Culture Foundation #3: Goals and Success Metrics
Like I wrote in my first post, my friend Jerry always tells me: if you ain’t keeping score, you ain’t playing the game. As part of my series on the raw fundamentals of good culture, this post focuses on goals and success metrics. Every employee should have specific goals that tie into larger team and company goals, and a set of success criteria that helps them measure and track their progress towards those goals. Aligned goals help employees understand how they are contributing to the bigger picture. Without clear goals, employees can feel lost or find it difficult to know how they’re doing. Also, managers have an extremely challenging time giving proper feedback to their staff if there is no foundation on which to measure performance and set expectations.
So let’s say you’re in the right role with the right responsibilities and authority. How do you know if you are doing a good job? Goals need corresponding success metrics. Goals tell you what you need to get done, and success metrics tell you how you’re progressing towards those goals. My favorite framework for this is OKRs — Objectives and Key Results. As an example, let’s say you’re a sales manager and your objective is to increase sales by 20% by end of year. Your key results could be: 1) hire and train 6 new sales reps, 2) increase your average sales price by 5% for the SMB segment, 3) expand and upsell to 5 existing enterprise customers.
OKRs even work for broader objectives. Let’s say you wanted to open a new office in Philadelphia. In order to measure your progress on that objective, your key results could be to: 1) have sales of $100k/month in the greater Philadelphia region, 2) hire a team of 5 go-to-market employees, and 3) find a 5 year lease that costs less than 10% of your overall G&A. In this example, if you are able to achieve those 3 key results, you should be able to accomplish your objective of opening a Philly office.
Nowadays OKRs are fairly popular. In fact, Google is well known to have been an early adopter of John Doerr’s OKR framework. Setting OKRs annually and reviewing them quarterly is a typical review cycle, however you could scale this frequency up or down based on your organization’s operating cadence.
Short one this week! Shoot me a note if you need any help in developing yours or your team’s OKRs (or any other framework you use). Next week, I’ll discuss how the overall business objectives should trickle down to each employee’s day to day workflow.
