The Top 5 OKR Mistakes and How to Avoid Them
Common OKR Mistakes
Introducing OKRs to your organization usually comes with challenges, and it generally takes a few cycles before you nail down the process. Often, however, the same mistakes are made again and again, which can lead to unsuccessful goal-management and demotivation. If you can detect and avoid some of the most common OKR pitfalls, your organization will develop a goal-setting rhythm that will guarantee success. Here are the top five OKR mistakes and how to avoid them:
Mistake #1: Setting unattainable goals
You’ve likely already heard that objectives are, by nature, challenging and high-reaching. After all, there would be no significant growth without first reaching for the stars. That said, the goals you set should be within the realm of achievability. If your objectives are too high, not only could it lead to employee demotivation when they’re not achieved, but it could also cause teams to cut corners and compromise quality. Misinterpreting stretch goals can lead to stress, overwork, and lasting damage.
Solution: Set goals that are challenging but realistic
Shoot for the moon, but make sure you have the resources to get there. When writing your objectives, be sure to include both aspirational and committed OKRs. Aspirational OKRs are your stretch goals which will help push you to achieve the near-impossible. Include one or two of these per quarter. With these stretch-goals, it’s important to remember that achieving 70% of you goal should be considered a huge success. If you misinterpret this method, you can lead to stress and overwork. Your other objectives should be committed, meaning they are fixed and measurable: you have a clear plan, budget, and resources to successfully reach this goal. However, they should still be challenging and pushing your company forward.
Mistake #2: Creating tasks, not goals
Teams new to OKRs tend to write objectives with key results which are, in fact, just tasks. OKRs are not a to-do list, however. They are a guiding framework that give purpose and direction to most of the work being done. A task does not drive impact, and can be meaningless on its own without an objective driving it forward.
Solution: Understand the distinctions between objectives, key results, and tasks
Objectives are the ultimate goal, i.e., what is to be achieved. They provide direction and focus. Meeting the objective should be a yes or no answer–not “80%” met.
Key results are the measurable outcomes that will achieve the objective, and should be measurable and time-bound. Initiatives are the efforts that go behind key results. They are the daily tasks that are focused on achieving the key results. Tasks or initiatives can also be milestones that bring you closer to achieving the key result.
Example of an objective, key result, and task:
Objective: Become top-selling luxury candle brand in Germany.
Key result: Conversion rate from referral traffic increased by 500%.
Task: Establish 2 partnerships with top German lifestyle influencers.
Mistake #3: Using strictly a top-down approach
It’s a common misunderstanding that objectives and key results are meant to be set from the top-down, with employees laddering up to high-level goals. If you don’t involve teams on company strategy, you risk employees becoming disengaged in their work, becoming unmotivated with the loss of autonomy. Moreover, as a leader, you likely aren’t involved in the details of execution–meaning you might not be the expert on which key results and initiatives will be the most impactful.
Solution: Involve the team
Communicate with managers and employees on how OKRs can be effectively implemented for a more aligned and committed organization. When first rolling out OKRs, it’s probably beneficial to start with a top-down approach in the first cycle to give everyone a sense of direction. But once OKRs are established and contributors are familiar with how they work, start writing them from the bottom-up.
Before the start of the quarter, clarify any changes or adjustments to company strategy, then have individuals write their personal OKRs that they think will help work towards that “north star” vision. Then teams come together to create team-level OKRs based on their individual goals, then department heads create OKRs based on team OKRs, and so on. Once bottom-up OKRs have been written, management should meet with the C-suite to develop company OKRs based on these sets, and then the sets work their way down again so any adjustments can be made. This approach is called a “W” shaped OKR process, and has been proven extremely effective.
Mistake #4: Measuring performance against key result progress
It’s not uncommon for companies to tie goal-reaching with bonuses, promotion, and raises. This is problematic for many reasons. For one, it could lead to employees cutting corners, deprioritizing other important work, or using dishonest methods to achieve goals. It could also result in averse risk-taking: Why stretch for the near-impossible, when the much safer option is more likely to lead to personal pay-out? Not only bad for innovation, this method also kills productivity, engagement, and ambition.
Moreover, OKRs are meant to be a guiding framework to help navigate uncertainty and highly complex situations. Key results are hypotheses–we think this is how we will achieve our objective, but in the end, we may not be able to prove that’s how we did it without a doubt. External factors may be at play–the current political climate, inflation, market demand, etc. Cause and effect are at best correlated in OKRs. Achieving the objectives is almost always a combination of planning, execution, and pure luck.
Solution: Measure performance based on planning and execution
Instead of tying performance reviews to how many objectives were achieved, measure the contributor against their planning and execution. Did they make the best plan possible, and receive approval from management for that plan? Did they stick to the plan as best they could? It’s important to encourage an agile mindset in OKR: If the hypothesis isn’t working, did the contributors work quickly to make a new plan, and learn from mistakes? Throughout the cycle, did they make the right decisions? If there were blockers, did they react fast to adjust the plan?
Mistake #5: Keeping OKRs separate from daily business
All too often companies introduce OKRs and hire coaches to help them write them, have one or two designated “OKR Champions” who are the only ones responsible for updating an Excel spreadsheet, and everyone promptly forgets about objectives and key results until the end of the quarter. This results in confusion, a mad rush at the end of the cycle, frustration, and a lack of employee buy-in. OKRs will never be successful unless they are fully transparent and constantly visible to every contributor.
Solution: Use OKR software to keep OKRs top-of-mind
Goals work best if they are part of your team’s routine. Using an OKR tool like Collato that displays goals and initiatives, aligns every team member, and celebrates success will keep your objectives front and center of daily work. Moreover, keeping OKRs visible will increase accountability and productivity. Wakefield Research did a study in 2016 of 1000 adults in the U.S., and 92% said that they would be more motivated to reach their goals if colleagues could see their progress. Collato’s goal tracker lets teams monitor the path towards progress, which helps gain clarity on which key results are working and which might need to be reassessed.
What comes next
Now that you’re equipped with the knowledge of how to avoid the most common OKR pitfalls, you can go forward and start using OKR framework with clarity. It takes time to adapt to new mindsets, so it might take a few trials and errors before you and your team feel fully confident working with OKRs. At Collato, we want to help you bridge the strategy execution gap by aligning your team behind your company’s top priorities. Our OKR software can help you bring transparency, engagement, and alignment to your organization. Learn more about how Collato can help you implement OKRs here.