Jen Grant

Business, 3-Series Blog Post 3,000 Words ARTICLE 1: LINKS & CLIENT NOTES EXTERNAL LINKS: • “What Are MBOs?”: https://www.investopedia.com/terms/m/management-by-objectives.asp INTERNAL LINKS: • • • • • • “What Are OKRs?”: https://objectives-key-results.com/ “Goal-Setting”: https://objectives-key-results.com/what-is-goal-setting/ “Aligning and Linking”: https://objectives-key-results.com/aligning-and-linking-okrs/ SMART Goals: https://blog.weekdone.com/setting-smart-goals-to-achieve-success-infographic/ Home Page: https://weekdone.com/ Case Studies: https://weekdone.com/case-studies IMAGE LINKS: • Chess Board Pieces: https://unsplash.com/photos/_pc8aMbI9UQ OKRs vs. MBOs: Key Differences Every Manager Should Know J. Grant Page 1 of 12 Business, 3-Series Blog Post 3,000 Words Performance management is a discipline in and of itself. Many companies see value in measuring time, results, and big-picture progress over the short- and long-run horizons. The majority of these organizations use a management philosophy known as management by objectives, or MBOs. MBOs are the prevalent choice between academics and business managers alike. However, there are new approaches on the horizon. The rising star among the pack are OKRs, or Objectives and Key Results. There are several compelling reasons for this change in preference. Since giving rise to OKRs, let’s begin by understanding what MBOs are first: What are MBOs? MBOs aim to improve company performance by defining goals to which both management and employees agree. The theory encourages goal-setting and participation. Plus, it creates a level of commitment on behalf of the employees which theoretically motivates them more. What Are OKRs? OKRs evolved from MBOs and took its best practices with it. Both frameworks focus on goal-setting. However, OKRs offer further clarity by outlining how the company defines success. It also determines which steps are necessary to achieve its goals. The primary purpose of OKRs is to cascade goals from the top down through a company. Every individual, team, and project aligns with the business’ strategic objectives. Primary Differences Between OKRs and MBOs The first part of this article focused on defining what OKRs and MBOs are. Now, let’s shift our attention and see what their key differences are: Frequency of Milestone Reviews Companies that deploy MBO-style performance management review its performance at an annual cadence. Objectives are set at the beginning of the year and then evaluated at the end. Goals tend to be broad and strategic versus focused and tactical. OKRs operate under the premise that goals need reviewing more frequently. Instead, they are sent monthly or quarterly and analyzed as such. It allows an organization to change course and make decisions based on current information rather than wait an entire year to address it. Measurement and Scoring MBO measurements and scores are flexible and can adapt to the company’s needs. They tend to use quantitative and qualitative measures. J. Grant Page 2 of 12 Business, 3-Series Blog Post 3,000 Words OKRs are always quantitative. The idea is that if you can quantify your performance indicators then you can accurately see the results your resources produced. Managerial Relationship Managers tend to discuss MBO feedback privately between him or her and the employee. Goals are personal since the manager does not share it with the team OKRs set goals that align with team objectives. Confidentiality is not always an option since team members may need to be aware of what the others are trying to achieve. OKRs are more team-focused. Compensation MBOs set the stage for determining an employee’s level of compensation based on the annual performance review model. They always focus on individual performance compared to the goals set for the employee at the start of the year. Compensation does not change based on an individual’s OKR review. Instead of personal gain, OKRs seek to achieve excellence. In theory, it helps people understand and appreciate why they are doing what they do while keeping everyone on the same page. However, compensation does not fall on deaf ears. The quantification of OKRs allows managers to measure how much they are contributing to the company by percentage. Why OKRs Are Becoming Preferential MBOs are great and work for a lot of organizations. Plus, they have been around since the dawn of performance management. However, the rise of OKRs makes it exciting for business teams since they align their objectives with modern needs. Here are a few additional reasons as to why OKRs are on the rise: Results Measure Accomplishments OKRs rely on SMART goals to fuel their measurement efforts. As a refresher, SMART goals stand for: • • • • • S – Specific M – Measurable A – Achievable R – Results-Driven T – Time-Sensitive Since managers can measure the goals, they can quantify their employees’ reviews which makes it an excellent approach for OKRs. It gives measures a close-up look at how their people are performing. J. Grant Page 3 of 12 Business, 3-Series Blog Post 3,000 Words Cross-Department Communications OKRs seek to coordinate efforts across departments and business units. For example, sales can cross-align with marketing in achieving the goal to generate more sales. It makes a ton of sense from an operational standpoint to function in this manner. Self-Directed Objectives OKRs encourage employees to set self-directed goals that promote a pattern of high-performance. The objectives chosen by the employee are generally aspirational, so it is not an expectation to perform at maximum capacity 100 percent of the time. Final Thoughts and Considerations on OKRs vs. MBOs So, in summation, these are the most significant similarities differences between OKRs and MBOs include: • • • • OKRs review performance more frequently while MBOs operate on an annual scale OKR scoring focuses on performance and teamwork instead of compensation and individual performance OKRs focus on companywide goals while MBOs serve individual performance MBOs set goals based on strategy while OKRs align with specific steps As you can imagine, OKRs can become more complicated than MBOs quickly. Due to their heavily involved nature, managers are leveraging the options available on today’s market with connectivity and software solutions that aim to assist in defining, tracking, and measuring the performance across an entire organization. These solutions save companies both time and money by tracking employee progress closely while remaining at a non-interfering distance. The right application can even alert him or her to kinks in the performance to correct them before getting too far off track. This function allows everyone to accomplish their goals and perform like a rock star. Consider Weekdone to Accomplish Your Goals Weekdone is an OKR-based application that focuses on helping you achieve your goals, coordinate your teams, and simplify the weekly planning process. We take it to the next level by offering easy-to-track activity options that allow your team to connect with each other across your entire organization. Want to learn more about meeting your objectives? Check out our case studies to find out why OKRs work and how Weekdone can help you manage them. J. Grant Page 4 of 12 Business, 3-Series Blog Post 3,000 Words ARTICLE 2: LINKS & CLIENT NOTES INTERNAL LINKS: • • • OKRs: https://objectives-key-results.com/ Weekdone: https://weekdone.com/ Case Studies: https://weekdone.com/case-studies EXTERNAL LINKS: • • • The Balanced Scorecard: https://www.balancedscorecard.org/BSC-Basics/About-the-balancedscorecard “Goal-Setting”: https://objectives-key-results.com/what-is-goal-setting/ “Aligning and Linking”: https://objectives-key-results.com/aligning-and-linking-okrs/ IMAGE LINKS: • Group Fist Bump: https://pixabay.com/photos/paper-business-finance-document-/ OKRs vs. Balanced Scorecard: Which Is Better for Your Organization? J. Grant Page 5 of 12 Business, 3-Series Blog Post 3,000 Words Today’s business environment demands a company’s attention to efficiency and efficacy. While this makes sense, it creates challenges for businesses that they have yet to experience. However, performance management methodologies give rise to change in uncertain times and help business managers forge ahead. The good news is that there are multiple options available from which companies can select. Carefully evaluating your needs is a great way to kick off the process in deciding which performance management system you may deploy. The diverse management tools available support the efforts of teams from the top down in any organization. In this article, we examine two models that assist in this capacity: OKRs and the Balanced Scorecard. Let’s begin why learning more about the Balanced Scorecard first: What Is the Balanced Scorecard? The Balanced Scorecard (BSC) links projects and processes together in a way that measures performance from four different perspectives. It combines elements of strategy such as milestones and project completion as opposed to OKRs which focus on operational efforts. The BSC offers leeway and flexibility to teams that use it. It encourages accountability and assigns teamwork evenly. With the Balanced Scorecard managers can: • • • unify projects with objectives evaluate KPS ina qualitative format adjust the plan as needed Companies that use the BSC appreciate its overall approach to strategy. The most significant disadvantage of the BSC is the buy-in must occur across the entire organization, or its efficacy diminishes and never takes off companywide. What Are Objectives and Key Results? The Objectives and Key Results (OKRs) framework seeks to establish a few goals, typically between three and five and then assigns the same number of objectives to measure and analyze performance. Every task and goal requires teams to quantify their results. The goals you choose to prioritize are up to you. OKRs are hierarchical. Employees set the first level of goals and progress upward through the ranks. The idea is that when employees achieve their goals then managers achieve theirs from bottom up. In practice, OKRs measure performance by percentage with the maximum level of performance being 100. So, for example, if you have to ship 80 orders in a month, but you could only send 60, then your return is 75 percent. Consistent performance rewards tie in with increased compensation, benefits, and bonuses for workers who consistently produce high-quality work. What Are the Main Differences Between the BSC and OKRs? J. Grant Page 6 of 12 Business, 3-Series Blog Post 3,000 Words As you can see, both frameworks have several similarities. However, there are characteristic differences between the two styles. Here are a few ways in which the BSC and OKR differ. Results Clarification The BSC is a little better at conveying results. Some managers find the results to be more accurate among BSC-operated projects. When it’s easier to read objectives, it may be more conducive to managing projects. Plus, it allows you to take insight and put it into action after recognizing the opportunities available. Measurement Cadence OKR performance reviews occur more frequently. BSC functions on an annual review basis. OKRs work weekly, monthly, and quarterly, in addition to annually. Due to our rapidly changing environment, OKRs make sense for today’s needs. Doing so give organizations the chance to correct its course before going too far ahead in the opposite direction. Implementation Reach OKRs, by nature, implement tactics in both breadth and depth across an entire organization. OKRs give teams more flexibility in designing their objectives. This allowance provides them with stability in terms of engagement and participation. BSC focuses on top-down leadership styles which are bit counter-intuitive for younger companies and some industries. Compensation OKRs do not link themselves to compensation amounts directly. They focus on performance and excellence instead. While companies that use OKRs reward high performers handsomely, it is done based on achieving quantifiable goals. The BSC is more traditional in the sense that it still ties performance to pay and bonuses even if only partial. Focus and Aspiration OKRs require companies to shift their focus to ambitious goals. In reality, it requires a willingness to fail in some ways. Instead of developing a list of practical objectives, OKRs encourage high-reaching, inspirational goals instead ones that employees know they can reach. In OKR, it’s reasonable never to reach 100 percent. Too high of a performance rating signals that the goals aren’t lofty or visionary enough. Critical Principles for Implement a New Framework No matter which option you choose, there are common threads that define success. First, executive leadership must participate in a performance management system to work. When they buy-in, everyone else follows suit and adopts an approach that promotes accountability. J. Grant Page 7 of 12 Business, 3-Series Blog Post 3,000 Words Second, you must communicate the company’s ‘why’ to implement a performance management system to support your efforts. When employees understand the need for a new framework, then the process to adopt it is more fluid. Finally, it’s essential to culturally align with the framework you choose. This decision isn’t one that managers and business owners make overnight. Instead, it takes time and patience before the implementation feels ‘natural.’ Final Thoughts and Considerations on the BSC and OKRs The correct implementation of either BSCs and OKRs can transform an organization by turning planning into action. Choosing the right tool depends on the needs of your organization. However, the universal message is clear: don’t leave your strategic efforts on the backburner by putting them on the shelf. Use performance management strategies to amplify your efforts. Consider Weekdone to Accomplish Your Goals Weekdone is your OKR-based solution that can help you meet your goals, strategize with your team, and implement a weekly planning session. We take it to the next level by offering easy-to-track activity options that allow your team to connect with each other across your entire organization. Want to learn more about meeting your objectives? Check out our case studies to find out why OKRs work and how Weekdone can help you manage them more effectively. J. Grant Page 8 of 12 Business, 3-Series Blog Post 3,000 Words ARTICLE 3: LINKS & CLIENT NOTES INTERNAL LINKS: • • • • Setting Key Results: https://objectives-key-results.com/setting-key-results/ OKRs: https://objectives-key-results.com/ Weekdone: https://weekdone.com/ Case Studies: https://weekdone.com/case-studies EXTERNAL LINKS: • MarketWatch Supply/Demand of Performance Management: https://www.marketwatch.com/press-release/talent-management-software-market-2019-globaltrends-sales-supply-demand-and-regional-study-by-forecast-to- • IMAGE LINKS: • Person Staring Down a Roadway: https://pixabay.com/photos/fog-mist-road-lost-girl-eerie-/ Thinking About Skipping Performance Management? Try OKRs Instead J. Grant Page 9 of 12 Business, 3-Series Blog Post 3,000 Words Building a skilled, talented, and engaged workforce is critical to the success of every organization. As the need for top talent rises, so is the need for managing and leading them toward meeting your company’s objectives. The achievement of results is entirely dependent upon it. If it sounds like an ideal arrangement, then you may be onto something. Talent management and performance monitor is a rising effort in today’s market, and it’s only going to grow. MarketWatch predicts that the performance management application industry is going reach $16 billion by the year 2023. That’s a pretty impressive number, but it also speaks to the growing need for KPI monitoring across the globe. It’s not surprising consider most companies focus on three main goals: • • • globalizing their business and leadership reach developing business models that are conducive to growth recruiting and retaining customers and employees Do you see a typical pattern among these goals? You are correct if you guess that performance management runs through all of them. Without implementing performance monitoring using methods like the Objectives and Key Results (OKRs) framework, means that your company may be missing out on the efficiencies and efficacies of deploying them. Why You Can Rely on Performance Appraisals Alone Companies, such as small business, find themselves relying on performance appraisals alone to monitor achieving goals. However, focusing on the long-term horizon regarding management has more positive effects on a company’s results. Performance reviews offer: • • • useful information that relates to an employee at the personal level efficiencies in reviewing results an opportunity to receive employee feedback Unfortunately, giving an employee or team feedback once a year can actually be a bad thing. How so? Imagine if a top performing athlete like Serena Williams received tips and performance feedback once a year? Do you think she would be regarded as such a high-performing player? Maybe. But it’s unlikely. A well-oiled machine needs constant appraisal so that there is opportunity to correct a course of action that may actually hurt the company over the long-run. Using OKRs in Favor of No Performance Management System J. Grant Page 10 of 12 Business, 3-Series Blog Post 3,000 Words Using the OKR framework is a much better approach in terms of managing your teams. When you rely on performance appraisals or even no system at all, you risk creating inefficiencies in productivity and reaching the organization’s overall goals. Instead of leaving things to chance, choosing to focus on deploying OKRs has many advantages. Unfortunately, companies only feel their benefits after implementation and buy-in from top management levels down the human resources chain. Consider the following benefits of using an OKR versus nothing at all. Benefits of Using OKRs in lieu of Laissez-Faire Methods Companies need more than a relaxed atmosphere and performance appraisals to drive its full capacity. Instead of focusing on judgments, you can make the shift towards the softer side of OKRs, which use vision and motivation to encourage higher-quality performances on behalf of the employee. OKRs also assist in continuous performance management over the long-run horizon. Rather than setting and literally forgetting the goals you created, using OKRs systematizes your approach over the short- and long-run. This aspect is critical to the overall growth and stability of a company. Consider these additional benefits that are part executing an OKR framework strategy versus not using any performance management framework whatsoever. Goal-Setting and Revision Employees need clear instructions to meet expectations. When you forgo using OKRs, you essentially quell their ability to perform at maximum capacity. They require context and substance to find inspiration. Today’s employees are highly motivated by the ‘why’ aspect of their work. OKRs allow you to set goals and develop a map that leads your team on the road toward achievement. Aligning your workforce with a higher calling creates buzz, direction, and priorities. When this happens, companies generate an inspiration synergy that has long-lasting effects on the entire organization. Coaching and Management While goals need adjusting at times, sometimes an individual is simply incapable of reaching them due to available resources, knowledge, and training. OKRs allow you to identify the performance gaps and quash problems long before they ever begin. Forgoing a performance management system means that you may miss out on multiple opportunities available to your organization. Employee Development Employees thrive on professional development. It sends the message that they are worth the investment. It also means they learn about their capabilities through carefully designed, regular feedback on their J. Grant Page 11 of 12 Business, 3-Series Blog Post 3,000 Words performance. Using an OKR brings this opportunity to them at regular intervals throughout their tenure with your company. It also builds trust and respect between the two sides which can result in even greater synergy across the board. Final Thoughts and Considerations on Using OKRs as a Primary Performance Management Solution Performance management through OKRs is critical to the success of your organization. In fact, we cannot stress their performance enough. Make sure you find modern technology that supports the evaluation of OKRs specifically. You’ll find that these platforms align far better with tracking and monitoring over other programs. Integrating your offline efforts with the online world is critical in sharing knowledge across teams while effortlessly collaborating as cohesive to achieve those goals. Whichever method you approach, ensure that it aligns with your existing programs and suites. Consider Weekdone to Accomplish Your Goals Weekdone is your OKR-based solution that can help you meet your goals, strategize with your team, and implement a weekly planning session. We take it to the next level by offering easy-to-track activity options that allow your team to connect with each other across your entire organization. Want to learn more about meeting your objectives? Check out our case studies to find out why OKRs work and how Weekdone can help you manage them more effectively. J. Grant Page 12 of 12