On July 20, 1969, the first two humans walked on the surface of the moon, with one of them stating, “That’s one small step for man, one giant leap for mankind.” Nearly 50 years later, NASA declares “we are going to the moon—to stay,” heralding the delivery of permanent tech to the lunar surface. So we have to wonder, how do monumental feats of achievement like these occur?
It all begins with inspiration. Someone pointed at the largest visible object in the sky and said, “we’re going there.” Next comes the strategy. Countless teams planned and executed their small part, measuring progress along the way.
Your company is probably not going to have the same 400,000 engineers, scientists, and technicians who helped accomplish the moon landings, and you may not be able to point at the moon to inspire. But you can make the seemingly impossible happen by using a process called Objectives and Key Results (OKRs).
The process of creating, measuring, and learning from OKRs is deceptively simple. Here are just a handful of questions you’ll encounter:
• How many company-wide, team, and individual objectives should we have?
• Will objectives be rigid or can they be adjusted during the quarter to match business needs?
• How will we track them?
• Should they be aspirational based (ambitious stretch goals) or commitment based (designed as a way to track progress, with 100% completion required)?
• Can OKRs be used to determine promotions and salary increases?
This post includes excerpts from our latest eBook: 15Five’s Comprehensive OKR Guide: How To Launch, Track, and Achieve Your Objectives & Key Results. Below we’ll discuss specific steps you can take when strategizing and launching your company’s OKRs.
Company-wide Objectives are instrumental for prioritizing focus areas, and ensuring that everyone is aligned and motivated by contributing to something deeply meaningful. It may seem like common sense, but many companies are unclear about their top priorities or don’t communicate them, thereby losing out on a valuable opportunity to improve employee performance, engagement, and motivation.
Creating the right Objectives for your company, your team, and yourself will not only help you accomplish what you set out to do, but it can boost you to higher heights than you ever thought possible. In order to advance your company to this level of success, you must first understand the basics of OKR setting.
According to performance management expert, Alan Colquitt, Objectives should be flexible enough so employees can freely adjust, revise, or even abandon what they’re doing as their work evolves and as priorities change. Research from Kuvass, Buch & Dysvik, and many others in the field of organizational psychology demonstrated a link between lower work performance and people seeing their goals as unmovable or non-negotiable.
In fact, an employee whose manager is involved with setting their goals are far more likely to be engaged at work. And to further prove how mission-driven most employees are, individual productivity increases by 56% when managers help employees align their goals with the needs or purpose of the organization.
Below, we’ll uncover some of our secrets to crafting the right Objectives and Key Results at the company level.
A strong OKR process starts with the CEO, the person responsible for setting the direction of the company. Not only to develop yearly and quarterly Objectives, but to be the chief advocate of the company mission, vision, and values. Objectives translate strategy into organizational priorities.
Company Objectives provide context and direction for employees to align their efforts with team and organizational goals. Every company leader must help employees connect their work to the deeper purpose, and make sure the entire company is informed, aligned, and inspired to focus on what matters most.
We recommend that top leadership set company Objectives first, followed by nested department-level Objectives that support the level above, and then allow team members to align their individual Objectives with the department and company Objectives. Gallup research shows employees who strongly agree that they can link their goals to the organization’s goals are 3.5 times more likely to be engaged.
Can you name your companies top three priorities? Turns out, only 2% of employees can, even though executives predicted 64% would be able to do so. One reason for this disparity is that many companies set way too many company Objectives, making it hard for employees to keep track. Morten Hansen, Berkeley management professor and author of Great at Work, shows that high performing individuals and companies “do less and then obsess.”
In other words, business tasks should be reduced to the fewest possible metrics, the fewest goals, the fewest steps, the fewest pieces. Employees and organizations who choose a few key priorities and channel their effort into doing exceptional work in those areas greatly outperform those who overextend themselves. CEO’s are encouraged to set and prioritize a limited 3 to 5 key priorities and company Objectives.
Research from famed professors Richard Ryan and Edward Deci shows the key to intrinsic motivation is autonomy, mastery, relatedness and purpose. Company Objectives are important because they provide context, which also creates a more visible line of sight to the overall purpose that drives people’s work. Three strategic company Objectives is all it takes.
Most work today is accomplished by teams, and research support helps a group deliver on specific team goals. When team members can create goals together and see how their work directly contributes to the progress of the whole, performance improves. Collaborative Objectives enable teams to align and work together to drive company initiatives forward.
Organizations (especially larger ones) are structured in a variety of different ways, which can add complexity to the process of aligning employees. Alignment is not just top-down and typically occurs in 3 ways:
1. Vertical: An individual’s objectives connect to (and do not conflict with) the objectives of managers and the team.
2. Company/Mission: An individual can clearly see the importance of his or her objectives because they are connected to the company goals and mission.
3. Horizontal: An individual’s objectives connect (and do not conflict) across teams.
Whatever your version of landing on the moon, 15Five’s Comprehensive OKR Guide is designed to help you get there. It’s a resource for managers at all levels to implement the company-wide objectives established by leadership. We’ve included details for working with every employee so that they have measurable objectives that impact the entire company each quarter of the year.
Each business is different, with a unique culture, business model, and leadership philosophy. In this eBook we’ll discuss Objectives and Key Results as part of your larger performance management strategy, share the latest research so that you can determine why a particular course is right for you, and we’ll discuss best practices to help set you up for success.
David Hassell is co-founder and CEO of 15Five, performance management software that includes continuous feedback, OKRs, peer recognition, 1-on-1s, and 360° reviews. David speaks and writes about leadership, and was named “The Most Connected Man You Don’t Know in Silicon Valley” by Forbes Magazine. Follow him @dhassell.