In the world of hybrid work, measurement of work performance hit a brick wall.
Traditionally, people are measured based on input. The time they spend at work and their punctuality.
But in a world when we are working remotely, input measurement is impossible.
This is leading to many people managers biting their nails every working hour as they don’t have butts on seats to monitor.
But those anxieties are unnecessary if companies (and managers) can start measuring people based on output.
That is what I was exposed to in my previous job and have seen how much less frivolous stuff I would need to care about as long as I get my job done.
How it all started:
The concept of OKRs originated in Intel attributed to Andy Grove in the 1970s, was popularized by John Doerr, Chairman at Kleiner Perkins who took it to Google way back in 1999 when they were about 8 employees, working out of a garage.
Two decades later, with more than 70000+ Googlers globally, OKRs are still used to drive a highly aligned organization!
In the words of LarryPage, CEO of Alphabet and Co-Founder of Google, “OKRs have helped lead us to 10X growth, many times over.”
What are OKRs?
While many define OKRs as a strategy execution framework, which it certainly is, a better reflection of OKRs is in the definition by Paul Niven and Kevin Baum, global leaders in Strategy Execution and OKRs, Directors of OKRs Training.
“OKRs is a critical thinking framework and ongoing discipline that seeks to ensure employees work together, focusing their efforts on what is most important in order to make measurable contributions that will drive the company forward.”
So, it’s not surprising that companies are stepping forward to use OKRs, to supercharge growth, drive change, innovate or excel in a manner that every employee in the company knows how they contribute.
More than 80% of Silicon Valley startups have adopted OKRs and experienced a meteoric rise in their growth, by just being thoughtful about the metrics they measure.
Although so much is written about OKRs everywhere, not to mention, success stories of Google, LinkedIn, Twitter, many companies still don’t seem to get it right.
This could be attributed to their lack of understanding of OKRs or could also be the inertia of stepping out of their comfort zones around traditional performance practices.
Objectives tell you “What do I need to achieve?”
Key Results focus on the “How do we measure success?”
Objectives are “The big Why/ Idea”, in short, it is the propeller for your company to shift out of the existing model to the competitive mode.
Interestingly, objectives are emotive and an offshoot from your mission statement.
So let’s see what sets apart good objectives?
1. Qualitative and inspirational – Objective statements have words, not numbers. They need to be qualitative and inspire your teams to a higher level of performance.
2. Attainable in a Quarter – Objectives should be such that they are attainable in a quarter. Your team should also be able to control its achievement. Most times, teams mix objectives with long term strategy statements. They are best when articulated as smaller achievable goals, for teams to work towards.
3. Must have a Business Value – We cannot tell you how important this is! While cherry-picking an objective ask yourself ‘By selecting this objective, will this help move my business forward?’
4. None get left out! – The litmus test of a great OKR is that none get left out. Objectives should be such that every team in the company has the ability to connect and align.
OKR for Finance Team
Objective: Automate Payment on the Platform to Reduce Amount Receivable
Key Results are where quantification steps in.
Everything inspiring and aspirational in the objectives needs to be quantifiable and that’s what you do with Key Results.
Ask yourself some critical questions
- How do we measure success?
- What milestones define that we are moving in the right direction?
- How would this add up in numbers?
Key Results need to have measurable outcomes.
Using the OKR for the Finance Team as an example, let’s look at how the KRs would look.
Key Result:
- Reduce invoicing time from Y days to X mins
- Reduce amount invoiced to amount receivable from Y to X
- Complete API integration with X Financial Instruments (FIs)
- Improve financial forecasting accuracy from X% to Y% of actual
For more info on OKR, check out the Leadership module in ThePowerMBA
