In measuring work performance, objectives and key results or OKR is a method that is currently widely used.
In general, there are actually various methods that can be used. One that is commonly used by many companies is KPI or key performance indicator.
However, along with the times, other methods have been found that can improve employee performance, as well as develop the company’s business.
This OKR method may be unfamiliar to you. However, this method has actually been used by several startups, especially in the technology sector, and has begun to be adopted by several other startups.
In this article, we will explain what is OKR and how it is implemented.
Quoting from What Matters, OKR is a way that is made for teams and individuals, with challenging and ambitious targets but using a measurable way.
OKR can also see the progress of a person’s performance quite flexibly.
The purpose of using OKR as a performance measurement method by companies is because OKR allows companies to set targets that are quite ambitious, but all of their implementations can be measured.
In OKR, there are two elements, namely the objective, and the key result. The objective is arguably the main target of a competency to be achieved by the company, team, or person.
The objective is something that is ambitious and tends to be qualitative.
Therefore, in achieving it, it is necessary to take measurable and quantitative actions. This is then called the key result.
After the objective of competency has been determined, the leadership and team must be able to determine what key results will be carried out to achieve these objectives.
This makes the key result must be something that can be measured and has a certain time span (time-bound).
In practice, OKR was chosen because it can measure the performance of the company, its leadership, and its staff.
Ideally, the OKR of each team or division is derived from the OKR of the leadership, and the OKR of the leadership is derived from the OKR of the company. Simply put, the objective of each division/team is the key result of its leader.
Early History of OKR
Actually, OKR has quite a long history. However, its application has only begun to be widely used in the last one to two decades.
Initially, the OKR method was developed by Peter Drucker in 1954. At that time, this method was called management by objective.
Then, in 1968, Andy Grove founded a technology company called Intel. At that time, Andy Grove adopted the use of MBO and modified it to OKR as we know it today.
However, at that time the use of OKR was still exclusive to Intel. Until then in 1974, a man named John Doerr joined Intel. There, he learned about the OKR method.
The journey does not stop here, in 1999, John Doerr who at that time worked for a venture capitalist who coincidentally invested in Google.
John Doerr was then responsible as a consultant. This opportunity was used by John Doerr to convey about OKR to the two Google founders, Larry Page and Sergey Brin.
Since then, OKR was used by Google and is widespread now.
In Indonesia itself, the use of OKR is still a new thing. Several startups have pioneered the use of this OKR method.
Gojek is the one who popularized OKR as a performance appraisal method.
Currently, many startups have started using OKR, reflecting on the success of Google to Gojek which can expand to become as big as it is today.
The use of OKR in a company can run effectively when the leadership element has implemented a clear OKR as well. As mentioned earlier, this OKR is passed down from the leadership element to the staff.
Besides being able to develop the company, this can also improve employee performance even better.
From this, the following are examples of OKR that can be applied by companies:
company objective: to become a global scale company
- get sales of 100 billion per year
- get cooperation with 1000 new clients in a year
- opened 7 new branches overseas in a year
- reduce production error by 30%
From the key result points above, it can be reduced to an objective for each division to be achieved with certain key results, such as:
business development division objective: get cooperation with 300 new clients in a year
- contact 100 prospective clients every week
- pitching with as many as 10 prospective clients every week
And so on up to the personal level. Because the objectives given are ambitious, it allows the development of the company to personal to be much better.
Advantages of Using OKR
In addition to the advantages shown above, according to Workfront, there are several other advantages of using OKR by companies, including:
1. Bringing the company together
Because OKR is hereditary and interrelated between divisions, it can unite the company. Communication between divisions is increasingly intertwined and can minimize the ego of each division.
2. Employees can work more clearly and focus
The use of OKR is also beneficial for employee productivity. With OKR, what employees have to do will be clearer, and this can make employees more focused at work.
OKR also shows openness to performance among employees, even the leadership. In this way, fellow employees will be able to more easily collaborate for maximum results.
4. Speed up results
With transparency, it will be easier to monitor performance. With employees who are more focused and performance increases, it can accelerate the company to achieve the desired results.
So, that’s a brief explanation of OKR that is starting to be widely used today.