In an era of constantly changing business, it is a challenge to cope up with increasing customer expectations, adopting new technologies, and growing your organization at an ever-increasing pace. OKR is a key internal alignment framework that aligns people with strategy, and overall company objectives while helping the management to ensure that the efforts of all employees are moving the organization forward.
The key benefits of OKRs are effective employee engagement, transparency, and open communication, monitoring and accelerating performance, and alignment of goals.
“People can’t connect with what they cannot see; networks cannot blossom in silos. By definition, OKRs are open and visible to all parts of an organization, to each level of every department. As a result, companies that stick with them become more coherent.”
–John Doerr, Measure What Matters
Objective and key result (OKR) methodology helps in breaking the larger goal of the company to short objectives which are tied to specific results. Working with OKR enables leaders, management to set review meetings frequently. This not just helps team members clarify doubts but also helps in building a team. This is just an introduction to the benefits of OKR, let’s dive deep into the subject and see how OKRs help companies improve process, performance, and build engagement.
1 Better Results – Hypergrowth & Agility
It is easier to stretch the goals and get desired outcomes using OKRs.
Google is the best example of stretching goals towards hyper-growth, and becoming the number one browser using OKRs.
“OKRs have helped lead us to 10X growth, many times over.”
Larry Page, Co-founder, Google
OKRs assure a scaled agile transformation in each business. It is possible to address the challenges midway reducing the time taken for the feedback process.
2 Increase Employee Engagement
As per a report published in Gallup, only 1/3rd of all employees are engaged in the organization worldwide. When employees are accountable and can set individual objectives and tracking systems, then they become more engaged within the organization.
A bi-directional communication level enables employees to feel more connected with the organization, an increased sense of responsibility. HR’s organize various activities to engage employees regularly, why is that? When employees are engaged, they feel more connected to the company, and their performance increases.
Statistically, companies with higher engagement are 23% more profitable than those that are not or have less engaged employees. 90% of employees adopting an OKR framework feel more in tune with organizational goals. This helps in employee retention as well.
3 Swift Adjustment
They say, ‘change is the only constant’. OKRs help with just that. OKR methodology is designed to set shorter and quantifiable objectives and key results. Setting up short-term goals that lead to bigger targets can lead to frequent reviews. More reviews would help in understanding challenges. These challenges can be solved early on so that the long-term target is still achievable. And in case the problem is grave enough to change the course that can be worked on early in the process.
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4 Align Organization
OKRs help in setting objectives for every level of the organization that aligns with the overall vision and goal of the organization. OKRs can be set for the entire organization and broken down into teams and individuals. At times it gets difficult for teams and departments to function optimally if they are completely aligned to the organization’s goal. This also hinders understanding an individual or team’s role in achieving the organization’s vision.
With OKRs, this can be avoided. Teams and individuals can be assigned separate OKRs that ultimately align to the larger company objective.
5 Promote Innovation- Achieving beyond
Promoters of OKR acknowledge the fact that objectives might not always be achievable. They work with a 70-80% success rate. Why so? The OKR framework allows for setting challenging objectives, in OKR terms, this is called ‘Moonshot Objectives’. Leaders do realize that these might not be always achievable but it motivates the team to think outside the box to achieve such goals.
It has been observed that a goal framework motivates individuals to be innovative. Even with moonshot objectives, employees are too focused on the work needed to achieve the goals that they seldom overlook the chance of failure.
6 Goal Visualization
If you use proper OKR software to track yowould enable goal visualization. If properly implemented, OKR software would allow tracking progress on an OKR. With graphs and easy access to data team members could visualize the outcome. At times visualization helps in thinking outside the box.
Higher efficiency and aligned team members increase the chances of the company growing faster. OKR framework enforces transparency and regular reviews giving the company agility to move around challenges and achieve hyper-growth. When employees are focused on achieving their goals and understand their role in the organization’s growth, there is job satisfaction, which in turn reduces employee churn rate.
The valuable feature of the OKR framework is that they are not always set within the reach of the team. OKRs can be built to test the limit of an individual’s problem-solving ability or a team’s success rate by setting objectives that extend the boundaries. These are just some of the documented benefits of OKR; a proper implementation could provide commendable performance.
Like any effective system, implementation plays a vital role in its success. Similarly, an OKR system must be implemented properly so that some of the most common pitfalls of setting up OKRs could be avoided.
7 Makes Employees Accountable and Committed
OKRs allow employees, team members to set objectives. When team members set OKRs, it ensures that they understand the company’s objective. Secondly, people on the field are better in-sync with the problems faced in execution. So when they set objectives and key results, it leverages their understanding of the task to get better results. A good OKR system would include around 60% of OKRs to be set by team members.
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Even in cases where OKRs are set by the management, a good OKR methodology would allow a better understanding of the objective and key results. When employees are clear about their responsibility and their role in achieving company goals, they are more accountable for their tasks. Plus, with defined results and a shorter period, team members can be held more accountable for jobs assigned to them.
8 Better Transparency
OKR framework is based on transparent objectives. Only when team members are clear about the larger goal, will they be able to build their own or their team’s OKRs. A good OKR is always based on precision and clarity. Objectives and their key results are more data-driven and are specific. Good OKR software would also allow clear communication. That way if a team or member is not clear about OKR then they can easily raise questions and get those answered.
9 Focused Team
OKR methodology is based on breaking down a larger picture into small jigsaw pieces. Completion of each ultimately culminates in the final picture. OKRs can also be divided into periods, that is, they can be divided into weekly, monthly, or quarterly objectives. Shorter and fewer objectives that are well within the sight, helps teams to be more focused in achieving those.
Conclusion
OKR has set a key benchmark in the future of work and the benefits of OKR cannot be summed up in a single article. OKRs are here to stay and it has gone far and beyond leading to tremendous results in focused teams, goal setting, employee engagement, etc. The benefits of OKR have a profound impact on the management style and undoubtedly OKRs make their mark on organizational success.
Frequently Asked Questions
What are the 5 benefits of OKRs?
Five benefits of OKRs are alignment of goals across teams, enhanced transparency, increased employee engagement, focus on ambitious, measurable goals, and improved adaptability, allowing for quick strategy adjustments in response to changes.
Why are OKRs effective?
OKRs are effective because they align individual and team objectives with organizational goals, foster accountability through transparency, and encourage ambitious goal-setting. The framework’s focus on measurable key results allows teams to track progress and pivot as needed.
Why are OKRs better than SMART goals?
OKRs are often better than SMART goals for ambitious, company-wide objectives because they emphasize stretch goals that inspire growth. Unlike SMART goals, which are typically more specific and task-oriented, OKRs provide flexibility and a broader focus on impactful results that drive alignment and innovation.
What are the three important elements of OKRs?
The three key elements of OKRs are: 1) Objective – a clear, inspiring goal, 2) Key Results – measurable outcomes that track progress, and 3) Initiatives – actionable steps taken to achieve key results. These elements provide a framework for structured, results-oriented progress.
