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Setting the Organisation Vision with OKRs
OKRs stand for Objectives and Key Results. OKRs is a goal-setting tool and is significant in its aim to encourage engagement and excite the team. The Objective in OKRs should be a clear and inspirational statement describing the direction towards which the team is headed. The Key Results should define the measures how the team will know the objective has been achieved. OKRs should be created collaboratively and connect with the organisational strategy.
OKRs vs KPIs: Simplified
People tend to get Objective and Key Result mixed up with Key Performance Index. While both tools are used in business management to help organisations measure success, they serve different purposes and are implemented in different ways.
If your organisation’s goal is to enhance or expand an existing plan or project, KPIs could be the more suitable choice. They are clear-cut and provide a way to integrate a measurement system into your ongoing projects and processes. However, OKRs may be preferable if you're aiming to shift your overall strategic direction or have a broader vision.
Using both OKRs & KPIs in your organisation would be impactful and powerful approach as it can help an organisation not only meets its immediate, quantifiable goals but also aligns with broader strategic objectives.
Organisations have increasingly adopted environmental and social goals, carrying out their responsibility as a business to operate sustainably. Through the development of meaningful sustainable outcomes using OKRs, organisations can change the way they work and bring their people together to strive towards creating positive impact. Here is an example on how to use both in case of sustainability practices:
OKR: Minimise environmental footprint by end of fiscal year | |
|---|---|
Key Result | Key Performance Index |
KR1: Reduce greenhouse gas emissions by 20% through travel offsets | Measures the total emissions of carbon dioxide and other greenhouse gases monthly. Target: Reduce by 20%. |
KR2: Establish recycling initiatives and reduction of use of non-recyclable products for 15% decrease in output of landfill waste. | Measures the monthly percentage reduction in waste produced by the company at least by 15% |
KR3: Increase use of renewable energy sources to 50% of total consumption | Measure the percentage of energy consumption met through renewable energy sources quarterly with target of 12.5% per quarter. |
From the example above, we can clearly see that OKRs will act as a framework to drive strategic objectives while KPIs will help the team to track and monitor performance of a particular aspect.
Aligning OKRs with Organisational Strategy
An organisation has vision as the highest level of strategy followed by mission, OKRs, and tactics and tasks at the ground level manifested as projects. OKRs on the organisational level will inherently be set annually but there is a hierarchy for OKRs, breaking down organisational level OKRs for a team level to support.
It is essential to prioritise OKRs first with projects and milestones second to maintain flexibility. Projects are strategised and delivered to fulfil OKRs which should be connected to the organisational goals. In this way, projects that do not drive the business can be easily killed. If this priority is flipped around, delivering on organisational goals can be frozen by projects which no longer have value to the business. This can be achieved with two-way data exchange, where typically there is just a one-way reporting from project teams doing the work, reversing the feedback loop for the business to share metrics allows project teams to set OKRs that can fulfil business objectives.
Any OKR developed should have both vertical and horizontal alignment. Up and down the organisation and cutting across with the people you are working alongside.
CTA: How to create OKR for your team (practical steps)
Engage with your whole team: Discuss with your team members to understand their perspectives and goals. Collectively identify key areas in where you want to make an impact. Build OKRs using the expertise of the people around you rather than scientific steps to couple with the organisational OKRs. It is more important to develop a story. Storytelling should be a huge part of the OKR creation process to develop a clear line of sight for the team.
Develop objectives: Get agreement from your team on what your company’s goals are and which objectives will help you achieve them. They should be designed for quarterly completion. Draft clear and inspirational objectives that the team will be proud of achieving. Aim to evoke emotion. These goals should be ambitious and should balance the 50-50 chance of achieving the goal, aiming to stretch for peak performance. Have no more than 5 and each should be no longer than 14 words in one sentence.
Brainstorm Key Results: Key results should be specific, quantifiable and measurable outcomes that indicates whether the objective has been achieved. Aim for two to four key results per objective and make them time-bound and realistic with measures for tracking frequency and the baseline. There must be an owner for key results.
Evaluate Key Results: Discuss with your team to ensure the proposed key results align with their corresponding objective. Implement feedback session when evaluating. OKRs should be a universal language and its progress can be measured from 0 to 1 in 0.1 increments for everyone to understand how success for an OKR can be achieved.
Align OKRs with organisational goals: Ensure your OKRs align with the broader organisational goals. Ensure cross-functional alignment by involving other teams in the process.
OKRs can seem deceptively easy but it is likely that throughout the first quarter you will find that you got many things wrong when building the OKR such as finding key results you defined difficult to measure. Ultimately, the success in the first quarter will lay in striving towards the direction set and making progress.
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