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OKR – Why is it so vital?
9 MINS READ
Highlights
- Organizations needs to embrace the changing landscape of performance assessment. Working towards a more transparent and rewarding framework is vital for success.
- Organizations should prioritise measuring employees on how well they are aligned to the organization and provide continuous support to set them up for success.
In this article
The need for an agile appraisal
Organizations continuously strive to bring more agility into their performance assessment methods. Renouncing the calibration process, establishment of feedback loops, and increasing the frequency of assessments have all been a step towards a more transparent and collaborative performance evaluation. This is where the ‘Objectives and Key Results’ or OKR model of performance assessment has been introduced.
Using OKRs, organizations can establish a robust system in which everyone knows how to decide what needs to be done, how to get those tasks done, and how to allocate resources and continue to create real value for the organization and stakeholders. The OKR framework ensures that everyone is pulling in the same direction.
At a glance
OKR or Objectives and Key Results is a framework for goal management that helps organizations define and establish objectives and track outcomes. By adopting an OKR goal system, organizations can achieve better focus on results, increase transparency, and further strategic alignment.
At the base of the OKR framework lies a shift from output to an outcome-based approach to work. Simply defining what do you want to achieve is not enough; it must include a way to measure this achievement. OKR can help organizations stay on track and bridge the gap between strategy and execution.
The OKR framework
OKRs have mainly the three parts: (1) The objective you want to achieve (2) Key results which are the ways to measure how the objective is achieved (3) Initiatives which describes the tasks to achieve the required results.
Objectives are defined by asking the question ’Where do I want to go?’. Objectives define the direction and focus for the planning period. Objectives should provide clarity on the end goal at a broader level whether it’s an organization transformation, changing a process or driving innovation. Key results measure the progress of the objectives by asking the question ’How do I know if I’m getting there?’. It has a metric that has a start and an end value. The third part of OKR is the initiatives which describe the steps to be taken to achieve the key results.
The cadence of OKRs is usually flexible. This allows organizations room to easily adapt the OKR framework to best suit their needs and culture. Most companies choose a quarterly cadence to make it easier for stakeholders to have more real-time information. A quarterly performance assessment allows important decisions to be taken as the market changes; not after it happens.
Effective OKRs
Rather than using OKRs as the deciding factors to arrive at final performance score, OKRS should be used to continuously ensure progress. KOKRs should be dynamic and aspirational. They are a tool for a process of continuous refinement and improvement.
The OKR framework even allows for different cadences across the organization. Some teams would require a monthly review whereas others a quarterly cadence review would suffice. The cadence review provides a platform for teams to discuss and analyze which initiatives/key results are working, and which are not. The OKRs for each cadence should be built from the achievements and lessons learnt in the previous review.
Goal cascading is another feature that works well in the OKR setup. This is because cascading helps achieve one of the biggest aims of OKRs – Organizational alignment and communication. This way, every employee’s goals connect to higher level goals. Goal cascading, therefore, adopts a top-down approach. Typically, the CEO or any other high-ranking employee will set the company’s objectives and the associated key results. The next level of executives will identify which of the company objectives will their team be responsible for the set, relevant OKRs. This process iterates until all individual OKRs are aligned to the company’s OKRs.
Regular check-ins are also a process that adds to the success of the OKR framework. Regular evaluation to check if the goal is on track, reflection on the learnings, and setting the priority for the future is decided in these check-ins. Similar to the cascading process, check-ins also ensure everyone in the team is working towards achieving the same goal.
Revaluate and relearn
To be effective, organizations need to continuously work on the set OKRs, discuss them, check the progress, and plan what ideas can be executed. OKR is a framework, but it’s also a learning process that often involves a change in how people think about and measure the work they do, moving away from output-focused to outcome-focused approach. At the base of the OKR framework lies a shift from output to an outcome-based approach to work. Simply defining what do you want to achieve is not enough; it must include a way to measure this achievement. OKR can help organizations stay on track and bridge the gap between strategy and execution.
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