Opinion | Knowing how to set objectives is often more important than the goals
What is measured also can be gamed. So, don’t lose sight of the intent and spirit
There’s a lot of jargon and abbreviations in HR and on appraisal forms—OKRs (objectives and key results) and KRAs (key result areas) are just a few. But whatever alphabets and names you assign them, these are just tools, or a framework to prioritize efforts and getting individuals in the organization to pull towards a common goal. If one understands the principles and process behind this exercise of objective setting (irrespective of what you call it), you are bound to execute it well.
One thing I have learnt over the years is that the sophistication of a tool or a framework has little to do with its effectiveness on the ground. Those who understand the principles behind a tool manage well even without the tool. The tool merely makes the process a little more structured and efficient. And those who do not understand the principles behind a tool well enough will actually be worse off with the tool. It’s like equipping someone who has no clue how to get to a place with a bike. He would probably end up at the wrong destination faster.
I was recently chatting with a function head about his OKRs and was surprised to see a list of nineteen. And like a true engineer he had assigned weightages to each. Obviously, there were some OKRs with weightages as low as 3%. As we walked through the list, it was evident that everything he or his team was expected to do was on this list.
Any OKR list should not have more than four to six of the most important things that you need to focus on. The same goes for the OKRs of those who report to you. If people in your team are not attending training sessions they have signed up for, you cannot solve this problem by including “attending training programmes" as one of their OKRs with a 5% weightage. It may sound ludicrous but there is a tendency to include elementary things, which need to be fixed by clear-headed and firm leadership, on the list of OKRs. This is a clear sign that someone is abdicating leadership responsibilities.
The questions you need to ask yourself before arriving at your list of OKRs are somewhat as follows:
■ What are my customers—internal or external—most concerned about? What is bothering them and causing pain?
■ What are our investors most worried about? Unit economics, unsustainable growth or that our margins are not best in class?
■ What are the most important people issues I need to address if my business goals are to be met without glitches? Succession planning, retention, or a weak performance culture?
■ How do I get a good mix of OKRs that address issues of today while helping create the foundation for a stronger future?
■ How do I balance outcomes that are within the direct control of the individual with those that require collaboration?
We all learned sometime or the other that budgets often don’t mean anything and that the process of arriving at budgets means everything. Similarly, the process described above and the discussion around these questions is as important, if not more important, than the OKRs themselves.
The other big debate in organizations is about whether OKRs always need to be quantified. There is one school of thought that strongly believes in the maxim is that “what gets measured gets done". I would largely agree with this but would not force it to an extreme.
Try and assign “results" or outcomes to the extent possible. But don’t let the challenge of measuring something keep you from doing it. Sometimes the counter to the above maxim is also true—which is, what gets measures can get gamed. So, don’t lose the sight of the intent and spirit.
In the late nineties, I saw how B. Muthuraman, then CEO at Tata Steel, set objectives and expected outcomes for his vice-presidents. The term OKR hadn’t been coined then, but it’s what we’d call it now. The OKRs he came up with were neatly written out in his own hand on a sheet of paper. There were just five to eight of them. Most objectives had clear measures. On reading those OKRs, it was evident that he had thought through all the questions I had listed earlier.
This brings me to the last point, which is that most of management is about reinventing what is already known, giving it a new name and disseminating it as if it were a breakthrough. It is important not to forget the basics and do them well always. And if a new tool is made available, use it to drive the basics more efficiently.
T.N. Hari is head of human resources at Bigbasket.com and adviser to several venture capital firms and startups. He is the co-author of Saying No To Jugaad: The Making Of Bigbasket.