More and more businesses are implementing OKR systems in their business. OKR stands for Objectives and Key Results, which are a set of objectives that you establish at the beginning of a performance cycle.
A lot of people assume that Key Performance Indicators (KPI) and OKRs are the same. While they can be used interchangeably, there are subtle differences between the two. For example, an employee’s personal aspirations are considered an objective with OKRs but this is not the case for KPIs.
An objective-based system that focuses on OKRs provides a way of assessing an employee’s skill level, knowledge, speed of accomplishment, and progress. You can get a free OKR template online, which provides you with an excellent way of tracking this progress.
With that being said, in this guide, we are going to look at objective-based systems in further detail, helping you to understand the chief benefits you will gain by going down this route.
What are ‘objectives’?
Before we can take a look at the different benefits of implementing an objectives-based system, we first need to understand what objectives are. By definition, an objective is a course of action. It is something that is expected to be accomplished.
You can categorize objectives as stretch goals and key objectives. It is the latter that you are expected to meet.
Stretch goals, on the other hand, are accomplishments aside from your chief objectives. An employee’s chances of promotion, areas for improvement, and strengths are evaluated from this.
Because of this, it is vital to make sure that your workers estimate their objectives accurately.
Understanding key results
Every objective will have at least one key result. In many cases, there will be several key results. A key result is an indication that you have met the objective in question. You can partition a key result into numerous phases or results.
The manner in which key results and objectives are established depends on the organizational structure of your business. A flexible OKR policy is often considered the most effective way of evaluating performance. However, you may want to implement a separate and distinct OKR system for each department. It all depends on your business and your objectives.
Management by Objectives (MBO)
You may have heard of MBO before, which refers to management by objectives. This is a strategic type of management model that has the aim of enhancing a business’s performance by clearly defining objectives that both the employees and management agree on.
If you follow this theory, having your voice with regard to setting goals and establishing action plans will encourage commitment and participation for anyone who works for your business. Not only this but you can make sure that objectives are aligned across the entire business.
The term “management by objectives” was first used in The Practice of Management book of 1954, which saw Peter Drucker refer to the term for potentially the first time.
While the basic ideas of Management by Objectives (MBO) were not original to Drucker, they pulled from various management practices to create a complete ‘system.’
Management by objectives, at its core, involves supervisors and employers managing their subordinates through the introduction of a set of specific objectives that both the business and employee will strive to achieve in the near future.
The five steps that you should follow are:
- Review the organizational goals of your business
- Set objectives for the worker
- Monitor the progress
- Provide a reward
Businesses that utilize this approach tend to report better sales rates and productiveness within the business.
Five of the top benefits of using an objective-based system in your company
Now that you have a better understanding of what objective-based systems are, and what objectives are in the world of business, let’s explore the benefits of these solutions in more detail. Why should you consider moving to this approach within your business?
1. Increase resource management and productivity levels
There is only one place to begin, and this is with the fact that you can boost productivity while also enhancing resource management at the same time.
Rather than having to multi-task and spread yourself too thin, an objective-based system will give you a sense of purpose and direction. They provide you with all of the guidelines needed for successful time management.
When your workers invest their time in objectives that fulfill their professional lives, they end up being more productive overall, which is only going to benefit your business.
You will also gain some truly beneficial insights with regards to the strengths and weaknesses of all of your employees. This can be helpful in terms of shuffling employees around, and ensuring that your workers are concentrating on tasks that are right for their skillset. With this approach, you will develop a high-performance-oriented system.
All things considered, you will be surprised by how much of a difference an objective-based system can make in terms of how productive your entire workforce is and the approach that you take when going about your daily business.
2. Employee morale will reach new heights
There are many different factors that come together to dictate employee morale. If the work that your employees are doing is meaningful in their eyes, this creates a positive feel. If good managers and colleagues surround them, collaboration can really soar.
When you have a participative environment like this, it will act as a cohesive unit, with everyone working together. Teamwork makes the dream work, as they say!
With an objective-based system, your employees have a reason to perform to the best of their ability. Everyone will be working together to achieve the ultimate goal.
3. Create a culture of accountability
In addition to all of the benefits that we have discussed so far, another reason why you should consider an objective-based system is because it creates a sense of accountability in the workplace.
Goal orientation helps a manager or employee generate value. When you tick a goal off the list, a business objective is also accomplished. Whenever a personal goal is achieved, the manager or employee ends up being a piece of the larger goal for the company.
This level of goal orientation will create a culture of accountability. This will make all stakeholders mindful of their actions, time, and effort. They will make sure that the conversions they have are productive and meaningful.
It is important to remember that a culture of accountability is not about taking blame or worrying about owning up when something has gone wrong. Instead, it is about accepting that things may change and that you need to work together in order to reach your overall goals.
4. You can set micro-goals with an objective-based system
If you are still not convinced that an objective-based system makes a lot of sense for your business, you also need to consider the fact that you can set micro-goals to progress your business further and ensure exceptional growth.
Scoping is one of the main issues with OKRs. An objective can be part of a much larger one. Such a goal is known as a micro-goal. An employee can establish a number of different micro-goals during a performance cycle.
If these micro-goals are achieved, it will bring them closer to fulfilling the bigger goal.
Therefore, one of the best tools for progression is micro-goal management. Progress is assured with milestone or micro-goal planning. It also enables you to evaluate your goal after some time has passed.
You may find that a goal you once set is simply not relevant anymore. With an objective-based system, you can have the flexibility to stop pursuing it.
5. Make sure your corporate vision is aligned with your employees and how they feel
Last but not least, the OKRs of a worker does not need to be specific to the project they are working on or the team they are in at the moment. Nevertheless, they do need to represent the person’s personal aspirations outside of the business.
There have been a number of different situations whereby OKRs have been set and then misaligned to the business. For instance, competing training in a certain technology is a personal objective that could be an OKR. Nevertheless, you will need to turn it down if the technology belongs to the competition, for example.
Final words on the benefits of using an objective-based system in your company
All in all, it is clear to see that there are many benefits that are associated with implementing an objective-based system in your business. This is a great way of aligning your employees and your overall corporate vision. Plus, it can generate a culture of accountability, which is important for any business.