Insights from Engagedly’s State of AI in HRM, 2nd Edition Survey.
”If you don’t know where you are going, you will probably end up somewhere else.” –Lawrence J. Peter
Goal-setting is critical for the success of an organization. It helps allocate resources efficiently and provides the direction and focus to achieve committed and aspirational goals.
Most successful and innovative organizations put great emphasis on goal setting. They create both short-term and long-term goals and also motivate their employees to accomplish more by helping them set individual goals. By keeping their workforce aligned towards organizational objectives, they create a competitive advantage and brand positioning in the market.
On the contrary, organizations that do not set goals become stagnant and struggle to keep up with the competition. Further, their employees are not engaged and committed towards the organizational goals. Such companies have high turnover rates, plunging employee productivity, and are low on creativity and problem-solving skills.
In the current scenario, where uncertainty and unpredictability are ambushing businesses, it is imperative for leadership to develop a focused, determined, and goal-driven organizational culture.
The quandary is, how to do it?
Organizations like Google, Amazon, Spotify, Gates Incorporation, and Zynga are some of the renowned firms that have adopted a goal-setting methodology called OKR, or Objectives and Key Results.
By using this framework, they have reached new heights and created a distinguished position for their products and services in the market. They are able to better organize their resources and create a continuous learning and improvement environment.
By focusing on the most important goals, OKRs help organizations achieve more in less time. It helps in making teams and individuals more accountable towards their goals. Furthermore, it keeps track of employee productivity and creates a communication channel for better collaboration between employees and managers.
OKR, a.k.a., Objectives and Key Results, is a goal-setting and tracking framework that helps individuals, teams, departments, and organizations set and achieve measurable goals.
It is a collaborative methodology that provides a match between the objectives that organizations want to achieve and the key results that help measure their progress. By tying objectives to small and measurable key results, the framework enhances visibility and provides actionable insights into every employee’s contribution and performance.
Unlike other goal-setting frameworks, OKRs are clearly defined, making it easier for managers and employees to track progress. By breaking down objectives into small key results, managers can create milestones that help accomplish challenging goals.
The different qualities of good OKRs, such as qualitative, inspirational, committed, and time-bound, make them immensely useful for every team. That’s the reason the framework has garnered excessive adoption in the last two decades, with everyone from large-scale organizations to budding startups and even NGOs now using it to set their goals.
OKRs are made up of two components: objectives and key results.
Objectives are the goals organizations want to achieve in the short or long term. They are clear, informative, qualitative, and inspirational in nature. A well-defined objective helps organizations stay committed to their goals and also aids in resource allocation.
It is important to note that organizations should have only three to four objectives that they wish to achieve in a specific period.
Having more objectives can lead to ineffective resource allocation and confusion among employees. Also, it is highly taxing to keep track of too many objectives.
Examples of objectives:
Key results help measure the progress and achievement of objectives. Every objective is followed by three to four key results that are quantifiable in nature.
It’s important to note that key results have to consist of activities that are in sync with objectives. Otherwise, they would not harbinger any positive results. Some of the important qualities of key results are that they are measurable, clear, specific, and time-bound.
Examples of key results:
Every organization wants to accomplish more with their workforce. But the distinguishing factor amongst the successful ones and the laggards is how well organizations understand the difference between aspirational and committed goals.
Based on the types of goals, OKRs are differentiated into two types: aspirational OKRs and committed OKRs.
Committed OKRs are goals that an organization would want its employees to accomplish anyhow in a given cycle. The commitment percentage of such OKRs is 100%. Also known as “roof shot goals,” they determine the short-term achievement of objectives.
An example of a committed OKR:
Objective: Increase outbound sales
Key Result 1: 10% increase in customer revenue
Key Result 2: Close 3 enterprise clients in a quarter
On the other hand, Aspirational OKRs are the stretch goals that push the workforce to achieve more in an OKR cycle. They are also known as “moonshots” because they cannot be accomplished in a given timeframe.
An example of aspirational OKR:
Objective: Increase sales revenue
Key Result 1: Close 15 enterprise clients in a quarter
Key Result 2: 30% increase in average customer revenue
As per Google OKRs, a 60–70% achievement of overall OKRs is considered a success. Anything below that indicates that organizations are not realizing their full potential.
OKRs were founded by Andy Grove, the then CEO and cofounder of Intel Corporation, in the 1970s. He incorporated the methodology while working in the company, thereby leading it to enhanced performance and better goal completion. Using this framework, Intel restructured itself into a goal-driven and employee-centric organization.
The concept of OKRs was further popularized by John Doer, an Intel employee. He understood the application and nuances of the framework and shared it with the founders of Google, Larry Page and Sergey Brin, in 1999, while working for a venture capitalist firm.
Google used the OKR approach to reposition itself as the world leader and grew its revenue by leaps and bounds. Seeing the success of Google and Intel, many organizations have switched from the traditional goal-setting approach to OKRs.
A report by Asana found the following about communicating company’s goals and objectives to their employees:
The above statistics highlight two important things. The first one is that organizations aren’t communicating effectively with their employees. The second is that the majority of employees have no clarity about organizational goals, how it guides their work on a day-to-day basis or how they contribute to the overall goals of the company they work for.
To overcome the issues of miscommunication and goal misalignment, organizations are implementing OKRs. It helps in aligning organizational and individual goals and creates a purpose-driven culture. Some of the benefits of OKRs include:
There are two approaches used in setting OKRs. The first one is a top-down approach, in which the organizational objectives are cascaded down to different departments, and in alignment with them, teams create their own OKRs.
The second approach, bottom-up, is the opposite of the top-down approach. Here, different teams and employees create their own OKRs and try to convince top management to adopt them. The approach usually requires leadership’s rationale and forward-thinking for the adoption of OKRs.
While most organizations use a mix of both approaches, it is important to follow the OKR process to get substantial results from it.
The process consists of the following steps:
To get the most out of the goal setting process, it is important to follow some standard OKR best practices. While most organizations spend a considerable amount of time investigating OKRs, there are some specific areas they need to mull over for effective OKR implementation and tracking.
Some of the OKR best practices listed below will be useful for HR leaders in charting out an efficient OKR process.
Many organizational leaders and departmental heads find it challenging to create OKRs. But with a clear understanding of the OKR process, experience, and due diligence, it is possible to create objectives and key results that can make a positive impact. Moreover, examples of OKRs can help clarify the process further. The below links to OKR examples will help in compiling them for different departments and teams.
It is common for organizations that are just starting with OKRs to make mistakes. Any major change in an organization requires learning, persistence, and adaptation.
For OKRs to be successful, organizations need to simultaneously work on their goals and their culture.
Some hiccups in the first few quarters are always expected, but as an organization adapts to the framework, it becomes easier to implement and track OKRs.
In addition, companies should take care to avoid these common OKR mistakes and avoid inconsistencies in the process.
To simplify the process of goal setting, scoring, and tracking OKRs, organizations use OKR templates. It helps in creating a synergy between the leadership and different teams. Furthermore, it provides greater visibility into the system and uncovers actionable insights to accomplish goals.
Image: Goal Setting Template
Image: Goal Tracking Template
OKRs are a powerful framework for setting ambitious yet achievable goals and tracking progress towards them. However, implementing OKRs effectively can be challenging. Engagedly’s OKR module helps organizations overcome these hurdles, offering a comprehensive and user-friendly platform to:
Engagedly’s OKR module goes beyond simply setting and tracking goals:
Engagedly’s OKR module is more than just a software; it’s a catalyst for organizational transformation. By streamlining goal setting, fostering transparency and communication, and driving continuous improvement, it empowers organizations to achieve their full potential and navigate the path towards success.
The current dynamic and unprecedented business challenges offer both threats and opportunities for organizations. Sustainability in today’s world requires taking smart decisions and being goal-centric. Companies that are leveraging technology for decision-making and performance management are reaping the benefits of higher ROI and productivity. The OKR methodology can help companies set strategic goals and become highly efficient at utilizing their valuable resources.
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