As companies grow, they must change the traditional way of measuring progress. One reason for the need for change is tedious annual accountability, which turns out to be a boring and demotivating act of frustration that discourages many talented workers from changing companies.
In response to this, a new strategic measurement system called the Key Objectives and Results (OKR) method appears, devised by Andy Grove, former CEO of Intel, and implemented by leading technology companies such as Spotify, Google, Linkedin, etc…
One of the novelties of the methodology is that it measures the implementation of the strategy with objectives (O) at three levels: organization, team and person, where the important thing is that these objectives are related to the results and not to the tasks…
Another novelty is that the objectives may have been measured through a small set of key results (KR), that is, the level of achievement of the main objective will be a calculation of your KR. It is recommended to establish no more than 5 key results per objective.
The essence of an OKR system is that the KRs of a level become the O’s of the lower level, each level being free to set their KRs to reach the target.
This must be done in an open and transparent way so that everyone knows everyone’s goals, and everyone knows their contribution to the highest goals of the company.
It is important to say that OKRs are not made to evaluate employee performance, they are made to motivate them and that their efforts are directed towards achieving the ultimate goal of the company. You should not confuse OKRs with a target incentive system.
Let’s see an example of OKR:
O1 (organization level): Improve customer satisfaction
KR1: Get a positive score with ratings above 8.
KR2: Conduct more than 1,000 surveys in the year.
KR3: Conduct 50 interviews with top clients.
O2 (commercial team level): Conduct 50 interviews
KR1: Call 200 Top Clients
KR2: Visit 100 Top Clients KR3: Send 500 emails to top clients
O3 (person level): Call 200 top customers
KR1: Select 400 Top Clients
KR2: Get 20 interviews
According to the methodology that I propose, although the operations part has not been seen yet, the following system to implement your first OKR:
Set one or two annual goals at the organization level to help you achieve your vision and be consistent with your PTM. Identify the key results, between 4 and 5, that will help you measure the degree of achievement. These KRs should be horizontal throughout the organization. Set 3 to 5 quarterly goals at the organizational level that add up to meet the annual goal and that pick up the 90-day plan for this quarter. (The 90-day plan will be discussed later.) Defines the KRs associated with this objective. Cascade down the annual and quarterly goals to set the goals per team and per person as seen in the example.
Each person in the company must know how to clearly answer the question: How did the week go? simply by observing the measurements of your targets. A person can have multiple objectives, but a KR at the person level should only be responsible for that person.
Measuring well through OKR-type dashboards is key for companies in today’s rapidly growing contexts, as a small error can become very large in a very short time.