Google was successful with this. And companies like Twitter and LinkedIn also swear by it: the OKR method. What is behind the recipe for success? And what are actually the advantages of the OKR method? Here is an overview.
What does OKR stand for?
OKR stands for Objectives and Key Results.
The number-based management method creates a clear focus in the company and connects the overall company vision with the goals and results of each individual employee.
In this way, the intrinsic motivation of the employees, as well as the self-organization and the commitment of the teams, are demanded and promoted.
OKRs – Objectives and Key Results
As a company, you should first ask yourself the question of the mission, the WHY, of your company. The corporate vision, the WHAT, can be derived from this. To achieve this vision, you then define a strategy, the HOW, to achieve your vision.
Goals/visions for the individual departments and employees can be derived from the corporate vision. Since corporate visions are usually long-term and often abstract, it is important to break them down and reformulate them into short-term goals. This is exactly where the OKR method comes in.
The objective is a goal, the WHAT that wants to be achieved. It ties directly to the vision and makes it more tangible for day-to-day operations. In a way, it is a milestone on the way to fulfilling the vision. On the one hand, the objective is clearly defined and action-oriented. On the other hand, it should tempt you to reach for the stars: a good objective is important and inspiring. It is a lofty goal that motivates those who pursue it to surpass themselves.
Each objective has key results. They indicate HOW we achieve the objective. Effective key results are specific, time-bound, and yet realistic for all their aggressiveness. Above all, key results are measurable. Each key result must contain a number. The objective is divided into small steps, so to speak, which are intended to show the progress of the work. At the end of the specified period (e.g. a quarter or a month), a key result is either fulfilled or not. Has the number been reached or not? The answer is clear. There is only black or white. And no excuses. As soon as all key results have been completed, the objective has been achieved.
Who sets OKRs?
Your OKRs are not shared with teams and employees. Instead, they consider for themselves how they can best use their skills and make the best possible contribution to the corporate vision with their area of responsibility. They discuss their suggestions with their superiors and jointly define the OKRs for the agreed period.
In this way, the company-wide vision with the associated goals is broken down into departments, teams, and employees. The focus becomes clearer and ultimately each individual employee knows what he or she personally contributes to the success of the company.
In order to continuously maintain concentration and focus, less is more: It is advisable to formulate no more than 3-5 objectives, each with a maximum of 4 key results, per defined period of time.
What are the advantages of the OKR method?
The procedure is postulated by many companies – regardless of size and industry – as a silver bullet. But what are the exact advantages compared to conventional target agreement methods?
Agility
OKRs are among the agile management methods. Unlike other target agreement methods, which often involve a period of 1 year, the objectives and key results are set for a shorter period of time, e.g. a quarter or even a month.
After the time has elapsed, the team members formulate new OKRs. In this way, the framework conditions are continuously checked and reflected on what works and what doesn’t. Accordingly, the formulation of the following OKRs can be readjusted and the result improved.
Once established, OKRs are by no means set in stone. Regular coordination takes place in the team to ensure that all members are on track. In this way, teams and employees can react quickly to constantly changing markets and general conditions, even during the agreed period of time.
Transparency
Another benefit and innovation at the same time is the transparency that comes with the OKR method. Because all OKRs – regardless of which company level they belong to – can be viewed by every single employee at any time.
Everyone has an insight into the big picture and understands which piece of the puzzle they themselves and others occupy in the big picture. This transparency facilitates coordination and avoids double work.
Result orientation
OKRs are less about checking off a list of tasks. Rather, the focus is on the result of the work. Each task is linked to a key result, which in turn is linked to an objective. The teams and employees thus act within a clearly defined framework. They know why they do what they do and what the result of their daily work is.
Ambition and motivation
As mentioned above, a good objective is meaningful and inspiring. An OKR should be formulated ambitiously and encourage teams and employees to surpass themselves.
Google even has the motto “70 is the new 100” – here OKRs are set with an achievement of 60 to 70 percent. At least 30 percent of the time, key results are not achieved. And that’s a success.
Last but not least, involving individual employees in setting their goals is a tremendous boost to intrinsic motivation. The vision, which is often formulated by the management level and hardly reaches the individual employees, becomes tangible for everyone. There is a common, major goal to which everyone contributes in their area of responsibility and with their skills. Through self-defined objectives and key results. Employees feel that they and their performance are valued and, thanks to the transparency, also appreciate the performance of their colleagues. With OKRs, everyone is visibly pulling together.
OKRs in interaction with the Balanced Scorecard
You may be seeing a parallel to the Balanced Scorecard (BSC) developed by Norton and Kaplan in the 1990s. The BSC is an excellent tool for developing corporate goals and prioritizing and linking them.
Goals are structured based on the areas of customers, processes, employees, and finances. This makes it clear that the BSC is above all an instrument for the sensible selection and structuring of goals.
OKRs deal with the process of achieving goals and how this maximally motivates team members. The methods of BSC and OKRs thus intertwine and can optimally complement each other in everyday business.
OKRs at TechMinds GmbH
As a tech & IT recruitment agency, TechMinds also relies on the OKRs recipe for success. Our IT headhunters work agile and based on self-defined OKRs.
The entire TechMinds team follows one vision, one big objective. From this, we derive OKRs for each individual employee. In regular team meetings, the various OKRs are checked for their validity and the target/actual status is compared.
In an IT recruiting process, it often happens that the original requirement profile changes – for example, because the general conditions in the company have changed or the market situation does not provide the desired profile.
Due to regular coordination and continuous review of the search strategy, our consultants can react quickly to new customer requests and immediately take up short-term adjustments to the requirements.
