As an HR professional you know that an important part of a strong company culture is ensuring there is clarity and alignment across the board. This is often one of the main challenges we see companies trying to address via the performance management process, and with reason: When people know how their work is contributing to the company and its overarching goals, they are more engaged and have a desire to contribute to the “global cause.” This in turn, increases overall productivity.
So how can HR support the company in ensuring there is strong alignment between individuals, teams, and overarching company objectives? One way to do so, in line with the performance management process, is goal setting.
The OKR framework
A framework for goal-setting that has become more popular over the past decade is OKRs: objectives and key results. Used by Google, co-founder Larry Page credits them for its successful growth:
“OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of organizing the world’s information perhaps even more achievable. They’ve kept me and the rest of the company on time and on track when it mattered the most.”
What is the difference between OKRs and goal setting? You may have heard of popular frameworks such as SMART goals, which help you set attainable and achievable benchmarks. However, it is difficult to set a company-wide goal that translates as something measurable across all teams and departments. OKRs help drive alignment by creating a common Objective with measurable Key Results at the team and company level.
To start with, the objective should be somewhat of a North Star, something that gives the company direction. It should help answer the question “What do we do next”? For example an objective might be: “To successfully expand the business into North America.”
The key results are then a numerically based expressions of success or progress towards the overall objective, meaning they have to be measurable. However they shouldn’t be so granular that they turn into either a massive to-do list, or 1,000 smaller OKRs spread throughout the company.
If you’re ready to use the OKR methodology, here are some examples of how you might write them.
- Objective: Establish a strong growth path & stable position for the business
- Key Result 1: 80% revenue retention across all clients
- Key Result 2: $5M closed in new business
- Key Result 3: 35% of new revenue coming from North America
This objective can then “cascade” into teams. For example, the above might translate as follows for the marketing department:
- Objective: Improve our marketing in North America
- Key Result 1: Acquire 300 MQLs (marketing qualified leads) from North America in Q1
- Key Result 2: Convert 10% of North American MQLs to SQLs (sales qualified leads)
After determining objectives and key results, teams can go one step further by creating initiatives designed to contribute to the key results. In the example above, an initiative to help acquire 300 MQLs might be:
Initiative: “Develop a downloadable piece of content targeted at the North American market”.
Initiatives will help ensure there is movement towards the objective, and can be owned at a team or individual level.
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By using the OKR methodology, you are helping to create clarity, objective, and scale. By increasing clarity, the company is able to reach a position whereby everyone has a clear understanding of their objectives and how they’re progressing. In turn, this helps managers to have a better idea of where to coach and lead their team to performance.
When done right, it should also increase satisfaction in your performance management process, as people have a clear picture of what they are working towards.
OKRs as part of performance management
How do you tie in your new OKR framework with the performance management process? If you are using a performance management platform, it’s the perfect opportunity to make use of its goal setting function.
An important part of goal setting not to be overlooked is professional development, ensuring people have clear direction for their career progression. Since OKRs are related to company objectives, it’s important that your managers spend time with their direct reports in 1:1 meetings, as well as helping them to set goals.
Checking progress on OKRs
Once you’ve started using the OKR methodology, as with any goal setting activity it’s important to regularly come back and check progress. It can be incredibly demotivating for teams and individuals if goals aren’t reached, or worse still, if they’re reached but never discussed, let alone celebrated.
One of the main points of setting OKRs is to increase clarity and alignment for individuals and teams, helping them to see how their work is contributing to the bigger picture. You may notice that people feel more engaged when they can change tracks to be realigned with the company direction.
Evaluating results will also help you evaluate whether the OKR methodology worked well compared to others you have tried previously, or help you fine-tune for the next time you create OKRs.
Ultimately, OKRs are just another approach to goal setting, but are popular because of the way they help create alignment between individual, team, and company objectives. The most important thing as HR is to ensure that your performance management process supports the overall company culture, strengthening it along the way. By creating clarity and alignment through goal-setting, you are translating roles into careers and making people’s contributions more tangible.