Annual vs Quarterly OKRs
A common question we get is – should we set annual OKRs or quarterly OKRs? In this post, I am going to describe what we have found to work best in practice.
Have OKRs follow your planning cadence
The simplest answer is that your OKRs should be set at the same interval for which you plan. This usually means that you will have different OKR cadences within your organization.
The most typical setup we see is:
- The company sets annual OKRs
- Teams and individuals set quarterly OKRs
Annual OKRs for a company
Most businesses plan ahead for a year.
The budgets are usually set annually. Various legal reasons make company publish their annual performance. Finally, inertia is also at play – the larger the entity the more time it needs to adjust course (think team vs entire organization).
For those reasons, we have found that when you implement OKRs – the top-level, company objectives should usually be set for the period of a whole year.
Quarterly OKRs for teams and individuals
Agility means the ability to change and adapt quickly. To that end, teams and individuals will usually want to plan their OKRs on a quarterly basis – giving them at least 4 times a year opportunity to adjust.
In an ideal world, teams, and individuals will support annual OKRs of a company on some level. However, the way in which they will do that will typically change throughout the year.
How about doing both?
While the general distinction between annual and quarterly OKRs is intuitive, many people wonder should for example individual have both quarterly and annual OKRs. In the same vein of thought, one wonders should the company have both annual and quarterly OKRs.
In our experience, simplicity beats everything. So it is our advice that individuals do not have annual OKRs if they have quarterly OKRs. Similarly, a company or a department with annual OKRs, typically should not have quarterly OKRs. There is obviously room for exceptions – but they should stay exceptions, not become a rule.
How to align quarterly OKRs with annual OKRs?
The first question is – should we even align quarterly OKRs with annual OKRs? In our experience, this is a must. OKRs are all about alignment, and if departments or teams are not supporting business objectives – the whole idea of OKRs becomes nonsensical.
Managing alignment of OKRs can be cumbersome in general, but once the aligned OKRs are in different cadences – it becomes close to impossible. For such cases, one obviously needs to get proper tooling, and this is what we do at Gtmhub.
When one aligns annual and quarterly OKRs, there are several questions that need to be answered:
- How did the annual OKR progress through the time?
- Who was supporting this annual OKR throughout the quarters?
- How successful were quarterly OKRs in terms of attainment?
- What was the impact of quarterly OKRs on an annual OKR?
Should every quarterly OKR align to an annual OKR?
The simple answer is no.
Generally, only departments or teams will support annual objectives through their quarterly objectives. Individuals and teams are much better suited to support the quarterly objectives of their departments.
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