The CHRO and the OKR Framework
Organizations are adopting the OKR Framework at record pace – especially the CHROs. OKR stands for Objective and Key Results and is a goal-setting and execution tool taking the world by storm. OKR Framework initiatives are usually spearheaded by one of three people in the organization:
- The CEO – they view the OKR Framework as a strategic execution playbook that they can use to short-cut the time from strategy to results
- The CIO – they need to execute change in the organization brought about by IT modernization and digitalisation
- The CHRO – the OKR Framework is a tool that directly links people performance with organization performance.
Why should HR spearhead OKR Framework implementation?
The reasons that HR are interested in the OKR Framework is because it:
- Brings Purpose to Work
- Connects WHAT people do to WHY they do it
- Helps employees find more personal meaning in their day-to-day work
- Helps organizations move faster from strategy to results
- When work is aligned with both employee purpose and organizational goals, that sense of fulfilment ultimately benefits the organization as a whole.
For the longest time HR have realised that the “traditional” performance management practices don’t impact organizational performance. They work at the individual level, but that does not roll up to organizational performance.
The OKR Framework is a tool that directly connects individual performance with organizational performance. So, CHROs are looking to implement the framework specifically when:
- It’s an organization-wide initiative and HR has the most experience and success adopting such large change initiatives.
- It’s desirable to link employee performance directly with organizational performance
- A powerful employee engagement tool can be coupled with other HR programs.
The OKR Framework Superpowers
The OKR Framework is well-known for it’s “super powers” when implemented correctly. These “superpowers” relate directly to employee performance.
- Focus – Focusing on the WHY of a job, and what really matters, gives employees the ability to openly explore the best way to solve a problem.
- Alignment – The trick comes from combining top-down and bottom-up communication about goals: top-down conveys the importance of each individual’s work, while bottom-up generates motivation and enables a variety of innovations.
- Engagement – There are countless studies that create a direct link between employee engagement and purpose – Daniel Pink, Deloitte, McKinsey, et al. The OKR Framework drives engagement by helping people understand the WHY behind their work, and not just the what.
- Goal tracking and accountability – the OKR Framework is data-driven at its core. This means it encourage regular, periodic checkin’s, continuous adjustment of actions, and enables accountability that does not involve blame, which supports a collegial culture throughout the organization.
- Stretch – OKRs are set to motivate employees to go above and beyond, to achieve amazing things. With the freedom to experience failure without penalty, they expand the ability of employees to experience their most creative and ambitious sides.
The OKR Framework is a universal playbook for measuring the performance of employees based on their impact on the organization, not the amount of work they were able to accomplish in a day. It translates to employees working smarter, instead of harder. Also, OKRs by their nature are much more transparent than a typical results framework because every key result is required to be measurable (instead of opaque), measured, and tracked on a regular basis.
Why do we need OKRs AND KPIs?
Most organizations are familiar with KPIs, or Key Performance Indicators. KPIs can be great for measurement, but they’re standalone metrics — they may tell you when a measure is good or bad, but they don’t necessarily communicate context or what direction your team needs to go in.
Called “KPIs with soul”, OKRs provide that much needed direction and context. The Objective describes what you want to accomplish and the Key Results describe how you know you’re making progress.
The differences between KPIs and OKRs are, generally:
- KPIs are about management, OKRs are about strategy
- KPIs are almost always Lag indicators, whereas OKRs use both Lean and Lag indicators
- KPIs tell you how far you’ve come, OKRs tell you where you still need to go
- KPIs are “standalone” metrics, OKRs are directly linked to important moves the organization needs to make
- KPIs are measurements that may or may not exist within a framework, the OKR Framework IS a strategic framework.
- You can have as many KPIs as necessary, OKRs focus only on what matters – what “moves the needle”
In short, KPIs are like looking in the rear-view mirror. OKRs are like looking through the windscreen. And like that analogy – both are needed. By adopting both tools, CHROs can ensure that their organization is moving in the right direction while also fostering employee engagement, purpose, and fulfilment.
If you’re looking at ways of directly linking individual performance with organization performance, I’d very much like to talk to you. PLease go to my diary and set up a time for us to talk.
If you would like to understand more about the OKR Framework, visit our overview of the OKR Framework page.
I’m looking forward to our time together.
Agile OD Facilitaor / Coach / Consultant
Working with leaders to set and achieve their most audacious goals, turn mission into action, and create an ongoing discipline resulting in execution and results. | Experienced in Business, Technology, and People