The art and science of defining effective OKRs

3 Nov 2022 | Intelligence

How to find the right balance between directive and participative modes?

When using the OKR methodology to deploy strategic objectives, the cycle starts with the President defining the 3 to 5 key objectives of the company:

– Develop our business in Asia
– Reduce accidents on the worksite
– Improve our profitability
– …

Each objective (qualitative) is then complemented by 1 to 3 key results (quantitative).

For example, we want to develop in Asia and in the next 3 months, we want our monthly turnover in this area to increase from 20 to 30 million euros.

The objectives set by the President are then broken down into sub-objectives and delegated to the President’s N – 1. The exercise is repeated at all levels of the company.

When this process is applied, the OKRs of all employees are 100% aligned with the goals set by the President. We will then speak of global objectives.

But in practice, each manager also needs to be able to mobilize resources on objectives that are not global (directly or indirectly linked to the objectives set by the President).

– Rebuilding a burned-out factory

We will then speak of a local objective for the manager.

When the manager defines a local objective and delegates the sub-objectives, the employees concerned contribute to an objective that is neither global nor local (for them). This is called a hybrid lens.

An employee can thus find himself with global (linked to the President’s goals), hybrid and local goals.

An employee’s (overall) goal alignment factor (%) can be easily calculated by dividing the number of “overall” goals by the total number of goals. One can also calculate the overall alignment of a BU or the entire company by averaging this factor for all employees in the area.

This factor (%) is a very revealing indicator of the company’s management style.

A factor greater than 75% will indicate a very strong alignment of all employees with the overall priorities of the company. This is a case of very directive management, which can be indispensable for managing a very rapid and profound transformation of the company.

A factor of less than 25% will indicate a strong decentralization of objectives and a very participative management style which is generally characteristic of companies where operational excellence takes precedence over the achievement of long-term strategic objectives.

From a management point of view, it is interesting to note that this factor can easily be controlled. It is sufficient to set an overall alignment goal at the beginning of the cycle. Example: each employee must have between 3 and 5 objectives and a minimum of 65% of “global” objectives.