How to successfully implement OKRs

and avoid common pitfalls

Lewis Carol’s classic, “Alice in Wonderland” contained a valuable lesson: It doesn’t matter what path Alice takes if she doesn’t know where she’s going. The same is true for performance management. Planning and implementation are the keys, but the devil is in the detail. In this article, we outline how to implement the OKR approach while avoiding common pitfalls.

To recap, the main reason why an increasing number of multinational companies use the OKR approach is that it allows them to “repurpose thousands of working hours and millions of dollars from tasks that do not drive performance”. An OKR approach differs from the standard annual performance management (PM) process in several ways. For example, using OKRs helps team managers lead team performance in a much more agile way. This includes using quarterly objectives, linking strategic objectives with individual performance and focusing the evaluation on key results, as measured by the value created for the organisation and its customers. The performance cycle becomes embedded into day-to-day people management activities and is outcome rather than task oriented. It is also supported by regular real-time feedback, from managers, colleagues, direct reports and others, rather than in an annual planning meeting.

Key OKR Implementation Success Factors

Based on our practice experience, there are three crucial steps to successfully implementing the OKR approach:

  • Align performance with your organisational culture: Like any other performance approach, OKR is not a “one size fits all” solution. The approach needs to be adjusted to your organisation’s culture. Based on extensive international and local projects, we have developed a model which helps to identify seven key maturity pillars that will help you review and assess how to best update your performance management approach. These pillars include, for example, an organisation’s strategy and purpose, current career and development processes and the state of their IT systems as well as their key components. Such a focussed assessment enables leaders to define the framework for a successful performance model specific to their organisation. As a result, they know what to focus on - or not – and allocate resources accordingly.
  • Start at the top: The real power of OKRs resides in strategic alignment and execution. For this reason, it is critical that your leadership team understands that their commitment is paramount to the success of the OKR approach and fully supports it. We suggest that the executive team outlines three to four clear, simple, and actionable priorities for the year which will be used as key inputs for the OKR cycle. Each department and team can then use these priorities as a guide to define their own objectives. To save time and easily translate business objectives into performance objectives, we recommend commencing the implementation of your OKR cycle just after the business planning cycle.
  • Manage people for performance. Managing performance is primarily about managing people. And changing a few critical behaviours can have a major impact on performance. Our research shows that changing 20% of your managers’ critical behaviours can influence up to 80% of the performance outcomes. It is therefore important to identify those behaviours that derail performance and focus on changing them. These include, for example, barriers to collaboration, communication and delegation. This laser-sharp approach will quickly enhance both performance and engagement.

Pitfalls to Avoid

OKRs are not new but their popularity and use has now grown beyond the early adopters in the technology industry. Key amongst the learnings from leading practitioners, these are pitfalls to avoid:

  • Avoid complexity at all costs. Complexity in PM systems destroys value. Each organisation needs to make some tough choices about where to focus its efforts; otherwise, their OKRs will turn into an extensive list of unfocused tasks. If OKRs are not being used as part of the everyday management process, then you are creating complexity and not achieving the benefits of the approach. To simplify your OKR model we recommend having your teams define collective OKRs where each member outlines how they individually contribute to team results and impact.
  • Set challenging OKRs. Setting OKRs that don’t challenge is a common mistake when teams are new to implementing OKRs. This is often compounded by a mismatched link to rewards such as bonuses and salaries. The OKR model is based on the principal of “stretched goals”. Not all of them will be achieved but increased “bottom-line” value will likely be achieved. To avoid the pitfall of penalising employees for not reaching all goals, we recommend separating the OKR model from the reward system or at least use the OKR model as well as other indictors as the basis for the reward system.
  • Don’t skip the feedback sessions and develop people. Establish a regular feedback cadence for employees. Based on the conversations, take action to help them overcome challenges that they face in achieving their results. OKRs can also help reveal concerns that won’t appear on any personal growth plan. Since OKRs are updated frequently, this enables managers to recognise slow progress or low confidence and coach through trouble before it becomes a major issue.

OKRs are a great methodology to drive growth within an organisation but their management can't be underestimated. Don’t let that stop you implementing them and growing. As Alice responded to the dormouse who told her, “You have no right to grow here”: “Don’t talk nonsense”.

The future starts now

Contact us if you’re looking for an understanding partner to help you navigate your organisation through these unpredictable waters.

Our previous article on this topic, “Creating Exceptional Performance through Key Objectives and Results” covered the components and benefits of OKRs

This article was originally featured in HR Today Magazine.

Contact us

Jose Marques

Jose Marques

Director People and Organisation and Leader New world. New skills., PwC Switzerland

Tel: +41 58 792 96 34

Kevin Boti

Kevin Boti

Manager, People & Organisation, PwC Switzerland