Understanding OKR’s disadvantages and choosing a better approach

  • Index
7 minutes

Defining the OKR Framework

The OKR (Objectives and Key Results) framework has gained widespread popularity in recent years as a tool for setting and achieving goals in organizations. This framework is often hailed as an effective way to align individual and departmental goals with company-wide objectives. However, it is important to note that the OKR framework has some significant disadvantages that can lead to departmental siloes and misalignment with broader organizational goals.

The OKR framework recommends that goals and objectives should be set at all levels of the organization, from individual employees up to the company as a whole. The process of setting goals and objectives starts at the top of the organization, with senior leaders setting high-level objectives that are aligned with the company’s mission and vision.

These high-level objectives are then broken down into smaller objectives at the departmental or team level, and eventually into individual goals and objectives for each employee. The process of goal-setting is iterative and collaborative, with input and feedback from all levels of the organization.

Individual goals and objectives are a key component of the framework, as they help to ensure alignment between individual employee performance and the company’s overall goals and objectives.

OKR Disadvantages

One of the key disadvantages of the OKR framework is that it encourages department-level goal setting, which can lead to a narrow focus on individual objectives without considering the broader organizational context. This can create siloes where departments work in isolation, without considering the impact of their goals and objectives on other parts of the organization. This can lead to different departments pursuing their own agenda despite attempting to align their goals with the company-wide goals.

Furthermore, the OKR framework encourages departments to run individual initiatives in isolation, with little regard to the wider impacts, conflicts and dependencies across other parts of the organization. This can create siloes where departments work in isolation, without considering the impact of their initiatives on other parts of the organization. This can lead to conflicts and dependencies that can hamper the achievement of company-wide goals.

Another disadvantage of the OKR framework is that it encourages organizations to set goals and objectives at the level of individual employees. While this can be motivating for employees, it is a bad practice for several reasons. First, individual employees cannot directly, in isolation, have a meaningful contribution to the organizational strategy. Individual goals and objectives are driven by their current job requirements and desired career path, not by the organization’s strategy. Second, individual employee goal and objective setting is part of people management which is usually an HR function rather than being part of strategic planning.

To be effective, the OKR framework needs to be applied in a way that is aligned with the overall strategy of the organization. This means that the goals and objectives need to be set at a high level, with a focus on the strategic pillars of the organization. In addition, the OKR framework needs to be applied in a way that encourages cross-functional collaboration and alignment, rather than silos and individual initiatives.

Lastly, one additional issue with the OKR framework is that it creates ambiguity with the way in which it defines objectives. The framework renames objectives to “key results”, and this can be confusing, as it conflicts with the broader literature that clearly defines goals and objectives. In most traditional goal-setting frameworks, objectives are used to describe specific, measurable steps that need to be taken to achieve a goal. However, in the OKR framework, key results are used to define objectives, and this can cause confusion as to the difference between goals and objectives. The term “key results” suggests that they are an end in themselves, rather than a means to achieving a goal. This ambiguity can make it difficult to align OKRs with other goal-setting frameworks or communicate the company’s goals and objectives to stakeholders.

To clarify, goals are broader and more general direction setting statements that describe what the organization wants to achieve in the long-term. Goals should be broader, higher-level and qualitatively defined. Objectives, on the other hand, are more specific, measurable, and actionable steps that are taken to achieve a goal. Objectives help to break down a goal into smaller, more manageable parts and provide a roadmap for achieving it. In order to avoid ambiguity and ensure clear communication, it is recommended that organizations use the more widely known terms of goals and objectives instead of the OKR terminology. By using these standard terms, it is easier to align OKRs with other goal-setting frameworks and communicate the company’s goals and objectives to stakeholders. This can help to ensure that everyone is on the same page and working towards the same outcomes.

A Better Approach

One way to address these issues is to use a platform like Sengi. Sengi is designed to break down silos and ensure company-wide alignment by emphasizing shared goals and cross-departmental initiatives. It encourages teams to work together and share knowledge and resources, rather than working in isolation. Sengi also helps to ensure that goals and objectives are aligned with the overall strategy of the organization, by providing a framework for setting high-level goals and objectives that are tied to the strategic pillars of the organization.

In addition, Sengi provides a way for organizations to track and measure progress towards their goals and objectives. This allows teams to see how their work is contributing to the overall success of the organization, and to make adjustments as needed to ensure that they are on track to meet their goals.

Our platform helps organizations break down silos, keep everyone aligned, and track their progress toward the set goals.

Conclusion

To succeed, it’s best to first align with broader, established terminology for goals and objectives.

Goals are high-level statements that describe what a person or organization wants to achieve. Goals are broad, long-term, and often abstract in nature. They provide a sense of direction and focus on the overall desired outcome. For example, a goal might be “maximize profitability” or “improve financial performance.”

Objectives, on the other hand, are SMART (specific, measurable, achievable, realistic and time-bound) actions that are taken to achieve a goal. Objectives are usually shorter-term and more concrete than goals, and they describe specific steps that need to be taken to achieve the desired outcome. For example, an objective that aligns with this goal could be “reduce expenses in the supply chain by 10% within the next year” or “increase sales revenue by expanding into new markets.” These objectives are SMART, but they also contribute to the overall aspirational goal of improving profitability.

In summary, goals are the big picture, while objectives are the specific steps that need to be taken to achieve the goals.

While the OKR framework creates confusion by renaming goals to objectives and objectives to key results, we recommend that organizations stick to the established terminology of goals and objectives instead of OKRs.

Secondly, setting shared, company-wide goals, is a best practice we recommend organizations to adopt. However, instead of directly setting department-level goals and objectives, we recommend planning cross-departmental initiatives and defining objectives within the scope of these initiatives. That ensures that all participating departments share the same objectives, they communicate clearly, transparently and effectively and due consideration is given to the impact, dependencies and any conflicts that these initiatives might incur across the wider part of the organization.

Sengi implements by design all of these best practices and ensures effective alignment and collaboration throughout the entire organization.

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