OKRs (Objectives and Key Results) can help all companies– even small startups– increase their focus, ensure transparency, identify problems early, and stay aligned as they work all quarter long, says Senthil Rajagopalan, COO & President, Profit.co, in an interview with Express Computer
Some edited excerpts:
How do we achieve a positive outcome by implementing OKRs?
At Profit.co, we use the PEEL (Planning, Execution, Engagement, and Learning) a structured method that guides you through the key actions associated with a highly effective OKR program. The planning stage of the cycle refers to a dedicated period at the beginning of each quarter where you ensure you write strong OKRs that speak towards your top priorities and overall strategic goals. The execution of OKRs comes in the form of weekly check-ins on key results and closely tracking what progress is being made, what plans teams have for the quarter, and the problems employees are running into as they do their work.
The engagement aspect of the PEEL cycle refers to the need to keep employees engaged in the OKR process. Leaders should foster conversations, follow-up on check-ins, and let employees know that their work is appreciated and they have support when they need it. Finally, the learning stage of the PEEL cycle involves reflecting on the progress you and your teams have made over the past quarter, and applying that knowledge to your next quarter with OKRs. Resetting OKRs and creating new OKRs is a vital part of this process, because based on the lessons learned in the previous quarter, you’ll have a better understanding of what works, what doesn’t, and how you can move forward.
Many companies start out using OKRs on spreadsheets. This simply isn’t a scalable solution, and spreadsheets offer no room for agility or transparency– two attributes all teams need their OKR program to have in order to find success. Making sure that you are using software rather than spreadsheets can increase OKR transparency in your organization and also prevent users from getting fed up or burnt out with meticulously keeping track of progress. Softwares such as Profit.co make it easy for users to set and track OKRs.
Finally, the last key ingredient needed to see a positive impact with OKRs is strong leadership and executive-level belief in the effectiveness of OKRs. This framework aligns your entire organization– and in order to reap that benefit, you need to ensure your entire organization has bought into the framework itself. This buy-in needs to come from the top level of the company so that they can enforce the usefulness of the framework with their direct reports, and commitment will trickle down throughout the entire organization. If these aspects of your OKR framework are present in your OKR program, you will absolutely see positive outcomes from your OKRs.
OKRs worked for Google. Will it work for us?
OKRs and Google are very closely associated for a lot of reasons. Google has publicly attributed their unprecedented success to the OKR framework on numerous occasions, and some teams are intimidated by the thought of using the same framework as an enormous technology titan like Google. However, it’s important to remember that Google started with OKRs in 1999 as a forty-person company– not the enterprise organization it is today.
OKRs can help all companies– even small startups– increase their focus, ensure transparency, identify problems early, and stay aligned as they work all quarter long. For growing brands or startups specifically, it’s good to follow a few simple tips:
1. Three Objectives or Less: focus on just one or two objectives until your product/market fit is established. At most, have three objectives.
2. Plan Shorter Cycles: you can start testing out if your objectives address your top priorities by planning shorter cycles, rather than quarter-long cycles.
3. Focus on Learning: be ready to iterate your OKR program and obsessively learn from mistakes and even successes.
4. Data before Ego: founders especially should be ready to pivot depending on the market and what aspects of the start-up are working well.
OKRs also work best when you have a leadership team that is committed to the framework, your entire team is intent on following it, and you’re ready to learn. Leaders must take the time to educate themselves and their entire team on the OKR framework as well as the tool you elect to use to track OKRs in your organization.
If you are committed to the framework and ready to learn, history tells us that you can make the OKR framework successful for your business– no matter the size or vertical.
How are OKRs different from other strategy execution frameworks like Balanced scorecard?
The primary purpose of OKR is to create alignment in the organization. The goal is to ensure everyone is going in the same direction, with clear priorities, in a constant rhythm. To do so, OKRs are made public to all company levels, where everyone has access to everyone else’s OKRs.
Instead of using annual static planning, OKR takes an agile approach. By using shorter goal cycles, companies can adapt and respond to change faster.
Using the OKR framework is straightforward, and OKRs themselves are easy to understand. Companies that adopt OKRs reduce the time spent setting goals from months to days. As a result, they invest their resources in achieving their goals and not on setting them. Objectives are statements that are short, memorable, and ambitious. These address the top-priority goals for a business in that given quarter. Then, three to five trackable or measurable key results are defined in order to measure the success and completion of that goal. These outcomes are what you should see in the business in order to know that the objective is complete.
Meanwhile, balanced scorecard, often abbreviated as BSC, is a strategic management system that organizations use to highlight what they intend to accomplish, connect daily tasks to overarching strategy, prioritize projects, and measure progress towards their most important targets. Strategy Maps aid in the implementation and execution around the Balanced Scorecard methodology.
The Strategy Map visualises four key areas and perspectives of business performance:
● Financial Perspective
● Customer Perspective
● Internal Business Process Perspective
● Learning & Growth Perspective
Within each Perspective, companies set Objectives, and define how each Objective supports or is dependent on other Objectives, indicated by arrow connectors between the Objectives. Objectives have Measures and Targets, which define the current and desired progress for each Objective.
OKRs are unique from other frameworks because they are simpler and easier to understand, while still providing the alignment and agility necessary to help businesses succeed.
How to get the most of 360 degree performance reviews?
360-degree performance reviews provide organizations with many benefits. When employees receive feedback from everyone they work with, there is a better chance that reviews will be accurate, and employees will feel they are fairly represented during reviews.
In order to get the most out of this effective performance management system, companies can follow a few key rules when using 360 degree performance reviews. First and foremost, leaders must recognize that this performance process is made to help the employee learn and grow– not for corrective action. There are better methods managers can use to address ailing performance. To make the 360-degree review system work for you, follow these tips:
Leaders should customize 360 degree performance reviews according to the organization’s culture, a job role’s description, and the vision and mission of the company itself.
Participants should be prepared for the results. While there are immense benefits to this style of performance reviews, it will not be effective unless employees are ready to hear results and act on the feedback. To ensure employees are ready, make sure they have some control or input over who contributes to the feedback process and when the review is held.
Make sure the company culture surrounding 360 degree feedback is positive and constructive. These reviews are a rare opportunity for employees to gain insight about their performance that they wouldn’t be able to get from a traditional annual review with their manager. Ensure that employees feel optimistic about this process and the environment is positive.
Since 360-degree feedback is subjective, it’s important to pay close attention to each employee’s reviewers and see if there are any gaps, or instances where one aspect of employee performance can’t be addressed by reviewers. For example, if an employee works in two departments and is being reviewed by their manager in Department A and a peer from Department B, there isn’t anyone to speak toward their daily work in Department A because there is no peer reviewer from that area. Ensure that all aspects of employee work will be addressed by reviewers.
Finally, after all 360-degree performance reviews, there needs to be an action plan. Employees should discuss results from their reviews with their manager or HR administrator so they understand where they can keep up the great work and where they can strive to improve. Feedback must be followed up with support and action items to get the most out of the 360-degree review process.
Can OKRs help us with Organizational learning?
OKRs can absolutely help businesses with organizational learning. Learning is one of the key elements for a successful OKR program, as we mentioned when discussing the PEEL Cycle in our first response. It’s important to ensure that your business culture is prepared for both OKRs and the learning that is necessary to get the most out of the framework.
To help your organization prepare for these, you can do a few things. First, start with your “why”. Leaders should define the purpose and mission of the organization; this helps team members understand the top priorities of the organization and set their learning priorities in accordance with them. Next, companies must ensure they have a learning culture. This means making all criticism constructive, and embracing iteration. Learning from mistakes does not mean you have to go back to the times employees messed up in their roles– it simply means you ask employees to reflect on what went wrong, and take substantive action to ensure they improve on their next try.
Organizations should closely follow an execution methodology like the PEEL Cycle– which stands for planning, execution, engagement, and learning. This makes learning a necessary and completely natural part of the OKR process and your business process.
Learning can thus be incorporated into your quarterly calendar. Dedicate certain meetings to break down learning opportunities and ensure you allocate a solid week or week and a half for employees to reflect on their OKR success and what they can improve on. Holding at least one learning session per week and recording what everyone has learned will give your entire organization a knowledge base. This way, the same avoidable mistakes don’t need to be repeated once in every department or team; instead, everyone can learn from each other.
To encourage learning, you can reward those who share their experiences as well as those who make action plans with recognition or even other incentive prizes. Demonstrate your commitment to learning by investing in the right tools needed to record learning and sharing. Software like Profit.co incorporate learning directly into the OKR process, with virtual spaces to leave comments, notes, and catalogue reflections that employees can continually revisit so that knowledge is always available.
Organizations can even use OKRs to set learning goals. If learning is a top priority in a certain quarter, you can set goals for individuals, teams, departments, or even the company as a whole and review progress throughout the quarter. This helps send a very clear message to your organization that learning is a priority, and it is an essential part of your business. Finally, you can empower employees to set their own learning goals. Emphasize the importance of personal and professional development, and give team members the space to learn and grow how they want to. You will see fantastic results if you ask employees to take ownership of their own education.
How to use OKRs to improve employee engagement?
According to a recent Gallup survey that measured employee engagement as companies transitioned from fully remote work back to hybrid or in-person work, only 36% of employees report feeling engaged. While some leaders might not find this particularly surprising, we can all agree that we want employees to be more engaged. And, according to Forbes, employees who feel their voices are being heard are 4.6 more likely feel empowered to do their best work. This means that including employees in the goal-setting process and truly hearing them out is not only great for employee engagement, but it’s also valuable, as Gallup reports that highly engaged teams show 21% great profitability than unengaged teams.
OKRs can help keep employees stay engaged throughout the entire quarter, because engagement is built into the framework. If we recall the PEEL cycle, engagement is one of the necessary steps to getting the most out of your OKR program. Employees are required to check in on their key results on a weekly basis to update their progress. Ideally, teams will also hold PPP meetings to discuss their progress, plans, and problems. This keeps employees engaged throughout the quarter.
Additionally, the OKR framework takes advantage of a natural human behavior that psychologists refer to as The IKEA Effect. The IKEA Effect is a cognitive bias where people tend to place a higher value on items they had a direct hand in making.
Using bottom-up alignment when creating OKRs is a great way to take advantage of this human behavior. If you allow employees to set their own priorities within a team, and align their objective upwards to inform the OKRs at higher levels of the organization, employees will naturally be more committed to achieving those goals than if they blindly received an assignment from their managers.
Make a point to collaborate with employees on OKRs and keep all goals within the company transparent. When employees can trace the key result they are responsible for up to top-level OKRs, they understand that the work they do on a daily basis has a substantial impact on the organization as a whole. This can substantially increase employee engagement. Employees will be more satisfied in their role and with their work, and in turn, you will see better performance and progress from your teams.