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Using Objectives and Key Results (OKRs) to Accelerate Business Success

1. The History of OKRs

Objective and Key Results, or OKRs, are nothing new. The practice was invented at Intel in the 1970s as the company pivoted to create computer processors instead of memory chips. Managers across the various Intel teams used OKRs to prioritize quarterly goals for employees that were aligned with greater company goals. 

By the time the personal computer revolution began, Intel was using objectives and key results to become one of the world’s largest manufacturers of microprocessors. Today, Google, Zynga, Yammer and most of Silicon Valley use the management by objectives model to quantify what they are working on and measure their ability to achieve those goals. The main idea of OKR goals is to prioritize important things first, then focus on the finer details.




2. How OKRs Work

 

Taken together, culture based conversations and management practices like OKRs create a powerful formula for success. The development of work culture is important, but key objectives are not achieved at the meta level. Structure is needed to encourage peak employee performance. Here are the six basic steps for effectively creating key objectives, achieving results, and learning from what went well and what did not:

3. Expert Tips For Rolling Out OKRs

 

 

Now that we’ve established the history and philosophy of OKRs, it’s time to dial things up a notch. Here are 15Five’s expert tips for managing by objectives:
  • Wording is important. For example we had a goal to hire a new vice president for one of our teams in Q1. What typically takes 6 to 9 months was attempted in only 3 months. The danger is that you might push to hit a result or key objective solely for the purpose of completion. Adding an adjective has an important psychological impact on decreasing anxiety for stakeholders and increasing the likelihood of success. So we changed the phrase “Hire a VP” to “Hire the Right VP”.
  • Break down quarterly work objectives into weekly and monthly goals. Taking small bites feels more manageable and provides a roadmap to completing the larger goal.
  • OKR goals can become flexible if necessary. For example, a new competitor may arise or the company’s financial outlook may collapse or improve. While the objectives and key results for the quarter stay the same, leaders can react by providing new goals for employees and teams to do what’s best for the business.

4. Critiques Of The OKR System

 

5. Alternative Systems to OKRs

MORPHS (Mission, Objectives, Results, People, How)

MORPHs have been used at Yammer for years. Founder, David Sacks, called them “an exercise in alignment” and offered that the mission gets people thinking about their individual contributions at the company. Guided by that, they come up with their top 3 to 5 quarterly objectives. Results are the metrics used to measure performance of those work objectives and how looks at how each person did that quarter. The big picture is that MORPHS are a symbol for change and progress within the company.

What separates this practice from the others is the “P”, or people. Yammer considers how employees fit into the completion of key objectives. Do they need to hire new people or reconfigure the teams? Everyone’s role within the company is defined in such a way that they have ownership over a certain sphere and the ability to achieve the desired department goals.



6. Employees Owning Their Own Key Objectives?

 Really?!





7. Complete Employee Performance with OKRs 


Kyle Porter
CEO & Founder
SalesLoft
 
"15Five is an awesome tool for our people to connect with management. They get to answer questions about their work and communicate if they are meeting their objectives."
Shane Murphy
Manager, Field Services & Account Support 
OEConnection
 
"15Five Objectives has simplified the performance management process. My team is no longer worried about ancillary projects. Objectives are kept top of mind and my team is focused on trending towards results."

What Our Customers Are Saying

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This quote from Peter Pan describes the heroes’ trajectory to Neverland, a magical place where we never grow old and don’t have responsibilities. While that is far from an accurate description of a workplace, it shows how no matter what our objective, we all need to name it and chart a clear path to get there. 

When we captain a ship, being off course by a fraction of a degree doesn’t sound like a big deal. But after 100 miles that tiny deviation can cause us to veer off our target by a wide margin. The captain has a variety of instruments to re-calibrate the ship at regular intervals, thereby limiting the potential for costly disasters and increasing the chances of hitting the objective within a specified timeframe. 

In business, the captain is responsible for setting the direction of his or her ship, the company. The “captain” might be the CEO, the entire executive team, or some other constellation of leadership. The captains of successful Fortune 500 companies like Google, Microsoft, and Salesforce have all used a similar navigation tool to grow and achieve work objectives. That performance management tool is a goal-setting process called OKRs or Objectives and Key Results, which are used to align every team and employee around the highest priority tasks. 

The captain’s job is not only to develop yearly and quarterly team objectives, but to also be the chief advocate of the company mission, vision, and values. These elements let you codify your work culture by purposefully distinguishing elements that are unique, strong and positive about your company. They act as touchstones to be used in the ongoing conversations and communication designed to continuously reinforce that culture. Every company leader must connect each action and initiative to the deeper purpose, and check in regularly to solicit employee feedback and make sure the team is inspired and the company philosophy is alive and well.

The dedicated captains of old used navigation tools during the day to orient the ship towards their key objective. In the dark of night, they would use the stars to guide the ship. 

Like any good captain, the leader of a company will use a performance management tool or system like OKRs when the path is well-lit and clear. At times when the data falters, or the path is unclear, they look to the stars. They look up towards the light of the company mission and values to guide their decisions. We have compiled the myriad resources below to help guide your efforts in steering your ship towards the shores of success. 

We assembled this WebBook as a go-to resource for leaders who are curious about OKRs, or those who want tips to refine the practice. It’s our hope that the links to case-studies, in-depth videos, and expert advice below will help you achieve your lofty operational  goals in the year ahead.

 
"Second star to the right and straight on 'til morning."
- J.M. Barrie
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David Hassell

Founder & CEO, 15Five

1. The company sets 3-5 leadership goals and objectives for the year and for each quarter.
2. Each team sets 3-5 team objectives that are aligned with the ones leadership sets for the company.
3. Employees set 3-5 personal objectives and key results that align with the team and company key objectives.
4. Employees and managers gain mutual agreement on set OKRs as stretch goals that are not easily achievable and are not tied to yearly performance evaluations.
5. OKR goals are made transparent throughout the company so that everyone sees the bigger picture and can hold each other accountable.
6. Employees evaluate their objectives and key results by scoring the percentage of completion throughout each quarter.

There are those nay sayers who disagree with management by objectives. For example, some of those folks feel that OKR goals are a dangerous practice and that they are out of sync with the pace of the market. In other words, market conditions may require businesses to shift away from previously established quarterly priorities, but objectives and key results are not set in stone. Below we address two of these misconceptions.




Misconception #1

The process of creating OKR goals will slow down my team.

Truth

OKRs improve the rate of employee performance, by planning ahead and keeping the team aligned.

Some employees will feel overwhelmed by the 3 to 5 lofty objectives they set every quarter, and overwhelm can cause shut-down. Here's some advice for managing employee performance so as not to cause undue stress: 

  1. Do not create too many key results. 6 is the absolute maximum so as not to risk overextending the team.
  2. Never set any work goals and then simply walk away. Managers should check in frequently to ensure that employees stay on track.
  3. Go beyond the metrics and ask qualitative feedback questions. “How are you doing? What problems in the workplace are you facing? How can I help?”


Misconception #2

Employees engagement suffers because they are worried about achieving objectives and key results.


Truth

Objectives and Key Results are stretch goals that don't impact performance reviews or compensation.

Employees can be intimidated because they are afraid of repercussions for not accomplishing their work objectives. Management can assuage their concerns by explaining that objectives and key results are independent of criteria for performance evaluations:

1. Don't tie OKRs to employee performance compensation.  

2. Objectives and key results are graded at the end of the quarter. They are stretch goals that should challenge the employee. The goal is 60%-70% completion. If employees achieve every one of these key objectives, they are not striving enough and should adjust next quarter.





Still have questions? 

Here are some answers: 

Quora: Objectives & Key Results

Top Questions Asked About OKR Goals



V2MOMS (Vision, Values, Methods, Obstacles, Measures) 

V2MOMs are a variant invented by Marc Benioff for use at his unbelievably successful company, Salesforce.com. Benioff believes that “while a company is growing fast, there is nothing more important than constant communication and complete alignment.” Salesforce follows a simple path from goal visualization to accomplishing objectives and key results, that has worked with every stage of company growth.  “We’ve used it as a business plan for our start-up, and we find the same construct to be effective for outlining the annual goals of a public company”, says Benioff. 

david-sacks
mark-benioff

Yes, really. Enrolling employees in the conversation about their specific and team objectives for each quarter is scientifically proven to have a positive impact on performance and improving employee engagement. Everyone at the company begins thinking strategically about achieving OKR goals to propel the business forward.

Behavioral economist Dan Ariely gave a Ted Talk and shared his research that employees are motivated by a feeling of connection to a greater purpose and by ownership and pride in their work. The link between a person’s ownership over a task and their engagement is a fundamental human need that goes beyond organizational culture. 

The link between a person’s ownership over a task and their engagement, is a fundamental human need that goes beyond workplace dynamics. For example, when cake mixes first came out in the 1940s, they didn’t sell. Why?

According to Ariely, it was too easy. People did not feel right baking a cake from a “just add water” mix, and presenting it as their own. It turns out that if you have to beat an egg, measure some milk and melt some butter, you feel enough ownership in the finished product to buy the Betty Crocker cake mix from the supermarket.

The link between a person’s ownership over a task and their engagement, is a fundamental human need that goes beyond workplace dynamics. The lesson for managers and executives in managing performance, is that employee engagement is fueled by both challenge and ownership. It is imperative to create work objectives every quarter, implement metrics to measure them, communicate along the way, and then evaluate employee performance.

OKRs by themselves are a powerful process for achieving your most important work objectives each quarter. Embedding them within holistic performance management practices like soliciting regular employee feedback, allows managers to delve into the drivers of employee performance. Was productivity low for a certain time period? Why? Asking feedback questions can provide valuable information to replicate what’s working in terms of employee motivation and to turn failures into wins.

When company management and leadership connect long term key objectives with regular communication, they tap into the human element of performance. People then move naturally towards doing their best work and becoming their best selves. But without supplementing the numbers with context, leaders are just guessing about best ways to manage employee performance and the future of their company.

The quantitative by itself only provides half the picture, but when managers solicit employee feedback and have conversations early enough, so much can be addressed before breakdown. When people can share openly about problems in the workplace because they don’t feel that their jobs are at risk, managers learn where they are struggling beyond their capacity and become aware of the things that need improvement before it’s too late.

Not every organization is ready to invest in OKR software, but every company can benefit from objectives-based management. 

Here are some examples of Do It Yourself OKR Tools: 

All About OKRs: How to Set Them, Achieve Them, and Track Them in Trello

The Startup OKRs Template

Being Successful with OKRs Requires Better Communication


15Five

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And to automate your management by objectives process... 

OKRs: Review of 3 Systems to Help You Get a Grip On Performance

OKR Software Comparison

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