While it is important to have objectives that are ambitious, having unrealistic ones that cannot be achieved demotivates employees.
OKR or Objectives and Key Results is an effective goal setting framework for organizations to achieve their business aspirations. The major merit to OKRs comes from their ability to help team members achieve shared goals in a time bound and measurable manner. It enables organizations to align business objectives with operational tasks and ensure that the top priorities don’t drift to the back seat as business as usual takes over.
However, setting OKRs comes with its own set of challenges and OKR mistakes that organizations must avoid.
In this blog, we will discuss —
OKRs consist of two components, Objectives and key results. Objectives are what the organization seeks to achieve, as a top priority, the overarching vision. While key results focus on how the intended outcome will look like.
Setting OKRs effectively involves creating an objective which is ambitious as well as qualitative in nature. Starting with quarterly objectives can be effective. It will allow organizations time to see subtle signs of progress, but at the same time, flexibility to realign in case of a disconnect.
Key results, on the other hand, must be measurable and quantitative. Without a data point attached to the key results, it is extremely difficult to gauge whether or not the objective has been met.
Working with the right structure can help avoid OKR mistakes. Here is a quick example of the structure for OKR goal setting along with the key considerations to keep in mind:
Objective: Improve employee engagement (ambitious)
Key Result 1: Increase employee satisfaction to 80% (measurable and quantitative)
Key Result 2: Increase employee participation by 50% (measurable and quantitative)
Key Result 3: Decrease voluntary turnover by 50% (measurable and quantitative)
To learn how to set the right OKRs, read this step-by-step guide.
With an understanding of the benefits of objectives and key results and the structure for effective OKR goal setting, let’s turn to the 15 common OKR mistakes that organizations make and how to fix them based on industry research and best practices:
Many organizations fall prey to the common OKR mistake of setting a disproportionate number of OKRs. There are several facets to this. First, there might be too many objectives that the key priorities get lost. Second, organizations tend to link only one key result to each objective, which may not be sufficient to achieve the objectives.
How to fix this: Focus on setting no more than 3-5 objectives per department or team per quarter. Similarly, having 2-4 key results for each objective is a good starting point. This will not overwhelm team members about the amount of work to be done as well as ensure that organizational priorities are sacrosanct.
While it is important to have objectives that are ambitious, having unrealistic ones that cannot be achieved is one of the most common OKR mistakes. Unachievable objectives demotivate employees instead of challenging them. On the flip side, having very low hanging fruits as objectives lead to a situation where they are not challenging or stimulating enough to encourage employees to push their boundaries. Either way, the OKRs lose significance and fail to create impact. This also leads to sandbagging and underutilization of available resources.
How to fix this: Adopt an incremental approach. Start with audacious but realistic goals. Check your team’s performance and adjust accordingly.
Lack of accountability is one of the major reasons why some OKRs fail. In the absence of direct accountability, there is an environment of finger pointing and shifting the blame, without any adequate results on the table.
How to fix this: Have a point person who will be directly responsible for measuring and sharing the efficacy and the effectiveness of the OKRs and share whether or not the team is on track with what was envisioned. When setting OKRs, always designate who will be accountable and responsible to track the same.
OKRs must contribute directly to the business growth and strategy. Good OKRs directly impact the bottom line — end-user experience and profitability. Low-value OKRs, even when fully achieved, fail to make any substantial difference, leading to wastage of valuable resources.
How to fix this: Set OKRs thoughtfully. Rephrase OKRs to focus on the tangible benefit to create a sense of urgency. De-prioritize goals that do not contribute to the primary objective of the company.
Having OKRs which are vague and not aligned to any specific measurable outcomes tend to be ineffective. This is especially true for the key results. One of the most common OKR mistakes is not having a measurable figure attached to the key results to gauge whether or not the objective has been achieved.
How to fix this: Adopting the SMART goals framework can go a long way to ensuring that the OKRs are very specific and can be measured in a time bound manner.
For instance, instead of simply saying increase customer NPS, make it specific as increase customer NPS to 9 in 5 months.
It is true that most OKRs will come from the senior leadership following a top-down approach to be implemented by others in the team. However, making this an exclusive approach is a big mistake. Top-down OKRs often limit creativity and autonomy leading to decreased motivation and negatively impact the performance overall. It is a common OKR mistake to have brainstorming in silos.
How to fix this: Adopt a balanced approach of top-down and bottom-up when it comes to setting OKRs. Employees need to be seen as organizational assets who have a fair understanding of business needs and priorities. Therefore, giving them a voice in the process of OKR goal setting can go a long way into augmenting engagement and making it a collaborative process. This also aligns business strategy with tactics and day-to-day operations.
Don’t set OKRs and forget. Without tracking progress, undertaking corrective action and realigning priorities becomes difficult. This leads to negligible impact to the overall business.
How to fix this: Have a weekly tracker to gauge the progress made on each OKR. Have regular conversations on the results achieved. It is a good idea to break the ultimate results into smaller percent size portions which can be aimed to be achieved and tracked on a regular basis.
OKRs are not to-do lists. It is important to understand that daily tasks can be many and are generally a way to achieve the objectives and key results. Treating OKRs as a task checklist for everything that needs to be done is one of the most common OKR mistakes.
How to fix this: It is important to differentiate between the top objectives from the tasks and smaller milestones that come along the way of achieving the objective. Listing down initiatives to be taken for each key result can eliminate the confusion.
Many managers commit the mistake of using OKRs as a performance evaluation tool to gauge how well their team members have been able to achieve what is expected out of them. Since performance evaluation is often linked to compensation and benefits, employees will push conversations towards setting lower objectives, which defeats the purpose. As OKRs are by nature ambitious, having a 70-80% achievement ratio of objectives is a good sign of progress. If OKRs are 100% achieved, objectives may not be ambitious enough to capitalize on the team members’ strengths.
How to fix this: Use the OKR framework as a management tool to encourage employees to push their boundaries. OKRs need to be aspirational for employees to put their thinking hats on and innovate, rather than a goal to achieve to reach the next promotion level.
Taking inspiration from industry practices is a good idea. However, replicating them without any contextual understanding is self-defeating. As the whole OKR framework gained momentum with Google’s success and explosive growth, organizations tend to replicate the Google way without any customization. Naturally, the results are often skewed.
How to fix this: Learn from the best practices of others and then customize them to fit your organization’s context. Instead of implementing blindly, it is important to understand the rationale for each activity and then align those with specific business priorities. To avoid this OKR mistake, organizations must understand the guiding principles behind successful OKRs, have clear business goals, and then implement OKRs according to their unique needs.
Many organizations expect to see results within weeks of setting their objectives. They seek instant results without giving the team members the room to work on them and achieve the desired outcomes. This need for instant gratification leads to frustration and pushes leaders to give up too quickly and is a very common OKR mistake.
How to fix this: Be patient and give the OKRs time to show their impact. As with any new process, the team will take some time to implement OKRs, and get used to them. The results will likely be visible from the third or the fourth cycle. Do not quit and dismiss OKRs too early. Engage with OKR experts to understand their gestation period and refine the process along the way.
OKRs need to be forward looking and ambitious. Focusing on very short term goals as objectives will compromise their impact and importance. OKRs are generally long term and are achieved over time.
How to fix this: Segregate your OKRs into three categories to have the perfect balance between strategy and execution.
Many organizations master the art of setting OKRs in the best and most effective manner, yet in the absence of clear effective communication are unable to achieve the expected results. Unless everyone is on the same page when it comes to the objectives and expected key results, it is very difficult to move the needle in the right direction consistently.
How to fix this: Once the OKRs are set, communicate them clearly to everyone in the team and specify the role of each and everyone involved. Creating OKRs in silos and expecting everyone to perform their roles doesn’t make sense. Setting OKRs must be a collaborative and communicative process.
Achieving any objective that has the potential to create business value requires adequate resources. However, often organizations fail to provide their teams with the right resources. This leads to an inability to meet the expectations, causing frustration and demotivation.
How to fix this: Before implementing any OKR, take an honest inventory of the resources — internal and external — that will be required to achieve them. Check whether or not the same can be provided to the employees. If not, it might be a good idea to relook at the OKRs and redefine them in case of a disconnect.
It is common for organizations to blindly go after the objectives set months ago despite changing business requirements. Failing to reinvent as and when needed can lead to potential loss of revenue and market share.
How to fix this: Organizations must be agile in setting OKRs and be ready to reinvent them as circumstances change. At the same time, when an objective has been achieved, it needs to be replaced with a new one to avoid wastage of resources.
The right compensation management practices and policies can make or break your employee experience. Of course, there is merit in linking compensation and performance to drive organizational success, it can lead to several questions and implementation problems as well.
Read on to get all your compensation management related questions answered.
Let’s start with the very basic question of why fair compensation is important and the merits it brings along. It is no surprise that if you are paid more and are compensated according to your efforts, you are likely to give in your 100% and stay with an organization longer. However, there are other factors that support fair compensation:
Thus, fair compensation as a part of compensation linked performance management has the potential to facilitate better employee outcomes such as engagement, experience and performance.
To make compensation fair and inclusive in all aspects, it needs to have a clear foundation. Most organizations have relied on performance reviews as a way of reflecting on performance as a means of compensation decisions. However, there are several competing views both for and against tying compensation to performance reviews.
Clearly, there are both sides to the story.
The most favorable outcome will be to keep performance as one of the parameters for compensation, but not the sole foundation.
Additionally, as one of the best practices, performance reviews can be conducted on a regular basis, where some are only developmental in nature and others can be tied to compensation management.
As discussed, focusing only on performance reviews for compensation management needs a relook. Working with growing organizations, we have curated a list of the top five performance and compensation management practices you can leverage:
Ensure that your compensation structure aligns with the market trends so your employees don’t feel underpaid and leave.
Provide complete transparency and clarity to your employees on what constitutes high levels of performance and what it will take to earn a raise or appraisal.
Have specific, well defined and measurable criteria for the compensation strategy to ensure that there is complete transparency.
Salary in hand or the pay check your employees receive is accompanied by a range of benefits that are a part of the compensation structure and cost to the company, but are often overlooked by employees. Make sure they are widely communicated.
Ensure that there is a base pay range for every role and profile with variable additions based on candidate competencies.
The idea of fair compensation and linking compensation and performance management, leads to a very interesting concept of distributive justice. On a broad level, distributive justice essentially focuses on ensuring that the compensation received by employees is fair and equitable and is based on objective and rational grounds which are uniform for all. Here are a few ways to ensure distributive justice:
Measure potential and market value of the employee in addition to experience and expertise to ensure distributive justice for high potential employees
Another interesting component of compensation and performance management that you must acquaint yourself with is pay transparency. Essentially pay transparency refers to how openly or freely employees within an organization can discuss their compensation with others.
This is not only limited to the check they take home but other perks and benefits they are entitled to. Invariably, many platforms today also enable individuals to anonymously share their salaries online and get insights from others doing the same. However, there are diverse views on when it comes to pay transparency for an organization.
Those who advocate for pay transparency believe that it can enable large scale impact for the organization across performance management.
However, there is a flip side to pay transparency too with some common pitfalls that need to be addressed proactively.
In the last section of this article, we will focus on how managers play an integral role in compensation and performance management and the best practices to guide managers to have effective compensation conversations with their team members.
Almost 58% organizations do not train managers on pay communications
This startling statistic clearly highlights how despite the apparent importance of compensation management, the focus on ensuring a seamless process is rather limited. However, organizations today can play a leading role in enabling their managers to have better pay communication and conversations by following these tips:
It is quite evident that compensation and performance management are intrinsically interlinked and if leveraged well, compensation has great potential to not only drive performance, but also facilitate engagement, retention and much more.
However, to ensure the same, you need to have a very structured, transparent and fair compensation strategy and policy. Furthermore, you must, don’t forget to invest in training your managers to bridge any gaps and constantly gauge and address employee pulse — to ensure fair compensation for all.
Talent development is critical for growing organizations which see the workforce as their biggest asset. Focus on developing their talent stack not only leads to a pleasant employee experience, it also augments the overall performance and productivity for an organization.
While you may come across many ways to facilitate talent development, leveraging the competency framework can help you move the needle very quickly.
Let's see how.
Before moving directly to how you can implement the competency framework, let’s quickly understand the 5 stages of talent development.
The first stage involves planning for your talent needs based on your organizational priorities and creating the position profile based on the skills, attitudes and other competencies.
Based on the position profile, you need to start attracting talent for the position. You can do so by spreading the word in the right networks, through job portal platforms, etc. The objective is to ensure that you are reaching out to the right network. You can also explore the right candidate for the position internally to considerably save hiring and training costs.
Once you have identified the right person, the next stage of talent development is extending the offer to the person after a thorough background check as well as a competency and expectation match. It also requires creating personalized onboarding plans for the first 30-60-90 days of the candidate’s journey within the organization. Read our guide to employee onboarding to learn more about onboarding do’s and don’ts.
The main focus of talent development starts with providing the right development and learning opportunities to your workforce. This can involve upskilling for both technical and soft skills, leadership building or any development intervention based on the need of the role and position.
Finally, talent development involves undertaking initiatives to retain your talent. While learning opportunities are important, facilitating engagement, wellness, motivation, etc. all contribute to employee retention.
If you are wondering how the competency framework aligns with talent development, you need to start by decoding what the framework actually stands for.
Put simply, a competency framework is a set of behaviors, skills, abilities and attributes that an organization considers imperative for creating a high performance culture.
The competency framework can be implemented at all stages of the talent development or the employee lifecycle within an organization. The idea is to ensure that certain core competencies are kept at the heart of the decision making that in any way impact the workforce.
Competency framework based talent development is very important for employee retention. Talent development practices when undertaken effectively have the potential to encourage team members to stay with the organization for long and at the same time become ambassadors to help attract high quality peers.
Here are the top reasons why competency framework based talent development matters:
Now that we have covered the basics of talent development and competency framework, let’s understand how leveraging the latter to advance the former can create a far reaching impact for organizations.
The first step is to create a competency framework which involves identifying the key competencies which will be instrumental in guiding all decisions around talent development. Depending on the nature of your organization, there can be categories within the competency framework that you seek to focus on. Your competency framework should focus on behaviors, skills and attributes which are critical for performance and overall success. The following steps can help you create a competency framework for talent development:
The responsibility of creating the competency framework is collective. It starts with involving the executive leadership to ensure alignment with the vision, people managers to ensure they are ideal for the culture you are trying to build and functional managers to ensure inclusion of right competencies for each role and position. Furthermore, involving those on the ground can be fruitful as they have the best idea of what competencies are critical and others which are good to have.
Once the competency framework for talent development is ready, the next step is to align it with your recruitment process to ensure precise and effective hiring. There are a few steps along the way:
The onus of implementing the competency framework during selection lies primarily with the HR team and recruiters who assess the candidates with different tests and assessments. Team managers and leaders also play a role in assessing functional competencies and fit.
Irrespective of whether an employee is onboarded before or after you have implemented the competency framework for recruitment, you need to ensure competency based performance management and development opportunities.
From a talent development perspective, the focus of the competency framework should equally be on developing employees for their next or subsequent role based on the specific competencies for the same.
The onus of aligning performance and development with the competency framework lies with team managers as they are best able to determine the performance gaps. Furthermore, employees with their managers can identify competency gaps for better performance and focus on the right learning and development interventions to bridge the same.
Finally, the competency framework must also impact the subsequent rungs of talent development where an employee moves up the ladder from one position to the next. Based on the organizational matrix and competencies for each level, you need to identify key attributes that differentiate one level from another and ensure the same is communicated to your employees.
In a nutshell, it is quite evident that the competency framework can inform and advance every stage of talent development for fast growing organizations. If you implement such a framework across the employee lifecycle, you will significantly reduce your chances of a wrong hire and will be able to nurture a workforce that aligns on the vision, goals and overall organizational culture.
A clear competency based talent development approach can help you achieve high levels of performance which is observable and measurable.
While most people managers are able to create a business case for setting OKRs as well as for the adoption of an OKR software by leveraging industry benchmarks and best practices, there is a need to explicitly decode the return on investment of using an OKR tool as well.
Unless they are able to clearly illustrate how the return achieved using a goal management software is greater than the investment, it becomes difficult to sustain the adoption and get long-term leadership buy-in.
Continue reading to strengthen your business case on the same.
Let’s quickly understand how the OKR framework is integral for an organization, especially high growth companies. Most fast growing organizations have competing priorities they need to focus on with limited resources at hand.
Therefore, simply setting goals by adopting a top-down approach without supporting parameters can lead to confusion and incompetence. OKRs help drive away this ambiguity by linking measurable key results for each objective and facilitating a collaborative approach to achieving goals.
Here are the top three benefits of implementing OKRs in an effective manner:
OKRs enable employees and leadership to have a very clear focus on what needs to be accomplished and what work is out of scope. The idea is to have complete clarity on —
The last part is extremely important as it helps create a sharp focus and set priorities straight.
93% of employees don’t really understand what their organization is trying to accomplish in order to align with their own work.
This illustrates that there is a big absence of clarity and focus amongst employees when it comes to what needs to be accomplished, which stands in the way of creating a high performance culture. Therefore, OKRs can help reduce such uncertainty and ambiguity, making it easy for the workforce to concentrate on what matters.
Taking cue from the first point, the second benefit or purpose of implementing OKRs foris a need for clarity of expectations and overall team and organizational alignment. In case of fast growing organizations, there is an overlapping of roles and responsibilities and a lack of clarity on expectations from each employee. This leads to lower than average outcomes, productivity and revenue growth and data backs the same.
97% of employees and executives believe lack of alignment within a team impacts the outcome of a task or project. Whereas, companies that regularly exceeded revenue goals were 2.3X more likely to report high levels of alignment.
By ensuring organization-wide goal visibility, OKRs help teams to decode what is expected out of each team member and their respective contribution towards achievement of the shared goals. Thus, increasing alignment and collaboration.
Finally, setting and implementing OKRs is often a collaborative process. Employees get involved in and participate during the entire OKR process and feel engaged in the same. This greater involvement and participation leads to deeper levels of engagement and ownership of key results which drive impact.
OKRs also enable employees to also gauge their performance and measure their progress in an effective manner. This motivates them to get more involved in achieving the common weekly, quarterly and annual goals. This higher level of engagement directly impacts key organizational parameters such as retention, productivity, profitability, etc.
The business case for OKRs is very clear. However, for companies that are scaling up, with limited bandwidth and competing priorities, often setting OKRs itself gets left behind due to other business priorities.
If an organization focuses on a manual approach to the OKR system, there are several steps which require a lot of time and effort including setting and writing, implementing, tracking, grading, evaluating and modifying OKRs.
Fortunately, today there are OKR tools in the market, which can help automate all of these aspects to help simplify the OKR journey. The right goal management software can help you maximize the realization of the return on investment for your OKRs. Following are the top five ways in which an OKR software makes a measurable difference on the bottomline —
First, an OKR tool can help organizations document or record the OKRs in a way that is visible and accessible to all. There is supporting evidence to show that what gets documented has a higher chance of being achieved, as what is out of sight is often out of mind.
Individuals are 42% more likely to achieve goals when they are physically recorded.
Therefore, the OKR tool can enable organizations to clearly define the business and team OKRs in a written manner which can be reflected on, seen again and again to create instant recall for employees.
OKR tools are great for creating alignment and accountability. On the alignment front, the OKR software can help achieve high levels of strategic alignment on what is the responsibility of each team member across organizations towards the key business goal achievement.
Highly aligned companies grow revenue 58% faster and are 72% more profitable than their misaligned counterparts.
The dashboard of a good OKR software can help you constantly gauge the level of goal achievement, ensure that team members are aligned on different phases as well as keep a track of when their responsibility is due. It creates high levels of transparency.
Moreover, greater alignment leads to high levels of accountability. Generally, since there is a lack of alignment on responsibilities, there is an accompanying lack of ownership and accountability, and most employees shirk away from taking accountability.
84% of the workforce describes itself as “trying but failing” or “avoiding” accountability, even when employees know what to fix.
A goal management software like SuperBeings allows you to integrate OKRs with regular meetings and check-ins to keep track of progress. Thus, driving a culture of accountability.
It is very common for companies to set OKRs and then evaluate them only at the end of the quarter/year. There is a lack of mid-term tracking which makes it difficult to gauge whether the progress is aligned with the key results or not.
40% of people that write down goals don’t check whether they’ve achieved them. Moreover, only 5.9% of companies communicate goals daily.
An OKR software can help you address this concern by facilitating day-to-day OKR progress tracking. A daily dashboard and history of 1:1 and team check-ins on OKRs, can help organizations track developments over time.
It can also help identify and resolve any performance issues that stand in the way of goal achievement preemptively. At the same time, even if organizations are tracking and monitoring OKR progress, doing so with a manual process is inefficient. An OKR tool can automate most of these processes to enable HR and people managers to spend more time on driving results.
Another major concern that organizations face when it comes to OKRs is being prepared and ready for the same. Many line managers and others struggle with writing effective OKRs. Many organizations believe setting OKRs once is enough. However, that is far from the truth.
Research says, companies that set performance goals quarterly can generate 31% more returns than those reassessing annually.
Using an OKR software can help eliminate all these challenges.
Finally, an OKR software can promote high levels of collaboration for goal achievement. For many organizations, the inability to collaborate leads to low levels of results, diminishing the ROI for OKRs.
86% of employees and executives cite lack of collaboration or ineffective communication for workplace failures.
Using a good OKR software makes collaboration seamless by aligning cross-functional projects and tracking cumulative progress. Invariably, an increase in degree of collaboration is a direct ROI of an OKR tool which can create far reaching impact.
In this final section of the article, we will talk about the key parameters that can help you gauge the ROI of an OKR software. While the above mentioned are primary impact areas, most of them have a qualitative aspect to them.
Gauging the ROI requires backing of data points from employee experience and business results, which the following parameters can help explain.
Organizations should start by gauging whether or not transparency and alignment on goals has increased. This can be measured using employee pulse surveys to understand their opinion on how well they have visibility of goals and clarity on what they need to work towards. Therefore, the first ROI parameter for an OKR software is to identify the increase in level of transparency to ensure everyone is working in the same direction and there are no gaps or overlap in efforts.
The main purpose of an OKR tool is to facilitate the effective and efficient achievement of the goals set by an organization. Thus, the next parameter to measure ROI should revolve around the degree and time period of goal achievement.
You can start by comparing the degree of goal achievement by leveraging OKR grading to see if there is a significant improvement in percentage terms as compared to pre-OKR tool period. Second, it is important to gauge whether or not the goals/key results have been achieved in a shorter period of time or not. Since the OKR platform facilitates better alignment, collaboration, tracking, etc., it can help organizations achieve or realize the goals faster.
Third, there are several administrative overheads that accompany the setting and implementation of goals/OKRs. These include tracking, grading, etc. for managers and providing inputs on the part of employees. The ROI of an OKR software can be gauged by mapping whether or not these overheads come down.
The next parameter for ROI calculation is to measure the change or increase in revenue after the adoption of an OKR software. Since an OKR tool seeks to enable organizations to achieve their goals faster, cost effectively and to a greater extent, there should be an increase in the revenue realized.
According to Larry Page, co-founder, Google claims that “OKRs have helped lead us to 10X growth, many times over.”
Finally, gauging the value of employee parameters like retention/turnover, productivity, engagement, etc, can cumulatively be leveraged to capture the ROI of an OKR tool. There are several ways to gauge these workforce parameters, along with factors like eNPS, etc. which have a direct business impact. Calculating them can help measure the ROI of the OKR tool for an organization.
It is evident that adoption of an intelligent OKR software is not only good to have, but integral for organizational success. Using the right tool has a direct business impact which can be measured in numbers using the ROI parameters mentioned in this article.
There are both qualitative and quantitative aspects to measuring the ROI and a balanced approach to both can empower organizations to align individual performance with business goals.
If you are considering implementing the right OKR software in your business, try out SuperBeings free 21 day trial. Book today. (No credit card or commitment required)