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Employee Engagement

Driving OKR Alignment to Create Employee Engagement


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OKR target with bullseye arrow
Image Courtesy of Adobe Stock: AdobeStock_1012677617

Now that we’ve crafted our OKRs, it’s time to focus on how teams within your company can work together to accomplish these goals. While OKRs empower teams with a significant amount of autonomy, the key to overall corporate success lies in connection and alignment. As you communicate your corporate OKRs, it’s crucial that everyone in the organization not only understands them but also recognizes their importance and how they contribute to the company’s success. A well-executed alignment process creates a direct line of sight from every individual employee back to the corporate OKRs.

Connecting OKRs from top to bottom within your organization helps illuminate the relationship between what employees do and how those actions lead to overall strategy execution. This connection fosters learning in two directions. First, as business units, departments, and individuals develop their OKRs, they showcase their unique roles in creating value for the company. To do this effectively, they must understand the business’s strategy, which deepens their grasp of the organization’s purpose. Second, as leaders analyze OKR scores across the company, they gain valuable insights into how different parts of the business are contributing to the overall strategy.

How Deep to Connect

Ultimately, your goal should be to extend the use of OKRs throughout the entire company. But how quickly should this be done? Should you rush to connect all levels within the first year, or take a more measured approach over several years?

OKRs have the potential to be a transformative tool for your business, sparking new thinking that leads to previously unimagined levels of success. To realize this potential, the framework must be embraced and utilized at all levels of the company, helping you foster fluency in a new corporate language: strategy execution. The faster you connect, the faster your employees will master this new approach, and the sooner you’ll see results.

We believe in the power of momentum and recommend moving aggressively but thoughtfully when connecting OKRs. Aggressively means connecting quickly and deeply across all levels of the company. Thoughtfully means ensuring you can answer these critical questions affirmatively before proceeding:

  • Do we have executive support for OKRs?
  • Do we have a clearly documented strategy reflected in our top-level corporate OKRs?
  • Are we committed to using OKRs to manage the business, regardless of the initial results?

If you can overcome these hurdles, a rapid rollout may be appropriate.

Preparing Your Groups for Connecting

Young people putting their fists together as symbol of unity and achievement, top view. Group of people fist bump assemble together over workplace. Teamwork concept, copy space in middle
Image Courtesy of Adobe Stock: AdobeStock_909279080

In a previous post, we discussed the importance of a mission statement, which conveys your core purpose as an organization. Every business group that will create connected OKRs should develop a mission statement that clearly outlines why they exist and how they add value to the organization.

Armed with their mission statements, each group must then answer a fundamental question: “How do we support the organization’s mission and strategy?” This question primes groups for the task of connecting by having them enumerate in advance how they are going to support the company’s overall strategic goals.

The Key to Connecting Is Influence

The purpose of the connecting exercise is to allow all groups—even individuals—to show how they influence the overall corporate OKRs. This process begins with the top-level set of OKRs. These are the critical levers of your success, and everyone in the company must deeply understand them before you begin connecting. Let’s assume you’re starting from the corporate level. The first real connection occurs when business units study the corporate OKRs and ask, “Which of these OKRs can we influence the most, and how?”

The goal of a well-executed connection process is to provide a direct line of sight from every individual employee all the way back to the corporate OKRs.

Creating Alignment

Ensuring your people are aligned around a common purpose is the number one job for any successful corporation. Connecting OKRs provides an outstanding opportunity to drive that alignment through every job and function in your firm. There are two types of alignment you’ll be fostering during the alignment process: vertical and horizontal.

Vertical Alignment

This is the type of alignment most people think of when considering connecting goals across an enterprise. Vertical alignment creates OKRs that flow downward, eventually reaching the individual employee level. However, as we’ve previously noted, this does not mean the executive team dictates a number of obligatory goals that are forced upon lower-level groups regardless of fit or necessity. Instead, vertical alignment is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs? What can we do and measure at our level to drive both our success and theirs?”

Here’s an example of driving vertical alignment: The CEO of a mid-sized company declared that customer retention was the top priority. Traditionally, customer retention had been the sole domain of the customer success team, which managed ongoing client interactions and renewals. After the CEO’s announcement, everyone assumed that the customer success team would simply work harder to drive retention while other departments would continue focusing on their current priorities. However, with OKRs in place, the company could create a culture of alignment across all teams.

The product team, for instance, had typically focused on features that would attract new customers or differentiate the company from the competition. With the new focus on customer retention, they began asking, “How does this product improvement drive customer retention?” The marketing team also shifted its outlook, taking time at their user conference to interview customers and gather valuable survey data on retention. Even the sales team adjusted its approach, now taking time to call on their installed base to ask how they could add more value and emphasize long-term relationships.

Each of these teams did something different—something relevant to their specific function—but the common denominator was identifying actions that supported the corporate strategy of increasing customer retention. That’s vertical alignment in action.

Horizontal Alignment

While most companies are familiar with the concept of vertical alignment, horizontal alignment is equally important but often overlooked. In the modern enterprise, much of the work involves disparate teams coming together to solve customer issues or create new value. When one unit can’t depend on another, damaging consequences such as duplication of effort, missed opportunities, and escalating conflicts can occur. OKRs can help fill this gap.

Creating horizontal alignment isn’t complicated. It simply requires having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies. Both teams then create OKRs that reflect these dependencies. The resulting OKRs may be unique to each unit, or in some cases, they may decide to use “shared OKRs.” Shared OKRs are particularly useful when multiple teams work closely together to achieve a result, ensuring that everyone is aligned and contributing to the overarching goal.

Dividing line down road painted as an arrow in Autumn scene.
Image Courtesy of Adobe Stock: AdobeStock_894649161

Confirming Alignment of Connected OKRs

Creating a set of corporate OKRs that improves focus on what really matters is one thing. However, the value of an OKR implementation increases exponentially when you connect, allowing all participants to announce their contribution to the bigger picture. Connecting may be the most essential part of your OKR process, so it’s critical to ensure it’s done well. Once you begin rolling out the program and having lower-level groups develop their OKRs, you can’t assume that those OKRs are aligned. You must check each set to ensure they draw a clear line of sight back to your strategic goals.

Next up… Managing Effectively with OKRs.

Bill Gelbaugh

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

Crafting Great OKRs Part One


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Part 3 of our Unlocking Outhouse’s Potential with OKRs series

In our journey so far, we’ve explored why OKRs are valuable and how to prepare your organization for this powerful framework. Now, it’s time to roll up our sleeves and dive into the art of crafting OKRs that truly drive results. In this post, we’ll focus on what makes for an effective Objective and Key Result, ensuring they align with your company’s broader goals.

Characteristics of Effective Objectives

An Objective is a concise statement that outlines a broad, qualitative goal designed to propel your organization forward. For those new to OKRs, the challenge often lies in understanding what makes a good Objective. Let’s break it down:

Inspirational

A well-crafted Objective is more than just a collection of words describing a business goal. It should compel your team to strive for a higher standard of performance. The power of an Objective lies in its ability to challenge your team to think differently. For example, instead of aiming for a modest 10% improvement, an Objective that pushes for a 50% increase will force your team to solve tough problems and rethink their approach. That’s the essence of what OKRs are meant to achieve.

Qualitative

Objectives should represent what you hope to accomplish, expressed in words rather than numbers. While numbers are crucial, they belong in your Key Results. The Objective is about setting the direction and the ambition, not the metrics.

Attainable

Striking the right balance between inspiration and reality is crucial when crafting Objectives. While it’s important to push the limits of what your team believes is possible, you also need to be realistic. Encouraging your team to stretch their imaginations is key but remember that every Objective should still be within reach with the right effort.

Doable in a Quarter

Assuming you’re setting Objectives on a quarterly basis, they need to be achievable within that three-month period. If your team suspects that an Objective will take a year to accomplish, then it’s probably closer to a strategy or vision than a quarterly goal.

Controllable by the Team

Whoever drafts the Objective, whether it’s at the corporate, department, team, or individual level, must be able to control the outcome. If your Objective isn’t met by the end of the quarter, and your first thought is to blame external factors like “Sales didn’t deliver,” then you’re missing the spirit of OKRs. The Objective should be something your team can directly influence.

Provide Business Value

Your Objectives should be directly tied to your strategy and should create tangible value for the business if achieved. If there’s no clear business benefit at the end of the day, then it’s probably not worth the effort.

Tips for Creating Great Objectives

Avoid the Status Quo

When setting Objectives, aim to push the boundaries of what your team can achieve. Avoid Objectives that simply recite what you’re already doing, like “Maintain market share” or “Keep training employees.” If you can accomplish an Objective without changing how you work, it’s unlikely to drive significant progress.

Use Clarifying Questions

Sometimes, the best way to get to the heart of an Objective is by asking simple, clarifying questions. For example, if someone suggests that you should “Create value for our customers,” dig deeper. What do they mean by “value”? Are they referring to a specific segment of customers, or all customers? Escalating from abstractions to specifics will help you identify the true Objective that needs focus.

Frame Objectives in Positive Language

Your Objectives should be framed in a way that motivates and compels your team to take action. For instance, instead of saying “Reduce the amount of junk food I eat,” you might frame the Objective as “Eat more calories from healthy food.” The latter encourages proactive behavior and has a higher likelihood of success.

Start with a Verb

Every Objective should start with a strong action verb that drives the intended direction. Do you want to “maximize loyalty,” “build loyalty,” or “leverage loyalty”? The choice of verb shapes the actions that follow, so it’s essential to be deliberate in your wording.

Identify What’s Holding You Back

A powerful way to create meaningful Objectives is to identify the barriers that are preventing your team from executing your strategy effectively. What challenges are holding you back? Taking an unvarnished look at these obstacles can help you set Objectives that address critical issues and drive progress.

Use Plain Language

While it’s important to be precise, your Objectives should be written in plain language that everyone in the organization can understand. Avoid jargon and acronyms whenever possible, or if you must use them, ensure that everyone knows what they mean. Clear communication is key to ensuring everyone is aligned and understands the importance of the Objective.

Characteristics of Effective
Key Results

If Objectives set the direction, Key Results are the benchmarks that measure your progress along the way. They answer the question, “How will we know if we’ve met our Objective?” While it might seem straightforward, creating effective Key Results that accurately gauge progress can be challenging. Here’s what to keep in mind:

Challenging

Research has shown that setting high goals leads to better performance and greater satisfaction at work. When drafting Key Results, aim high. Challenge your team to push their limits and think differently. However, ensure that the goals are still within reach, so your team stays motivated to achieve them.

Measurable

Key Results should always be qualitative and measurable. Whether it’s a raw number, a dollar amount, or a percentage, your Key Results need to be tied to clear metrics. Progress should never be a matter of opinion—numbers provide the clarity needed to gauge success.

Specific

When writing Key Results, clarity is crucial. Ensure that everyone involved understands exactly what the Key Result means and what success looks like. This shared understanding prevents miscommunication and ensures that everyone is working towards the same goal.

Owned

Those responsible for delivering Key Results should be actively involved in their creation. When team members help shape the Key Results, they’re more likely to be committed to achieving them. Ownership drives accountability and engagement.

Progress-Based

According to Harvard Professor Teresa Amabile, the most important factor in boosting motivation and creativity is making progress in meaningful work. Your Key Results should reflect this principle, allowing your team to see and celebrate progress as they work towards the Objective.

Vertically and Horizontally Aligned

Your Key Results should align both vertically with your team’s broader goals and horizontally with the objectives of other teams. Regularly reviewing and sharing Key Results ensures alignment across the organization, fostering collaboration and coherence.

Drive the Right Behavior

The saying “You get what you measure” holds true. Once you focus on a specific metric, you’re naturally drawn to improving it. Think carefully about the behaviors each Key Result might encourage and ensure they align with your broader objectives.

Tips for Creating Key Results

Focus on the Key, Not All Results

This exercise isn’t about listing every possible outcome—it’s about identifying the most critical results that will drive progress on your Objective. Focus on what truly matters and avoid the temptation to track every potential action.

Describe Results, Not Tasks

Key Results should focus on outcomes, not activities. For example, “Add twenty-five qualified opportunities to the pipeline” is a Key Result, while “Email a prospect” is a task. The former measures progress, while the latter is just one step along the way. Focus on the results that signify true progress.

Use Positive Language

Just as with Objectives, framing your Key Results positively can have a powerful impact. For example, instead of “Lower error rate to 10%,” try “Increase accuracy to 90%.” The positive framing can boost motivation and commitment.

Keep Them Simple and Clear

While Key Results should be robust, they should also be easy to understand. Complexity can lead to confusion and misalignment, so keep your Key Results straightforward.

Assign an Owner

Key Results need a clear owner—someone who is accountable for their achievement. Without an owner, responsibility can become diffused, leading to inaction. Make sure someone is clearly responsible for driving each Key Result to completion.

By following these principles and tips, you’ll be well on your way to crafting OKRs that not only inspire your team but also drive meaningful progress. Remember, the power of OKRs lies in their ability to align your organization’s efforts, ensuring that everyone is working towards the same ambitious goals.

Next up… Crafting Great OKRs – Part 2.

Bill Gelbaugh

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.

Driving OKR Alignment


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CREATING EMPLOYEE ENGAGEMENT

A five-part series: 1. Introducing OKRs, 2. Preparing for the OKR Journey, 3. Crafting Great OKRs, 4. Driving OKR Alignment, and 5. Managing Effectively with OKRs.

Summarized by Bill Gelbaugh from: Objectives and Key Results by Paul R. Niven and Ben Lamorte, With additional material from Measure What Matters, Lattice OKR 101 and Perdoo.

Having crafted our Objectives & Key Results (OKRs), it is now time for a coordinated approach by teams within your company to accomplish the desired goals.  Although a significant amount of autonomy should be given to teams as they develop their OKRs, the key to overall corporate success is connection and alignment.  As you communicate your corporate OKRs, it is imperative that everyone in the organization understands them, what they precisely mean, why they were chosen, and how they are vital to the company’s success.  A well-executed connection process provides a direct line of sight from every individual employee all the way back to the corporate OKRs.

Illuminating the relationship between what employees do and how those actions lead to overall strategy execution is best accomplished by connecting OKRs from top to bottom in your organization. By connecting, we mean creating sets of OKRs throughout the company that align with your highest-level OKRs (which could be corporate or business unit, depending on where you’re starting) and signals the unique contribution offered by teams and individuals throughout the organization.

When you connect OKRs, you generate learning opportunities in two directions. First, as business units, departments, and individuals develop their OKRs, it provides them the opportunity to showcase their unique role in creating overall value for the company. To do this effectively, they must understand the business’s strategy in order to develop OKRs that align with it. So, as they create OKRs, they learn more about and deepen their understanding of the organization’s purpose and strategy. Simultaneously, as OKR scores are analyzed across the company, leaders benefit from the ability to examine results spanning the entire company.

How Deep to Connect

Ultimately your goal should be to spread the use of OKRs throughout the entire company. The question is one of timing. Do you rush to connect from top to bottom, perhaps in the first year? Alternatively, do you employ a more measured approach, staggering the implementation over a period of years?

OKRs can be a transformative device for your business, sparking new thinking that leads to previously uncontemplated levels of success. To fulfill that potential, the framework must be embraced and used at all levels of the company, allowing you to foster fluency in a new corporate language; that of strategy execution. Obviously, the faster you connect, the faster your employees master this new taxonomy, the sooner results will improve.

We firmly believe in momentum and suggest you move aggressively but thoughtfully in connecting OKRs. That sounds like a contradiction, so we’ll unpack the key terms. Aggressive is self-explanatory, meaning you connect quickly and deeply to all levels of the company. However, we temper that with the word thoughtfully, which in this context implies you have contemplated and can answer to the affirmative, these questions:

  • Do we have executive support for OKRs?
  • Do we have a clearly documented strategy that is reflected in our top-level corporate OKRs?
  • Are we committed to using OKRs, regardless of the initial results, to manage the business?

If you can successfully overcome these hurdles, then rapid rollout may be appropriate.

Preparing your Groups for Connecting

Previously we discussed the importance of a mission statement, which conveys your core purpose as an organization. All business groups that are going to create connected OKRs should create a mission that clearly outlines why they exist and how they add value to the organization.

Armed with their mission statements, each connecting group must then answer this fundamental question: “How do we support the organization’s mission and strategy?” In broad brush strokes, how does this group contribute to the company’s success? As we’ll learn shortly, the concept of influence is the key to connecting, and this question primes groups for the task by having them enumerate, in advance, how they are going to support the company’s overall strategic goals.

As you communicate your corporate OKRs, it’s imperative that everyone in the organization understands them, what they precisely mean, why they were chosen, and why they are vital to the company’s success.

The Key to Connecting is Influence

Allowing all groups, even individuals, to show how they influence overall corporate OKRs is the purpose and goal of the connecting exercise. It all begins with the top-level set of OKRs. These are the critical levers of your success, and everyone in the company must possess a deep understanding of them before you begin connecting. We’ll assume you’re starting from the corporate level. If that’s the case, the first actual connection occurs as business units study the corporate OKRs and ask, “Which of these OKRs can we influence the most, and how?”

The goal: a well-executed connection process provides a direct line of sight from every individual employee all the way back to the corporate OKRs. 

Creating Alignment

Ensuring your people are aligned around a common purpose is job number one for any successful corporation. As demonstrated, connecting OKRs provides an outstanding opportunity to drive that alignment through every job and function of your firm. In this upcoming section, we’d like to share the two types of alignment you’ll be fostering during the alignment process: vertical and horizontal.

Vertical Alignment

This is the type of alignment most people think of when considering connecting goals through an enterprise. As the word implies, vertical connecting creates OKRs that flow downward, eventually reaching the individual employee level. However, as we’ve previously noted, it does not mean the executive team dictates a number of obligatory goals that are essentially forced upon lower-level groups regardless of fit or necessity. Instead, vertical connecting is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs? What can we do, and measure, at our level to drive both our and their success?” Again, the process is one of loose coupling. With vertical alignment, we’re attempting to create a direct line of sight from what your group does every day to the group to whom you report and ultimately to the company’s overall aspirations.

Vertical connecting is facilitated when teams, departments, or individuals look to the OKRs of the group to whom they report and ask: “How can we influence those OKRs?

Here’s an example of driving vertical alignment: The CEO of a mid-sized company declared that customer retention was their top priority. Traditionally, customer retention had been the sole domain of the customer success team; it managed ongoing client interactions and renewals. Soon after the CEO’s announcement, everyone assumed that the customer success team would work harder to drive customer retention, and other departments would continue to focus on their current priorities. However, with OKRs in place, they could create a culture of alignment across the company.

The product team had traditionally focused on what they felt new customers would want or differentiate them from the competition. However, with the advent of OKRs, the product team now asks the question before approving a new feature request: “How does this product improvement drive customer retention?” The marketing team also shifted its outlook because of the OKR implementation. They took the time at their user conference to interview customers and gather valuable survey data. Finally, even the sales team changed their paradigm thanks to OKRs. They are now taking time to call on their installed base and ask questions around how they can add more value. They do this to build the relationship and emphasize the importance of working together over the long haul. Again, the goal is to help promote and drive customer retention. Each of the teams profiled above is doing something different, something pertinent to the specific function. Still, the common denominator is identifying actions that help them drive the corporate strategy of increasing customer retention. That’s vertical alignment in action.

Horizontal Alignment

We mentioned in the previous section that when it comes to connecting goals, most people are familiar with the concept of vertical alignment or cascading down. This familiarity results from the fact that vertical cascading is widely employed in most organizations, and effectively at that. The deeply entrenched notion that execution hinges on alignment has been accepted for decades (at least as far back as Drucker’s work in the 1950s). Thus, it has been rigorously studied, with best practices shared and widely used throughout the business population. Why is it then, if organizations are aware of the value inherent in alignment and have been utilizing vertical cascading for generations, our strategy execution rates remain so stubbornly low?

Horizontal Alignment entails having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies and ensure both teams then create OKRs that reflect them.

It turns out that there is a second form of alignment, one that most companies have largely ignored, that may prove even more critical in the quest to execute strategy: horizontal alignment. As shared earlier in the text, much of the work in the modern enterprise involves disparate teams (silos) coming together to solve customer issues or create new value (separately and individually). When one unit can’t depend on another, many damaging events tend to ensue: duplication of effort, missed opportunities, and escalating conflicts that damage the company’s culture. Once again, we believe OKRs can fill this void.

The good news is that creating horizontal alignment is not a complicated endeavor whatsoever. It simply entails having the discipline to hold detailed conversations with other units throughout the company to discover mutual dependencies and ensure both teams then create OKRs that reflect them. The resulting OKRs may be unique for each unit, or they may sometimes decide to use “shared OKRs.” These come into play when multiple teams work very closely to achieve a result, and thus it makes sense to share the same OKR. Shared OKRs help avoid situations in which one team may be celebrating because they completed their component of the project, but another is working frantically on their piece (which relies on the first team), and as a result of this lack of cooperation, the company fails to reach its overarching goal.

Confirming the Alignment of Connected OKRs

Creating a set of corporate OKRs that can improve focus on what really matters is one thing. However, the value of an OKR implementation can increase exponentially when you connect, thereby allowing all participants to announce their contribution to the bigger picture. Connecting may be the most essential part of your OKR process; therefore, it is critical to ensure it is done well and serves its purpose. For that reason, once you begin rolling out the program and having lower-level groups develop their OKRs, you can’t take it as an article of faith that those OKRs are, in fact, aligned. You’ve got to check each and every set of OKRs to ensure they are drawing a line of sight back to your strategic goals.

Bill Gelbaugh is one of our Senior Partners here at Outhouse and champions our OKR efforts.