The Objectives and Key Results (OKR) management method is intended to motivate employees to achieve top performance. In fact, the management system can also help companies through the current corona crisis – but only if realistic goals are set.
US tech companies made OKR popular
OKR management method is based on a sophisticated system of target agreements that is used by many prominent and successful tech groups in Silicon Valley such as Google, Twitter, Intel, Linkedin, Facebook, and Microsoft. They all use performance management and target agreements based on the OKR method, some of them since their foundation.
At its core, OKR is a further development of the classic Management by Objectives (MbO). So you work with a strategic corporate goal, which is then broken down to the level of individual departments, teams and people. Such a goal in the MbO system could be: “This year we want to increase the market share of our products with a relevant target group.” The HR staff will then, based on the company’s goal, pursue the achievement of a corresponding “key performance indicator”. For example: increasing the productivity of employees across departments in such a way that the company can achieve the higher market share. A variable salary component is often linked to the achievement of these goals.
OKR wants to make the impossible possible
HR managers have been using sophisticated MbO key figure systems with tools such as the HR cockpit for a long time. So far nothing new. However, The big difference is that the OKR variant developed in the US tech groups works with deliberately unrealistic goals. In the OKR system, companies initially set themselves visionary, and often abstract, strategic goals. Google, for example, does not just want to increase sales, improve productivity or become the market leader in a certain segment, but rather wants to “organize the knowledge of the world” in a very imprudent way.
The individual departments or project teams also set up several “objectives” that are oriented towards the overall goal and are very ambitious. In order to work towards this, the teams independently define concrete “key results”, i.e. measurable success parameters that individual teams and employees should achieve. The goals are published company-wide and employees should achieve them in the course of a quarter.
Employees should get everything out of themselves
OKR companies rely on the intrinsic motivation of their employees: Achieving key results is never tied to individual bonuses, other variable remuneration components or promotion. The target agreements are only intended to make transparent how far the company has progressed towards its goals. The basic idea behind it: Get employees out of the comfort zone. Those who set themselves ambitious goals and meticulously measure their own contribution will eventually achieve more than they would have thought possible.
At OKR there are no operational intermediate steps
With the usual key figure systems such as the balance scorecard, companies set goals for themselves and their employees for long periods of time, from one year to three or four years. OKR, on the other hand, sets new goals every quarter – much more realistic for today’s dynamic, uncertain conditions. However, OKR is not the panacea as it is sold in many places.
It takes smaller goals and longer implementation phases
HR manager Ravi Sahni at Xing sees things similarly. His experience shows that those who use OKR for the first time should not exaggerate and set realistic goals first. An example: The HR team sets itself the goal (Objective) of implementing new company values. As an indicator (key result), the HR team and management agree that at least 70 percent of the employees should say at the end of the quarter, “Yes, I internalized and understood the new values.”
To measure that, an employee survey is necessary. A very time-consuming process, but which must be completed as quickly as possible. Because according to the strict OKR schedule, there must be a result at the end of the quarter in order to set new goals again. When the survey takes place, however, there may have been only a few workshops on the new corporate values. “The survey results would only provide a pseudo-accuracy. If you set too ambitious goals that nobody believes in being implemented or measured, there is a risk that they are pseudo-goals that nobody really wants to achieve. Then OKR is doomed from the start,” Mr.Sahni says.
Conclusion
The OKR method takes up the MbO principle and above all changes the way in which the goals are formulated and implemented. Companies should set a comprehensive objective, i.e. an inspiring, visionary goal. Goals should be SMART, i.e. specific, measurable, actively influenceable, realistically achievable and clearly scheduled(timely).
In contrast to MbO, where goals should always be realistic and achievable, this goal is deliberately set too high.
The visionary goal (“Objective”) should be specifically uncomfortable and get teams out of their comfort zone. The basic idea is; this may not allow you to achieve your actual goal – but in the end it will do more than you thought possible.
The individual employees and teams determine the success parameters themselves, on the basis of which they want to measure their progress on the way to achieving the goals. In contrast to the objective, these key results must be very concrete and easy to measure. If the employees regularly achieved more than 60 to 70 percent of their target value, the target was not ambitious enough.
The goals are not set annually, but in shorter periods, usually three to four months. All goals and success parameters are transparent for all employees at all times.