RDEL #25: How can engineering managers improve the OKR and goal setting process?

This week, we dive into the top challenges and best practices of OKRs in software organizations. We also discuss strategies to more effectively use OKRs on teams.

Welcome back to Research-Driven Engineering Leadership. Each week, we pose an interesting topic in engineering leadership, and apply the latest research in the field to drive to an answer.

Goals are an extremely powerful tool to align the organization on a shared vision. Around this time of year, teams are hard at work setting and executing new objectives and key results (OKRs) for their teams. To assist with making that process as effective as possible for engineering leaders, this week we dive into how the OKR process impacts development, and how managers can improve the process for their team.

The context

The OKR framework is a very popular goal-setting methodology that aligns the objectives of a company, team, and individual with metrics that tie back to strategic outcomes. The basic idea is to set 1-3 objectives (or goals) for the team. For each objective, identify 2-4 key results per objective that allow teams to see how they are tracking.

The framework is often successful because it is data-driven in nature, which gives an objective way to measure progress towards a goal. Prior research has shown that for software teams, implementing OKRs improved knowledge sharing and transparency between teams. Since this is a commonly-used tool for building alignment in engineering teams, this week we look at top challenges, best practices, and opportunities to improve OKRs in software organizations.

The research

Researchers Jenna Butler, Thomas Zimmermann, and Christian Bird studied a single company of 4,000 engineers to generate data from 47 interviews and 512 survey responses. This data was analyzed using thematic analysis, linear regression, and hypothesis testing to find challenges, best practices, and opportunities for improving OKRs in the software organization.

The top three challenges of OKRs as identified through the research data were -

1. Creating and setting OKRs. Of the teams surveyed, 1 in 5 teams felt they were not effective at all at goal setting and only 45% thought they were effective at measuring goals.

2. Data issues. Teams struggled to get access to the right data they need, whether because of compliance concerns or complexity of pulling data.

3. Working with others. When working cross-team, respondents reported challenges aligning with other teammates - especially when one team’s OKRs aren’t aligned with another team, or there is data that relies on cross-team dependencies.

Additionally, researchers aimed to discovery best practices for OKR usage on engineering teams, and included a series of questions to understand whether effective OKR implementation (or “OKR maturity”) correlated with other factors. A number of interesting trends came forward, including -

• Researchers found a positive correlation between teams with high OKR maturity and years in industry, having a unified mission, and happiness at the company.

• Teams who reported the practice of high experimentation and rapid iterations were positively and significantly correlated with higher OKR maturity.

• Interestingly, individuals who work away from the office scored higher on OKR maturity. Researchers hypothesize this is because remote teams need to be much more clear about what they’re doing and how it relates to the org.

The application

For this weeks application, we share the researchers’ recommendations on how to improve OKR culture within an organization based on the results of their experiments. To address common challenges in adopting OKRs, researchers recommend to:

1. Invest in the data pipeline. It is difficult to evaluate what you cannot measure, so researchers recommend investing in getting high-quality data to track OKRs, which will make the whole framework more effective.

2. Increase transparency. To address the issue of working with other teams and understanding their goals, researchers recommend improving transparency by sharing OKRs across the entire organization. When OKRs are shared transparently, teams understand what others are working on and proactively align their work properly.

3. Improve communication. Researchers saw a discrepancy between how much a manager thinks they are communicating about their goals and how much teammates felt they heard. Managers also did not feel effective at translating high-level ideas into the work their teams did. By investing in increased clarity and creating a clear connection between a team’s work and the organization’s goals, the team will be more well-aligned with the organization.

4. Promote learning communities. For teams that struggle with OKR development, one of the best ways to learn is to look at other teams within the organization that excel with OKRs and learn from them.

5. Guide the process. OKRs are most successful when they are adopted consistently across the entire organization. Invest time in making sure teams understand the framework, know how to implement it, and can learn and improve as they mature.

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We hope these tips will guide your team to a successful use of OKRs this year. Have a great week, and happy Research Monday! 🎉

Lizzie

From the Quotient team