How organisational structures affect OKRs

In this article we’ll review three of the most common organisational structures, team-based, matrixed, and hierarchical, and discuss how each type of organisation affects the implementation of Objectives and Key Results.

Bottom Line.

  1. Whatever your organisational structure, mission alignment is key
  2. Transparency and communication can address problems of the silo effect, matrix confusion, and isolation of teams
  3. Empowering an OKR Lead and OKR Champions to drive the OKR process is key

 

Hierarchical

In a hierarchically structured organisation, everything flows from the top down, with employees organised in order of rank throughout the entire organisation. The most typical example of a strong hierarchical organisation is an army. From the commander in chief, the reporting lines are strictly hierarchical, and with severe penalties for insubordination.

 

OKR Advice for Hierarchical Organisations

Don’t micromanage. OKRs are not a management tool to monitor employee performance. OKRs are an opportunity for employees to define for themselves how they can get behind the company mission and do their part.

Watch out for silo effect. Employees in strong hierarchical organisations are at risk of losing sight of their peers in other departments, and focusing too much on the delivery of their objectives, to the exclusion of all else. Transparency, and communication of OKRs will mitigate this.

 

Matrix

In a matrix organisation, employees are organised in a grid, with horizontal, and vertical reporting lines. In this way, an employee based in a particular department, e.g. software development, would have one reporting line to the department manager, as in a traditional hierarchical organisation, but would also have at least one additional reporting line, e.g. to the product manager of the product that the employee is working on.

 

OKR Advice for Matrix Organisations

Take care to include both solid and dotted line alignment. Every employee should maintain objectives, which support both their solid line manager, and their dotted line manager’s objectives. The OKR Lead can support managers and employees to ensure that the right balance is struck.

The OKR Lead is very important in this org structure. The OKR Lead, supported by OKR champions, must be involved to ensure that employee OKRs support both horizontal and vertical objectives, with every OKR maintaining ‘line of sight’ to the overall company mission.

Team-based

In a team-based organisation, employees are grouped into teams to focus on a specific set of tasks and objectives, for example to manage and deliver a particular project, or to take responsibility for an on-going function, such as customer support. The team-based approach requires a high degree of delegated decision-making power, entrusted to team members.

 

OKR Advice for Team-based Organisations

Mission alignment. Team OKRs cannot exist in a vacuum. Team OKRs must align with company mission and higher-level goals. This does not mean that team have their OKRs dictated from above, rather that company goals and overall mission are communicated and well understood prior to setting team level OKRs.

Internal alignment. Team members will set their OKRs according to team OKRs. Although it may be easier to enable a bottom-up approach to OKRs setting in teams, at the end, team member OKRs must support team OKRs, which ultimately should support company level OKRs and overall mission.