Why OKRs Are Now The Standard Goal-Setting System

Performance reviews and goal-setting systems have a high potential to create more efficiency, higher performance, and eventually higher motivation among employees. Executed poorly, however, they are a huge threat to a company. Find out how OKRs can help you implement a goal-setting system for effective, objective, and fair employee evaluation.

„What gets measured, gets managed“ is a popular quote of management consultant, educator, and author Peter Drucker. Setting goals and evaluating them is a crucial management task. With a vast array of goal-setting systems to choose from, it is hard to keep up. Especially when you are busy running a company. We would like to introduce to you the OKR system - the Dimpact recommendation for modern goal-setting systems.

What are OKRs?

OKR stands for Objectives and Key Results. The OKR management system helps a company to focus efforts on the same important issues throughout the organization. Introduced by former Intel CEO Andy Grove, it later became popular with big companies like Google as well. The popular system consists of an objective (a goal to be achieved), with up to 5 key results. Each key result measures the progress of the corresponding objective. So-called 'initiatives' describe the work that is required to achieve the key results.

Implementing OKRs

The concept of implementing OKRs follows a simple formula: - I will… (Objective): Qualitative description of what you want to achieve. Usually short, inspiring and engaging statements.  - As measured by... (Key Result): Set of metrics that measure progress towards the objective. For each objective, you should have 2-5 key results. These are quantitative and measurable. “If it does not have a number, it is not a key result.”  Asked about the efficiency of this new system, manager John Doerr remarked, “The key result has to be measurable. But at the end, you can look and ask without any arguments - Did I do it or did I not do it? Yes? No? Simple. No judgments in it.” In other words, OKRs are about getting things done.

Can OKRs work with start-ups?

OKRs are not only popular with huge corporation. The goal-setting system is a welcome solution for start ups as well. Flat hierarchies and agile teamwork are typical for early-stage companies. That’s why they usually shy away from implementing complex management systems. But OKRs are actually not complex and can be integrated flexible in existing company structures. They only force CEO and employees alike to keep goals in focus and measure their success. Since most start-ups struggle with budgets in their first years, defining goals and measuring their success can become crucial for survival.

Setting the objective

An 'objective' is the description of a goal that is a desirable outcome in the future. It sets a clear direction, like a destination on a map. It provides motivation through clarity of direction. In other words, an objective is qualitative (no numbers!). Derived from the company’s mission and vision statement, objectives are set for each department within an organization. Example objectives: - Make the search engine faster. - Develop a lighter car engine. - Increase sales of fiction books online. 

Setting the key results

A key result measures progress towards an objective. These statements are quantitative and specific. Example key results - Optimize the algorithm to load the webpage in 1 second. - Reduce fuel pump weight by 20% - Achieve € 500,000 in sales. 

Setting the initiatives

An initiative is the action taken to accomplish the key result. It answers the question, “What does it take to accomplish the key results?” Example Initiatives: - Test a new algorithm with regular performance reports. - Build a new prototype for a fuel pump.

Which OKR tools exist?

To ensure that your department leaders are not wasting valuable time implementing OKRs, it is best to offer a short workshop. Next you pick a tool that is easy to access and use across the company. It could be a simple Excel sheet or an internal communication portal that is accessible by all departments. In case your company has reached a certain complexity in structure, there is special OKR software available as well.

OKRs and transparency

A key feature of OKRs is transparency. Make sure that the overall company OKRs and the ones for each department are accessible to anyone within the company. The success of achieving all your objectives requires a designated OKR ambassador. This can be a person within your organization or an external consultant who conducts weekly check-ins to ensure you are on track and completing the initiatives.

Interested in learning more about implementing OKRs in your organization? Get in touch and find out more about our possibilities.