OKR stands for Objective Key Results. It is a framework that derives from Peter Drucker and his management technique called ‘Management by Objectives’ (MBO) dating back to the 1950s.
The essence of Peter Drucker ‘s management technique is based on determining very clear and specific objectives and providing feedback on the results; timely and iteratively. Peter Drucker believed that this was the only effective way to manage people, pioneering the idea of letting go of control around working hours and hours worked per day.
OKRs: What value do they bring to the business?
There are many articles and videos on the internet that explain, in detail, how OKRs work. Therefore, I will not expand too much on the topic in this article.
OKRs have two parts:
And usually two to five Key Results; which ultimately indicate if the objective has been achieved, and if the people involved in the execution of the OKR are progressing in the right direction as they are constantly measuring and having the opportunity to reflect over the journey and course correct as needed.
As far as the objective is concerned, you need to be very clear about what you want to achieve, the outcome you are looking for. You do not have to have numbers in the ‘O’.
The Key Results must have numbers; meaning they need to be associated to some metric that points people to where we want to be. This is important because people need to be able to check their course, as they are progressing. They need some kind of metric to check whether their actions so far are contributing to achieving that Objective.
For you to know where you want to be in the next three months, for example, you need to start measuring from the very beginning so you can plan an optimal course and be efficient and effective about it. So, if you do not know where you are at the moment, that is either your preparation work for the OKRs or the OKRs themselves! Remember: knowing where you are now is essential in order to plan where you want to go next.
You should have at least 2 KRs per O; as there are many cases where OKRs were applied as 1 O and 1KR, that resulted in a so-called “perverse effect”.
Let’s have a look at the example below:
O: Increase the Service Desk Team productivity while working through client calls
KR: Reduce Average Response Time (ART) from 8 minutes to 2 minutes.
What do you think would happen in this scenario?
How would people behave to achieve the objective they were given?
In order not to fail, the most likely result (that I have personally seen happen in my career) is that the individual responding to the client call would probably disconnect from the call after about two minutes and by doing this, they would achieve the OKR given to them.
But what would happen to the overall customer success and satisfaction? What would quality standards look like? What would be the impact on the brand?
This is why, in cases like this, to avoid the “perverse effect”, it is highly recommended to have more than one Key Result, and make sure the OKR is designed in a balanced way – taking into consideration people, process, financial aspects, quality etc.
In the example above, we could also add:
KR: Improve customer satisfaction rating from 75% to 85%
KR: Reduce returning calls (calls for the same problem in less than 24h) from 30% to 10%
The original concept came from Intel and disseminated across Silicon Valley.
OKRs started to become a ‘big thing’, when Google decided to adopt it as a goal system right from the beginning, in 1999. 20 years later, it seems that Google has conquered thought leadership across industries and grew from 40 employees to more than 60,000 these days.
Besides Google and companies in the Silicon Valley, other companies like Spotify, Twitter, LinkedIn, and Airbnb are also using OKRs. Outside the tech industry, we have Walmart, Target, The Guardian, Duns and Bradstreet, ING Bank and others.
Personally, I started adopting OKRs back in 2015. I have seen it drive some impactful changes (improvements) across the company.
OKR is a simple tool, that creates tight alignment and engagement through organisations. It is also very fair and transparent, as it’s framed around measurable goals that should be constantly reviewed and adjusted (as needed).
OKRs for People Success department
If people knew how many fronts, projects, initiatives HR – known at Retail inMotion as People Success Department – can be involved in and understand the impact HR has in the whole organisational culture and functioning of other departments, they for sure would be given more attention.
OKRs represent a very powerful tool for HR; they allow the department to focus on key initiatives, have more tangible and clear objectives that they can also share with the rest of the company, track progress of their priorities, correct course and be transparent the whole way through, with the remainder of the organisation.
And, as a plus, if HR can understand and apply OKRs to their own area and business, imagine how it can influence and drive the organisation in this direction.