OKRs: The Goal-Setting Method Google Swears By
OKR stands for Objectives and Key Results — a management approach adopted by the likes of Google and Microsoft. Here is what it is, how it differs from KPIs, and where its limits lie.
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OKR stands for Objectives and Key Results — a management approach adopted by the likes of Google and Microsoft. Here is what it is, how it differs from KPIs, and where its limits lie.
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OKR stands for Objectives & Key Results. As the name suggests, OKR is a strategy that manages work through objectives and the key results that measure them. The approach was first developed by Intel co-founder Andy Grove, and it rose to prominence after John Doerr introduced it to Google.
OKR begins with a company's goal, and that goal must be ambitious. Each department should set its own departmental or individual objectives in service of the company's larger goal. These objectives need not be quantifiable, but they must connect to the larger goal. Department heads or staff then define measurable key results for each objective. The whole point of key results is to let employees see whether they have reached their objectives.
Although OKR is like KPI in that both emphasise measurable key results, OKR is not a yardstick for appraising employee performance. KPIs have drawn heavy criticism in recent years because they can push employees to fixate on hitting their targets while losing sight of what the company is really trying to achieve — gaming the numbers and, in the end, producing the cobra effect, where the means defeat the ends.
OKR does not ask employees to complete 100% of their KRs. The OKR approach expects employees to reach only 60% to 70% at each review cycle. The reasoning is that if an objective is too easily met, it was not challenging enough, and the employee can set a harder target next time. OKR was never meant to be a system for measuring employee contribution; that is fundamentally what sets it apart from KPI.
OKR places great weight on transparency and autonomy. Employees all have clear objectives, understand how their work connects to everyone else's, and — beyond having a clear direction of their own — can move forward with mutual support. When the OKR approach is put into practice, OKRs are not handed down directly by department heads; instead the decision-making power is placed in employees' own hands. Replacing the traditional Top-Down management model with a Bottom-Up one can give employees more motivation to complete their own objectives, and reduces the chances of KPI's most notorious failing — where staff simply satisfy a target yet do nothing to advance the company's goals.
The OKR approach asks managers or human-resources staff to run a CFR mechanism. CFR stands for Conversation, Feedback and Recognition. The CFR mechanism encourages communication between employees: rather than focusing on whether an employee has met their objectives, managers should consider how they can offer support, or whether objectives and key results ought to be adjusted as circumstances require, so that employees' work can deliver the greatest benefit.
Here is an OKR example a marketing department might adopt.
Here is another example, this time for an administration department.
These key results are not KPIs; they are indicators that measure whether an objective has been reached. Because key results do not force employees to finish within a fixed time, employees can work more effectively on objectives that matter to the company, rather than simply chasing KPIs.
OKR certainly has its limits in practice. To begin with, there may be some resistance at the outset, with even employees and managers finding it hard to adapt to the new management approach; everyone in the company, from top to bottom, needs to set their objectives clearly and assess their effectiveness and feasibility on a regular basis. On the other hand, OKR calls for a Bottom-Up company culture in which employees set their own OKRs, and in turn this demands initiative from employees and a good understanding of the company and of their own roles.
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