Updated: Dec 8, 2020
If you've been practicing OKRs, you've no doubt looked into how OKRs apply at the individual level. Right now we're seeing a lot of people who are relatively new to OKRs stating that having individual OKRs is a bad idea.
Let’s be frank, blanket statements like that are total rubbish. In fact at Intel Corporation, the origin of OKRs, they use individual OKRs tied to incentive plans. With a stock market return of around 15,000% since introducing OKR, it would appear that it's worked out quite well for them.
Great, so we should all do individual OKRs?
Well, no. The challenge with individual OKRs is they pull on the entire objective of having an organisation - that is the sum of a team is greater than the outcome of an individual. Creating individual incentives only encourages individuals to optimise their own performance. Unsurprisingly, this comes at the expense of team level goals. As Deming once said, “People with targets and jobs dependent upon meeting them will probably meet the targets - even if they have to destroy the enterprise to do it.”
As we learnt from Edwin Manica, an ex-Intel leader, individual OKRs only work when it's a mature practice at your business. There must be strong alignment to your values and strategy., team objectives and following consistent themes. With this level of maturity, you can create individual OKRs which enable people to contribute to border priorities and find opportunities to develop oneself.
So, we’re drawing a picture of how you need to tailor your approach to OKRs based on your context and what you’re hoping to achieve.
What value are you seeking from OKRs?
It’s important to remember, OKRs are intended to measure valuable outcomes, not activities. Personal development plans generally encompass more than just valuable outcomes, as they often include goals such as training, speaking and learning. Although there are measures for these activities, setting value-based OKRs for items like this is challenging. As companies like Spotify, Pangaea and many others are discovering, individual OKRs as they add complexity without adding value. They’ve made the move to dump individual OKRs altogether.
The real power of OKRs is how they can align teams to a common mission, answering the why behind the work that we need to do and setting context on the how. In other words, with OKR you'll have directional autonomy for teams, which takes a lot of trust.
To achieve directional autonomy, you need a clear common objective for the business, for teams to point their objectives towards. Rather than relying on personal responsibility, team-based OKRs rely on peer responsibility. For those that have been teenagers or have had teenager kids of their own, you know this is a pretty powerful mechanism to drive behaviour.
Does the team member have control over the outcome?
Where team members have control over the outcomes and metrics they’re driving, and team collaboration makes little sense, individual OKRs can function well. The trick is remembering the same rules and practices apply to individual OKRs as team-based OKRs; they need to stretch you, a level of failure is expected and you need to check in on them weekly.
Some examples where this may apply:
Single person project teams.
A Finance or People (HR) team member supporting a specific internal team.
A Customer Success, Sales, Recruitment or similar operational team member responsible for a certain segment who has control over the process.
Situations strictly like this are rare to find, generally, you need collaboration between team members. This is why it’s best to start with team-based OKRs, and only experiment at the individual level if the need arises. Further, situations tend to be more conducive to individual targets. If they have a number to hit, set the target.
So what are some patterns for individual OKRs?
Careful Harry, you’re playing with the Dark Arts. We strongly suggest that you leave this until you are one to two years into your OKR journey with great success, but still need more. Based on our observation, we have not seen a company experience an ROI from individual OKRs aside from a select few, such as Intel Corporation. They have only served to add complexity, and in some instances, lower team performance.
At SKILLFIRE after helping many companies across Australia with Objectives and Key Results we’ve seen the following patterns increase your chances of success, but you’ll want to tread your own path:
Use metric-based targets (not OKRs) for anything which is not related to business value generation, such as sales targets.
Structure your performance plans in a manner which allows for non-measurable activities for personal development, separated to outcome-focused individual OKRs.
Rather than an individual OKR, assess individual performance based on contribution to the team OKR. That is not to say tie their success to the success of the team OKR, however, assess how much their behaviour contributed to the success of the OKR.
Structure individual OKR in a manner which mirrors the team’s OKR based on their sphere of control, and based on the Key Result being achieved by the team. For example, if the team KR is to increase customer satisfaction by 1 point, then my individual KR will also reflect an increase of 1 point presuming I have influence over it.
In all of these cases, don’t tie the team member’s OKR to incentive plans.
There’s plenty of research as to why individual incentive plans are a dangerous idea. If you decide you must go down this route, tread carefully and experiment with your chosen approach.