These days, many business leaders are laser-focused on goals. Organizations don’t just want to have broad goals that only top-level personnel are aware of — they want to set, track, and measure goals across the entire company. That’s where the concept of Objectives and Key Results (or OKRs) comes into play.
OKRs are a goal-setting framework developed by Intel co-founder Andy Grove and implemented at major companies like Google. The framework encourages businesses to establish a set of broader objectives, as well as plan out the key results necessary to achieve those goals. Ideally, a business constructs a pyramid of OKRs that connects individual goals to team goals and broader company objectives, giving business leaders a more tangible path to success. Google co-founder Larry Page claims OKRs helped lead the company to 10x growth and made their outlandish company mission — to organize the world’s information — more achievable.
The truth about OKRs
What many business leaders don’t know is OKRs require a comprehensive adoption plan to guarantee effectiveness. Reaching the level of success that Google and other thriving organizations have attained requires astute planning, commitment, and diligence. With OKRs, you can’t just “set it and forget it.” You’re asking all of your employees to completely upend their planning strategy and adopt an entirely new process for setting goals. If you don’t execute an OKR roll-out successfully, you can wave goodbye to the potential benefits of this framework.
If you want your business to embrace OKRs, you must clearly understand the potential pitfalls — and know how to avoid them. Keep reading to learn about four common traps companies fall into when trying to implement an OKR framework. You’ll discover what not to do during your own OKR journey and learn how to set your organization up for success (you’re welcome).
Pitfall #1: Lack of alignment across an individual, team, and company goals
In theory, OKRs can work exceptionally well to align goals across the entire organization. With the focus today on the cascade method, many businesses aim to set goals at each level that flow into the goals on the next level (both up and down) the figurative company pyramid. However, one common trap businesses fall into is only setting goals at the top level or failing to coordinate goals between different levels.
Often business leaders and executives ignore the possibility that company goals may not always translate into individual or team goals. For example, many employees perform ongoing or repeatable tasks tied to the nature of their role. A quality assurance engineer tests and verifies the functionality of software products and programs. She will perform many of the same actions regardless of whether quality control ties into the company’s quarterly objectives.
How it affects your business
When individual responsibilities diverge from company-wide objectives, employees can feel frustrated about the lack of alignment or fearful about the security of their position. Failure to acknowledge the meaningful ongoing and repetitive tasks that individuals perform can lead to a lack of fulfillment or lower employee morale. Employees may feel obligated to create OKRs that reflect company objectives but don’t match their actual duties. Or, individuals may incorporate repeatable tasks into their OKRs but face difficulty justifying those goals to team leaders and executives.
Pitfall #2: Inconsistent expectations across different teams
Another potential weakness of the OKR framework is that you’re relying on multiple individuals (in some cases hundreds or thousands of individuals) to carry out adoption. You won’t succeed if team leaders don’t receive proper training. You can also face issues if there’s no OKR champion to monitor the rollout and ensure consistency across the organization.
How it affects your business
Without forces to guide them in the right direction, teams will likely end up implementing the OKR framework to varying degrees. Some managers may be familiar with the framework or believe in its value, and strive for their teams to set high-reaching objectives and key results. However, other managers may feel indifferent or less supportive of OKRs and introduce the concept halfheartedly. As a result, different teams can end up adhering to different OKR performance standards.
For instance, the marketing team leader may insist that OKRs be challenging and only partially achievable for the quarter, whereas the engineering team lead may allow team members to submit less ambitious OKRs. The lack of consistency can create disgruntled employees or cause resentment if some teams have to meet higher standards than others — all of which produces a negative environment that can foil your OKR strategy and adversely impact your business.
Pitfall #3: Focusing too heavily on the metrics
One of the great advantages of OKRs is that they allow teams to link tangible, quantitative results to lofty goals. But the focus on quantifying results is also one of the framework’s potential pitfalls. One strong quarter isn’t always a realistic benchmark from which to set next quarter’s goals, and falling into that trap can lead to expectations from higher-ups that are untethered to reality.
Business leaders often fail to think about how metrics can impact employee mindset. A 2018 survey found that 57 percent of tech workers were experiencing burnout. An unrelenting focus on metrics can play a large part in the mental and emotional well-being of your employees. Fatigue and overexertion can arise rapidly — particularly in a high-stakes goal-setting environment where individuals are constantly being pushed to top the previous quarter’s numbers.
How it affects your business
Too much emphasis on meeting a certain threshold can lead to unrealistic expectations in terms of what’s repeatable. For new projects in particular, initial growth with almost always surpass long-term sustainable progress. An employee launching a new customer service initiative may see impressive metrics during the first few months or quarters. Eventually, though, the numbers will stagnate, dip, or increase at a much smaller rate. Imposed quotas can also induce fear and end up restricting performance, which undermines the entire purpose of the OKR framework.
Pitfall #4: Linking OKRs to performance evaluations and compensation
If you encourage OKRs at the individual level, it can be tempting for managers and business leaders to use those numbers when annual performance evaluations come around. Many businesses do in fact use OKRs as a way to evaluate employee performance — to the detriment of their company. Once your employees understand how their OKRs connect to compensation and opportunities for promotion, they will lowball their goals. You’ll effectively undermine the culture of ambition and aspiration you’ve been cultivating.
How it affects your business
The issues with this setup should be quite obvious. As a venture capitalist and goal-setting expert John Doerr puts it, if “you pay bonuses on the sum total of all your objectives and key results, it will inevitably lead to sandbagging while setting the goals. You won’t get the risk-taking you want in the culture.” You’ll compromise the OKR framework and limit the performance potential of your employees.
If performance and OKRs are closely intertwined, employees will focus their efforts on gaming the system and intentionally set more achievable goals. Say an employee sets relatively easy OKRs for the quarter and then meets 95 percent of those goals. He will happily receive the majority of his bonus. If a colleague sets more difficult OKRs and only meets 50 percent of those goals, that individual will be quite upset to only receive half of the potential bonus.
OKRs can be an incredibly effective way to monitor progress and fulfill business goals. Keep in mind these potential pitfalls as you begin rolling out OKRs across your organization, and you’ll have a much greater chance of success. Plus, you can learn more about the OKR framework and get tips on how to implement it successfully with LiquidPlanner’s Complete Guide to Setting (And Achieving) Goals.
