strategy and support the achievement of its goals, but - as we shall explain - this isn’t always the case.
Why are OKRs so popular?
The technology boom of the 1990s brought with it a newfound fascination with performance management. The best and brightest engineers and developers were in high demand, but they weren’t always getting the ROI they deserved. This created a new demand for companies to boost productivity and improve results by setting quantifiable metrics and objectives for employees. The result? Objectives and key results (OKRs) were born. No one could have imagined that more than 20 years later, these metrics would still be a staple of performance reviews. OKRs are a quantifiable metric that allows companies to track employee performance. As soon as a manager and employee set goals together, it creates a sense of accountability on both sides. OKRs can also help boost job satisfaction, as employees know what’s expected of them and how their efforts contribute to the company’s overall goals.
The problems we see with OKRs
While some companies do indeed see great results from the use of OKRs, we’ve come across a few issues that cause us concern. On an annual basis we conduct the High Performance and Agility Survey that allows us to understand the true pains faced in implementing OKR's. A few popular insights include: -
1) Focused on Hardware not Software: No, I'm not referring to Technology here but a common pattern we see is organisations accelerating towards implementing OKR processes, frameworks and even tools without understanding the mindset and cultural shift that needs to occur for OKR's to thrive. For this reason our OKR support focuses on upfront education and coaching to help leaders and organisations put people before process and technology
2) Too Big, Too Fast: As a society we have an implicit obsession with big things. We see this repeated in many places including OKR's. A common failing amongst organisations is implementing multiple OKR's in multiple places at the same time and then wondering why it doesn't work. For this reason we follow the approach of Think Big, Start Small, Learn Fast. Have a grand vision but apply this with one OKR in one place at one time and then learn from the result, giving you a firm foundation to grow from.
3) Bad metrics: Some companies set the wrong metrics, and this can lead to the wrong results. If your company’s metrics are not in line with its strategy, they could mistakenly believe they’re being successful when they’re really not.
4) Incorrect measurement: If you’re using the wrong metrics, you might be measuring incorrectly as well. This could result in an inaccurate picture of your team’s successes or failures. -
5) Lack of room for growth: If your metrics are too high, employees could become demotivated. If your metrics are too low, your employees could lose confidence in themselves and their abilities.
Five ways to fix bad OKRs
1) Get rid of the bad OKRs completely: In our OKR Assurance engagements we look to find health and unhealthy OKR's. It takes guts to call it out but If your metrics are bad and your goals don’t make sense, OKRs will only make things worse. You need to start over with new metrics and new goals.
2) Recognise OKR's for what they are "Leadership and Cultural Change" when you accept this it is clearer to recognise the importance of good education and coaching to help you transition to the new way of working
3) Measure your Measures - In any OKR implementation or uplift we start by setting OKR's for the team undertaking the implementation including what good and not so good looks like, by measuring the success of the implementation gives us data to learn and improve going forward
4) Make your metrics more transparent: If you’re unclear about your metrics, you’ll never know if your OKRs are good or bad. You also won’t be able to tell if your employees are meeting their goals, or if they are even on the right path. Clear and transparent metrics ensure that everyone is on the same page. If you haven't already invested in a tool it is worth considering your options, we often see data linkage and management quickly becomes challenging.
5) Adjust your goals: If your metrics are the issue, you can’t just switch them out for new ones. You have to adjust the goals to make sure they are reasonable and attainable.
What to look for in a good OKR
Our experience has given us patterns of good OKR's we're delighted to share a few of these with you
1) Aligned team members : Team members should be aligned in the OKR's it is a collaborative process. Additionally, Your employees’ OKRs should tie in with their departments and their metrics should align with each other.
2) Clear metrics: Your metrics should reflect your company’s strategy and tie in with its goals and objectives. They should be clearly defined on both a company and an employee level.
3) No crazy growth goals : While OKRs are meant to grow and expand your company, they shouldn’t be unrealistic. If you set your team members up to fail, they won’t feel motivated and they won’t have confidence in themselves or in the company.
Summing up
OKRs are a great idea in theory, but they can go wrong in practice. The best way to avoid this is to invest in good education, coaching and the right tools to make sure your metrics are clear, realistic and tied to your company strategy and goals. Your metrics should also be aligned with your department objectives, and your employees’ OKRs should tie in with their personal goals and objectives. If your team members are on the same page, they’ll know what is expected of them and how their efforts contribute to the bigger picture. This will boost job satisfaction and, ultimately, productivity.
We cover OKR's in our public training courses from Business Agility Fundamentals to Lean Agile Procurement
If you need additional help please contact info@twenty2collective to understand more about our OKR Assessment or OKR Quickstart Workshop.