ROI in simple terms is the profit that is returned on your investment. Companies’ investment in marketing, sales, and R&D to see the profit return. While companies’ managers can create OKRs as well as for the adoption of OKR software but they are unable to decode how to use OKR to see ROI.
Unless the companies can decode how returns can be achieved using goal setting framework it becomes difficult to sustain the adoption and get long-term leadership buy-in.
In this blog, we shall see how ROI and OKR are Complimentary. But before that let us see about OKRs.
What is OKR?
OKRs or Objective Key Results are a simple yet powerful goal-setting frame goal-settings alignment framework that helps employees to have a whole new perspective on how goals are attained and for what purpose. OKRs are all about transparency which helps employees align their goals and objective goals to meet the company’s needs.
Utilizing OKRs also helps the managers to have a holistic view of each employee to understand their challenges and gaps while executing the organizational goal and also to see which employees are performing well. In order to set challenging, ambitious goals with measurable outcomes, teams, and individuals use this collaborative goal-setting methodology. Using OKRs, you can monitor progress toward measurable goals while fostering alignment and engagement.
How does OKR help in ROI?
Most fast-growing organizations have competing priorities and goals that need to be achieved. But without prioritizing those goals or objectives, the expected outcome may not be achieved. Therefore, simply setting goals by adopting a top-down approach without supporting parameters can lead to confusion and incompetence. OKRs help drives away this ambiguity by linking measurable key results for each objective and facilitating a collaborative approach to achieving goals.
Here are the top three benefits of implementing OKRs effectively:
1. Enhance clarity and concentration:
For an efficient ROI, the employees must focus on what needs to be accomplished and what work is out of scope. OKR enables employees and managers to focus better and helps them concentrate on the task at hand. OKR helps in having
- Better Clarity
- Helps them to focus on the long-term goal
- Provides a clear vision
Utilizing OKR will create focus and in turn, the ROIs will improve clarity, which is impeding the creation of a high-performance culture.
2. Systematic alignment:
Without proper and strategic alignment on where and which goals should employee focus on, there will be an overlapping of responsibilities and a lack of clarity on expectations from each employee. OKRs help teams decode what is expected of each team member and their respective contribution to achieving the shared goals by ensuring organization-wide goal visibility. As a result, alignment and collaboration will improve. This directly contributes to the ROI.
For Example: Assume that your current new customer acquisition revenue is $12M with the current methods and practices.
After adopting OKRs since the focus and prioritization increase, each person will be contributing more than they do currently, which will increase the revenue by $1 to $2M. This is one example of how OKR delivers ROI.
With proper and strategic alignment leaders, employees will also have clarity on what to focus on, which can lead to productivity.
3. Engaged Workforce:
The third benefit of implementing OKR is greater engagement among the employees. Employees get involved during the OKR progress and feel engaged when they contribute. This greater involvement and participation lead to deeper levels of engagement and ownership of key results which drive impact.
Since the OKRs help in alignment, Teams aren’t wasting time and valuable resources on works that don’t need immediate attention and focus all their time on their objective.
Eliminating the task which is not a priority directly contributes to higher productivity and ROI
How does OKR software make a difference?
1. Helping goals be documented
A recent study has shown by documenting their goals daily can improve their odds of success by 42% when they are physically recorded. By utilizing OKR software, goals can be physically documented daily or weekly thus increasing the chances of being achieved. Documenting goals can also be used as a reference in the future for any performance evaluation.
2. Organizational Alignment
A recent study has shown us that revenue grows 58% faster and is 72% more profitable than unaligned companies. When an organization is aligned, there is a shared understanding of the purpose and of the strategies, goals, and tactics that will make the organization successful. Organizational alignment energizes the organization, enables people to take action, and empowers people to work towards a shared goal. Further, when there is alignment, people have the autonomy to make decisions by themselves and trust each other to make the right decisions.
3. Performance Evaluation
Having your performance evaluated by the managers boost the employees and pushes them to achieve more. A recent study states, “Companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually. Havi