What is the idea behind OKR?

OKR is a methodological framework designed for companies to maximize efficiency of resources through most effective allocation of these resources by increased communication between employees, employees and employers and firm-departments. The framework typically includes quarterly objectives, meaning that the company and its employees find themselves in a three-month cycle. Three steps are taken at the beginning of every cycle:

Step 1:  defining 3-5 personal, team or company goals (objectives).

Step 2: 3-5 measurable results (key results) are specified to each objective, which can be measured in a range from 1-100% achievement.

Step 3:  Creating weekly plans that align with the set key results and objectives.

Why OKR may be an idea worth looking into

In OKR transparency is used to reach more efficiency. The framework proposes a setting, where regularly all employees are informed about their co-workers’ goals and tasks, enabling informed decisions and the alignment of work force to reach mutual goals allowing an increased focus on the latter and therefore more efficiency.

Moreover, it has been shown in psychological research (Berggren, E. and Bernshteyn, R., 2007) that transparency in the workplace leads to happier employees. When employees know the reasons and goals behind their actions and what the employer expects, reasoning their own work will make them more motivated and happier. Employees show more personal involvement and reach more autonomy. The psychologist Abraham Maslow (1908-1970) argues that autonomy is what people strive for on their quest to self-actualization.

Communication is key, not only in one-to-one relationships, but in companies as a whole. OKR enables a very efficient communication, through distinctively giving communication a set place and a high priority in the process. What is more, employers, with a look to the quarterly goals, can now say “no” to tasks that do not help reach their current goal, minimizing ineffective use of work force, leaving employees less stressed.

Since people, who work in a firm together have different personalities (also see: “The Big Five …”) and therefore different strengths they could complement each other in many ways. This is only possible with effective communication, which is key in OKR. Likewise, increased communication leads to more mutual engagement and inspiration of each other, bringing the firm forward.

In OKR the focus is not only on what tasks an employee has completed but rather what the outcome is. Did it help reach the goal? This approach facilitates a structure in the firm, which lays the focus on common goals of the team, department or firm, bringing the company forward.

Last, but not least, OKR works in big and small firms well, but is especially effective in small firms and start-ups, when resources are limited but can be allocated in the most effective way with OKR.

References:

Text written by: Sophia Wende for crispychoaching.com

BLOG ARTICLE: „The Big Five”

Berggren, E. and Bernshteyn, R. (2007), “Organizational transparency drives company performance”, Journal of Management Development, Vol. 26 No. 5, pp. 411-417. https://doi.org/10.1108/02621710710748248

Schmid, D. (2019, January 18). Auf diese Führungsmethode schwört man im Silicon Valley. Retrieved January 10, 2020, from https://www.impulse.de/management/unternehmensfuehrung/okr-methode/7311743.html.

Weekdone. (n.d.). OKR: Objectives and Key Results – Resources, Templates, Tutorial, Software. Retrieved from https://weekdone.com/resources/objectives-key-results.

“Benefits of OKRs.” Objectives and Key Results, https://objectives-key-results.com/benefits-of-okrs/.

Schmitt, M., & Altstötter-Gleich Christine. (2010). Differentielle Psychologie und Persönlichkeitspsychologie. Basel: Beltz PVU