OKR - Management by Objectives Methodology
Posted: Wed Jan 22, 2025 9:46 am
SMART management by objectives is a common approach to effective administration. But it is not the only one. Another system has been gaining popularity in the last few years – OKR. It is believed that it was invented by Intel Corporation. Then it was picked up by Google, Oracle, LinkID, Twitter.
The essence of this principle is that an individual employee sets several priorities for a given time interval. For each of them, no more than 5 criteria are defined, which allow assessing their achievement and the degree of fulfillment.
An interesting feature of the the advantages of line database approach is the need to set such goals, the achievement of which is difficult and requires the mobilization of skills and strength from the employee. If 70% of the plan is completed, this is a success. If 100% is completed, this does not indicate fantastic efficiency, but the ease of goals, the achievement of which did not bring a qualitative effect.
OKR - Management by Objectives Methodology
For example, the owner of several snack bars wants to expand the network of food outlets by 20%:
KR1: Compile a list of 15 candidates that could be considered as possible partners for opening franchise eateries.
KR2: 10 people from the selected list must undergo training by the end of the third quarter.
KR3: Contracts will be signed with selected candidates no later than October 31, 2022.
KR4: 10 new eateries to open no later than December 30, 2022.
Advantages of this system:
Specifically defined OKRs are an effective way to plan business strategy. No vague tasks with unclear content.
A limited number of goals are set that reflect truly significant areas. Experts have calculated that at least half of top managers of large enterprises find it difficult to clearly formulate five key areas of work. OKR helps to highlight these areas.
Disadvantages of the OKR system:
OKRs are not easy to assign to an ordinary employee. Often, they include everyday tasks, the solution of which is not capable of providing any breakthrough in work.
Often management by objectives is replaced by management by tasks. For example: reduce the time a visitor spends in a queue to three minutes. It would be more correct to say: increase the customer loyalty index to at least 35%.
Management by objectives in management requires skill, and often this approach turns out to be inconvenient for individual employees.
The essence of this principle is that an individual employee sets several priorities for a given time interval. For each of them, no more than 5 criteria are defined, which allow assessing their achievement and the degree of fulfillment.
An interesting feature of the the advantages of line database approach is the need to set such goals, the achievement of which is difficult and requires the mobilization of skills and strength from the employee. If 70% of the plan is completed, this is a success. If 100% is completed, this does not indicate fantastic efficiency, but the ease of goals, the achievement of which did not bring a qualitative effect.
OKR - Management by Objectives Methodology
For example, the owner of several snack bars wants to expand the network of food outlets by 20%:
KR1: Compile a list of 15 candidates that could be considered as possible partners for opening franchise eateries.
KR2: 10 people from the selected list must undergo training by the end of the third quarter.
KR3: Contracts will be signed with selected candidates no later than October 31, 2022.
KR4: 10 new eateries to open no later than December 30, 2022.
Advantages of this system:
Specifically defined OKRs are an effective way to plan business strategy. No vague tasks with unclear content.
A limited number of goals are set that reflect truly significant areas. Experts have calculated that at least half of top managers of large enterprises find it difficult to clearly formulate five key areas of work. OKR helps to highlight these areas.
Disadvantages of the OKR system:
OKRs are not easy to assign to an ordinary employee. Often, they include everyday tasks, the solution of which is not capable of providing any breakthrough in work.
Often management by objectives is replaced by management by tasks. For example: reduce the time a visitor spends in a queue to three minutes. It would be more correct to say: increase the customer loyalty index to at least 35%.
Management by objectives in management requires skill, and often this approach turns out to be inconvenient for individual employees.