The goal of every company is to generate growth. When companies are successful and grow faster than expected, there is great joy at the beginning. But rapid growth does not only bring benefits. We need to take into account things that have never been wasted on a thought before. How do you approach such a situation? How do you manage the company and its employees successfully in these conditions? Objectives & Key Results – or OKR for short – provides an answer here. You can find out what it is all about in this article.
What does Objectives & Key Results mean?
Aims and results
Each Objective has 2-5 Key Results assigned to it. The target is therefore set and how this can be achieved on the basis of 2-5 measurable criteria. The main cost of generating key results is that it takes time. The objective is usually set quickly. The key results, on the other hand, must be well and meaningfully considered. Here it is not uncommon to repeat this process again and again until one receives satisfactory and realistic key results. It is also important that not only OKRs are set up for the company as a whole, but also for each team and for individual employees.
Methodology of Objectives & Key Results
The methodology of Objectives & Key Results must be adapted to each company individually. As a rule, the targets for the next 2-4 months are set. It is therefore a short-term method that always starts from scratch. Once the cycle is over, the results must be looked at and new targets set accordingly. A target achievement of 70-90% should be targeted. If it is permanent at 100%, it may mean that the objectives are not sufficiently ambitious. OKR is definitely not an employee evaluation method. It serves much more as a management approach to achieving goals. It is transparent and publicly available to every employee.
But why do Google, Twitter and Co. use this method? The answer is simple: OKR is especially suitable for fast-growing companies. Here, a quick overview is often necessary, which can be achieved. The size of the company does not matter. The methodology can be applied anywhere.
Objectives & Key Results (OKR) – the advantages and disadvantages
OKR brings many advantages. For example, the transparency of the model can attract a great deal of support from employees. They can see the objectives and key results openly and thus become familiar with them. It promotes internal communication and is easy to understand. In addition, the method can be implemented without complicated infrastructure. Objectives & Key Results gives companies a real focus for the next two to four months. This allows these companies to focus more on the essentials and thus better manage and use scarce resources. Overall, companies are becoming more agile and can respond more quickly to changes.
However, OKR can become a disadvantage if it is not properly understood or if the readiness for action is not given. If it is used as an‘control tool’of the employees, this can be met with strong opposition. Even if this is not the case, but is understood and felt in this way, it can have negative consequences. OKR is also a change project. If this is not understood and viewed in this way, it is also not an advantage. As explained earlier, one of the first steps in Objectives & Key Results is to set goals. Achieving a target of 70-90% is optimal. However, if too many goals are set or if they are too ambitious, this quickly hits the mood in the company. Consideration and caution should be taken here. A maximum of 4-5 objectives and 4-5 key results per objective should be set for each organizational level. OKR requires a lot of operational readiness and time capacities. Every company and its employees must be aware of this. Especially for the so-called OKR Master. He is appointed by the company and is permanently responsible for the implementation and moderation of the processes. At best, the OKR Master is not from the management team, but rather a more neutral employee.
Here are all the advantages and disadvantages again in the overview:
- Clarity about the most important tasks in the company
- real focus
- Proper use of scarce resources
- Transparency for employees
- Better communication
- easy to understand
- Company becomes more agile
- too many goals = overwhelming
- requires operational readiness and time capacities
- Use as a “control tool” -> Rejection of employees
- OKR must be understood as a change project, otherwise rejection of the employees
In summary, OKR, as long as it is properly applied and understood, offers a very good corporate governance methodology. It is not without reason that it is successfully used by Google. It makes companies more agile and is particularly suitable for fast-growing companies. OKR can react quickly to changes. This is essential for such companies, as trends can vary from week to week.