December 11, 2020
How are OKRs in Business Better than Traditional Approaches?
The journey of driving employees towards a shared set of objectives is quite palpable in the corporate world. Even if the learning leaders try to steer their teams to work together, most of the people are not aware of how they can take the company forward. Thus, they lack the resources and perform poorly, failing to contribute towards organizational growth and success. Now imagine a workforce that collaborates to create a cumulative environment without any leadership pressure. Imagine your employees focusing on common goals to achieve measurable outcomes. That is the strength of implementing Objectives and Key Results (OKRs). The fact that OKRs in business serve as the perfect goal setting and performance management framework makes them better than any other traditional approach.
In an organization with around 500 employees, bringing everyone on the same page can be a daunting task. With a growing workforce, it becomes even more challenging to keep everyone motivated and engaged while aligning towards the long-term goals. Many organizations adopt the traditional approach where the goal-setting process is confined to the leadership level. This results in a disconnect between managers and their teams, impacting the overall employee productivity and business growth.
Also, employees fail to see the broader picture, which eventually makes a gap between the business strategy and its successful execution. Here comes the significance of the OKR framework that narrows the gap between what an organization wants to achieve and how they will achieve it. With the successful adoption and implementation of OKRs in business, the entire organization aligns with the long-term goals that are associated with the company’s vision. Ultimately, with the utmost focus and the right type of rhythm, everyone holds the accountability to contribute towards the company’s growth and success.
How are OKRs Better than MBOs & KPIs?
Management by Objectives (MBOs) is a traditional method to review employee performance. When managers agree upon a set of objectives for each employee and then assess individual performance based on those goals, you are talking about MBO. Key Performance Indicators (KPIs) are the metrics created to analyze workforce performance and measure the success of an organization’s marketing strategy, sales goals, and more. Unlike MBOs and KPIs, OKRs in business reflect the shared ambitious goals and an effective strategy to improve business outcomes. Here are the key highlights that make OKRs a better approach than MBOs and KPIs:
- MBO objectives are set in silos and kept confidential as they are associated with employee compensation. On the contrary, the OKR framework helps to successfully execute OKRs, bringing transparency between the teams, individuals, as well as leadership. This enables every employee to contribute to the company’s success while improving performance and driving excellence.
- MBO focuses on what organizations want to attain and sets goals on annual basis. At the end of the year, managers assess individual performance and provide appraisals based on the review done. On the other hand, OKRs are created with shorter cadence, so individual progress is reviewed on a quarterly or monthly basis. This enables managers to refresh OKRs if employees are lacking in performance, thus driving the overall business strategy, boosting impact, and increasing ROIs.
- MBOs set objectives that focus on the result that ultimately boost employee motivation. These are related to rewards and incentives based on individual performance during an activity. On the other hand, OKRs do not correlate to rewards but help people learn through experiments and remain ambitious. With OKRs, managers appreciate employees based on their overall approach to achieve their goals.
- KPIs are achievable and reflect the output of a business process or an ongoing project. On the other hand, OKRs are very ambitious and aggressive in a way to motivate employees to stay connected and productive at the workplace. While KPIs help to evaluate employee performance, OKRs help to improve processes and strategy through innovation and excellence. The combination of both can serve as a viable solution.
Today, businesses looking for goal setting methods often find it difficult to choose the best one. While MBOs and KPIs are the popular traditional methods of goal setting, OKRs in business is a powerful framework to strengthen performance impact and strive to succeed. Implementing the OKR framework for the first time is not easy. While it may seem daunting but OKRs play a major role in helping organizations achieve the desired goals and measure the outcomes effectively.
Undoubtedly, OKRs promote clear communication of intended goals that drive measurable outcomes and organizational effectiveness. Crafting and aligning OKRs across the organization localizes the company’s vision to individuals, bringing everyone on the same page to achieve the real and relevant outcomes.
Unlock:OKR is the powerful performance enhancement and goal setting framework that allows businesses to drive performance, employee collaboration, and increase ROIs with Focus, Clarity, Alignment, and Accountability. To leverage the benefits and benefits of the OKR framework, you can join our unique First Class program and help your company grow, execute the right business strategy, adopt the right rhythm, and achieve the results.