OKRs are used by some of the world's leading organizations to set and execute their strategies. So What is OKR? And how effective is it? In this article we will define What is OKR? and see how they are used in management.
What are OKRs? OKR . Governance Definition
Okr stands for what word? OKR stands for “Objectives and Key Results”. This is a method that helps link company, departmental and individual goals to a specific outcome. This popular goal-setting method has two main features including:
OKR . structure
- Objective: What do I want to do?
- Key Result: How do I do it?
Learn more: What is OKR concept
The principle of operation of OKR
So what is the main working principle of OKR? The belief system is what makes OKRs different from other goal management principles. As follows:
- Ambition: Objective is always set higher than the ability threshold.
- Measurable: Key Result is tied to measurable milestones.
- Transparency: All members from CEO to intern can monitor the organization's OKRs.
- Calculate performance: OKRs are not used to evaluate employee performance
The OKR method was created by Andy Grove at Intel Corporation and later inherited and developed by John Doer. Since then, many companies have adopted this approach including Google, Allbirds, Apartment Therapy, Netflix, and nonprofits like Code for America.
>> Learn more:
- What are KPIs?? Steps to build effective KPIs
- Compare the difference between OKRs and KPIs
5 Benefits of managing OKRs in your business
In enterprises when applying the form OKR . administration will bring 5 typical benefits such as:
- Focused and committed to the top priority goals.
- Connect and organize the work of groups.
- Monitor work progress.
- Scaling the target to breakout.
Concentrate - Focus
Concentration is the first benefit of OKR because then you are limited in number. There can be more than one goal, but there should be no more than 5 goals. Each goal should be short on 1 line. For key results, it should be no more than 5. So in order to limit the number of things to focus on, when implementing OKRs you have to give choices.
To start an OKR cycle, ask questions like: What is most important in the next three (or six or twelve) months? It is the time limitation that sets OKR apart from other goal setting systems. Because it motivates us to take action to create innovation, which prioritizes tasks in a sequence from important to less important. By focusing on a few important OKRs, leaders plan groups of directions and criteria for common evaluation.
Align - Alignment
What is the Alignment term in OKR? Alignment in OKR means the alignment between superiors and subordinates, between related departments, and of all employees to group goals, company goals, and companies create a high connection. opportunity 200% to become the leader.
Commit - Commitment
The sharing OKR . process should be conducted every month. You can also print OKRs on paper and paste them on the workplace or use a special software for OKR to do it. This will create more motivation and clarity at work.
Monitor - Tracking
Sometimes the goals that you set will encounter some problems such as:
- End-of-cycle risk: Untracked jobs will get stuck and we won't have time to salvage it.
- Sudden risk: Everything seems to be going well, but at the end of the stage, there is a sudden problem that cannot be handled in time.
- Risk of deviation: Work is deviated from the original goal due to lack of regular monitoring.
- Thanks to the monitoring of work progress in each week, each month will help limit the above risk situation. Is the hierarchical OKR rating the best way for an individual to know if he or she is on the right track and performing well? If so, what is the cause and how to fix it?
Stretch (Stretch) – Stretching
If your company already knows how to focus on work goals, from which there are individual commitments and the connection between members is reasonable and effective, you should take advantage of the last benefit. OKR's is "stretched".
As John Doerr, Larry Page of Google says, "I'd rather go to Mars, and if I fall, at least get to the moon." OKRs will motivate organizations to strive harder to develop more than the initial level.
The tiers of OKR
Strict link
In this approach we will consider Objective as the lower level and Key result as the higher level in an organization.
Eg:
- At the Product Manager level:
– Target: Launches new products
– Key results:
- Complete the app upgrade before June
- 5 product tests
- Reached a rating of 4.5+ at the app store
- At the Marketing Director level:
– Target: Attract 10,000 new users
– Key results:
- Increase conversion rate to 10%
- Run a campaign to attract new customers
- Reached a rating of 4.5+ at the app store
With this type of association, the Objective of the lower level will become the Key Result of the higher level. That means we will know the Key Result of the CEO of this organization is “New Product Launch” and “Attract 10,000 New Users”. From there, the lower parts will repeat these processes in a cycle to perform exactly as at the higher level.
Orientation link
In general, sometimes the stratification of Objective and Key result does not work. In some specific situations, the company will target ambitions for each department and employees are oriented to develop their individual potential instead of following the same company goals.
Same with the above example, although the CEO's Key Result remains the same as “New Product Launch” and “Attract 10,000 New Users”; but the Objective and Key Result of the lower levels are subject to change. For example:
- At the Product Manager level:
– Target: Build a really cool new product
– Key results:
- Complete the app redesign before June
- 5 product tests
- Reached a rating of 4.5+ at the app store
- At the Marketing Director level:
– Target: Build your favorite brand
– Key results:
- Increase customer satisfaction index to 12%
- Run a new campaign to promote the brand
- Appeared in technology magazines
It can be seen that the common goal is always linked together, but the link between Objective and Key result at all levels has certain changes. For businesses that have the ambition to build flexible goals, suitable to the potential of each department as well as each individual, they should follow this direction.
Methods of building and deploying OKR
Once you know the definition and What is OKR?, the general invisible business will be able to visualize OKR model. From there, build each element separately and implement it with high efficiency.
For Objective (Objective)
- For each level in the organization, there should be 3-5 goals
- Goals should be set beyond capacity, to create challenges for the team. As a result, employees are motivated to work, management promotes the performance of each individual, maximizes their ability to help businesses achieve good results.
For Key Result
- Key results need to be achieved with the goal being reached.
- Key results should indicate outputs rather than mere actions.
6 Steps to Building Effective OKRs
Define Objective and Key Result
To begin the process of implementing your new strategic plan, come up with three to five goals. These must be closely aligned with the desired outcome of the company. For example outlined in their annual business plan. This is why the two should always go hand in hand.
Define a system for the organization to manage OKR
Each company has a different organizational structure and operating model, so tracking the OKR indicator often have many distinctive features. Therefore, businesses should use available software to easily manage, monitor and adjust in the working process. However, businesses should not be too dependent on software. Instead, master the work processes and goals. Avoid doing the wrong focus leading to deviating from the direction.
Communicate with department heads to set goals
OKR implementation needs to be approved in meetings with leaders at all levels. Collect ideas from there to perfect the strategy. At the same time, popularize how to apply the OKR method to work effectively, as well as show the limitations and opportunities that OKRs bring.
Communicating OKR information to the whole business
Once the final plan has been put in place, OKRs will be disseminated to the entire company. It must analyze specifically the purpose and the end result. From there, company employees know as well as understand what they are and will do.
Connect, stratify, and present OKR
After it has been deployed to employees, the head of the department will summarize the comments on OKRs. Then send it to the management board. Once the management has agreed on the implementation time, OKR will be implemented. Together in specific directions to help achieve the expected results.
Track and manage personal OKRs
Regularly monitor and evaluate the OKR of each individual thanks to the support of available software. At the beginning, everything will be very new for sure. Management must regularly monitor and adjust during the implementation process. This helps each individual to work effectively, proactively and self-consciously at work. When employees really understand the process and become proficient, it will help increase work productivity.
>> Learn more: Top of the KPI software the most effective
5 Notes when applying OKR . strategy
Some errors that when applied OKR Common problems businesses face include:
Apply OKRs like a to-do list
OKR to measure the added value of the performer, not the assignment. You need to understand the difference between Value and Activity-based Key Results. OKRs bring the core values of the business – a measure of progress towards achieving goals. Therefore, it is necessary to clearly define the daily work and values of the company.
Setting up too many OKRs
Instead of listing OKRs, list top priority OKRs. When businesses set too many goals in a certain time, there will be no priority for work. From there rambling and distracting from the company values. That leads to not achieving outstanding results.
No adjustment OKR
The OKR indicators have been transparently announced internally and periodically reviewed weekly and monthly to make it easier for everyone to monitor and align better for the working process. In addition, OKR is seen as a goal management tool for the whole business. Therefore, adjustment between departments is essential.
Create but not focus on OKR
OKR model need to be recognized and implemented as a corporate culture to create a solid foundation. Therefore, each individual needs to regularly update the content. Avoid viewing OKRs as a blueprint.
How to evaluate OKRs correctly
To evaluate OKRs correctly, we should score on a scale from 0.0 to 1.0. The lowest is 0 ie not completing any part of the set goal. And from 0.6-0.7 is doing the right direction of the goals and completing well will get 1 point.
From the scored Key Result, we will get the average score, which is used as a scale for Objective. Here's an example of how the marketing department's OKRs should be evaluated:
- There are two kinds of key results
Performances at work that cannot be accurately quantified, such as launching a new website, are rated on a binary scale. For example 0 would be incomplete and 1 would be well done. In contrast, for measurable work, it is calculated as a percentage of % completed.
Finally if the index is below 0.4 does not mean failure. At this level, it shows that the company's goals are too high beyond the reach or the employee's work efficiency is not high. From there, we will have capacity stratification and assign appropriate tasks to each department to improve quality in the coming time.
- The OKR scoring system is not a performance appraisal tool
- The closing meeting on OKR is very necessary
To get an overview of the company's activities, each quarter should have meetings to exchange and discuss the implementation of work. Depending on the specific size of each company, there is an appropriate arrangement.
CoffeeHR – The best employee OKR evaluation solution today
CoffeeHR Software Joint Stock Company is one of the leading companies in developing effective management software today. With professional understanding and operation, the company has applied OKR method to evaluate and manage employees in the system. From there, the expected results were achieved. Currently, CoffeeHR also develops many other activities such as computer programming, telecommunications information, management consulting, etc., which are trusted by many customers.
Here is the introductory article What is OKR? sent to you. Hopefully, through the article, it has helped us have the most general view of OKR and apply this method effectively.
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