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Performance

How Can You Use OKRs To Set Goals That Motivate Employees And Boost The Success Of Your Organisation?

18 November 2022

7 min read

Lynette Teo
Lynette Teo

When your employees are assigned work goals that are inconsistent, ambiguous or unambitious, it can not only not help but even hinder overall productivity levels.

In fact, ineffective goal-setting only lowers the morale of your employees, and is a huge waste of time, effort and money overall.

Yet despite this, only 2 in 10 employees agree that their performance has been managed in a way that motivates them to put their all into their work.

How then can you set goals which are effective? What you need is a strong goal-setting framework, which you can use to ensure your employees are challenged in all the right ways.

And one of the most effective ones is what’s known as objectives and key results, or OKRs.

What Are OKRs?

OKRs are short for Objectives and Key Results. In short, it’s a strategy where your company’s high-level objectives for the year are defined, and then several key results are defined for each individual objective.

Under the OKR framework, your leadership will define a few high-level objectives. These should be memorable, qualitative statements of your company’s goals for the year.

Then, for each of these objectives, individual teams in your company will determine several key results that, when achieved, contributes to progress towards the related objective.

A set of 2 to 5 key results is a good number to define for each objective.

Why Should You Use OKRs In Your Organisation?

It’s because OKRs are the most optimal framework for setting effective goals. With a well-defined and carefully chosen set of goals to work towards, your employees can better understand how their work contributes to the overall success of your company.

This gives them a sense of purpose to their day-to-day work, which can be a powerful motivator and thus improve their productivity.

Effective goals also helps your employees track their progress over time, which also motivates them to put in their best effort towards achieving them.

OKRs are an especially effective framework for building an agile organisation, as agile planning requires regular reviews of how your business is currently doing. It also enables your managers and their direct reports to be able to easily check in on goal progress regularly, and make adjustments as needed.

This ensures that when you set goals for your employees through OKR, and pair it with continuous feedback, your company will be agile enough to adapt to changes in today’s fast-paced world.

How Should Your Organisation Identify Objectives?

OKRs are at their most effective when managers and employees alike have a stake in setting your company’s goals.

To begin with, have your executives and managers come up with 3 or 4 objectives that should be achieved within the year.

These objectives should be short, memorable, and qualitative descriptions of what your company wants to achieve in the short-term and the long term.

This allows your leadership to set the direction for your company, and strategize a plan for maintaining and building on its present success.

 Some good example of objectives are as follows:

  • Improve customer satisfaction
  • Increase recurring revenue
  • Scale system performance
  • Increase the number of customers served
  • Reduce the number of data errors in the system

How Should Your Organisation Identify Key Results That Support Objectives?

Your employees are the closest point of contact to your customers, and thus more familiar with the areas of opportunity for your company. Therefore, they should be involved in goal-setting through the OKR framework as well.

There’s also a benefit to this; when your employees can set their own career goals, by doing so they become 3.6x more engaged. When your managers help employees align their goals with your company’s objectives , their productivity increases by 56% as well.

So how do you get your employees involved in goal-setting? Once your company’s objectives have been defined, have each business function in your company consider each of them, and identify several key results that contribute to progress towards each objective.

These key results should be achievable within a quarter, so that you can measure progress towards them several times over the course of a year. This can help you figure out if they need to be adjusted over time.

For example, if one of your company’s objectives is to reduce the number of data errors in your systems, here are some good examples of key results that support that objective:

  • Number of data quality errors reported to the support desk
  • Number of orders that can’t be filled automatically
  • Order errors reported by customers

It’s also important that you decide on key results that work as leading indicators of your objectives, as opposed to lagging indicators. Not only must you be able to measure these key results regularly and frequently, they must also contribute to the overall objective.

Here’s an example of several objectives, along with key results that work best as leading indicators of each objective:

Objective

Metric

Customer satisfaction

Net promoter scores

Survey results

Customer churn

Adoption rate

Engagement

Market share (vs competition)

Conversion rates

Recurring revenue

Quarterly revenue

Subscriptions

System performance

Simultaneous users

Number of customers

Number of performance complaints

Number of monitoring system triggered critical events

Of course, neither your objectives nor your key results should be static goals; they should be regularly reviewed and revised to remain relevant to changing conditions.

This combination of clear objectives with a small set of specific, measurable key results, as well as a regular process of reviewing progress made towards achieving them and their continued relevance to current realities, is what makes OKRs truly useful for your organisation.

How Should You Track OKRs?

Here’s a quick and easy formula for scoring the extent of an employee’s progress towards a key result.

We’ll use a sliding scale between 0 and 1, which measures how close to the stated target for the key result the employee has progressed.

For example:

.3 = your employee missed the target by a significant amount.

.7 = your employee didn’t hit the stated target, but has made good progress towards it.

1 = your employee has hit the target for the key result!

As you can see, if your employee scores a .7 on a key result, it should be considered a success for them!

In fact, they should be encouraged to set ambitious stretch goals. It’s okay if they do not end the quarter with a perfect score.

In fact, if an employee is regularly scoring 1.0 on their key results across their boards, it’s a sign those key results aren’t ambitious enough. Therefore, they could stand to set more ambitious targets next time.

OKRs Are A Solid Framework For Business Goal-setting

OKRs are one of the most effective frameworks for establishing effective business goals.

It does so by clarifying how the individual contributions of your employees contribute to the overall success of your organisation, which helps motivate them to put in their best work.

To make the OKR framework work for your company, all levels in your organisation have to be involved in setting the respective business goals.

While your top-level management will be responsible for setting the objectives that set the direction and overall strategy for your company, your employees in each of your business functions should be involved in identifying the key results that will contribute towards progress on these objectives when achieved.

With the responsibility of business goal-setting distributed throughout all levels in your company, everyone in your organisation will thus have a stake in the overall success of your organisation.

But once you’ve set your company’s objectives and key results, how are you going to track your employees’ progress towards them? One way to do that is through performance reviews.

At Omni HR, we offer a performance review software with report generation and analytics features that gives you insight on how your employees are performing. Sign up for a free demo to find out what our solutions can do for you today.

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