OKRs and SMART Goals

 

One measurement is worth a thousand expert opinions.”

- Rear Admiral Grace Hopper

No one sums up the importance of measuring the right things quite like Grace Hopper, aka Amazing Grace. A famed American computer scientist, her achievements throughout a long lifetime have shaped the very world we live in, giving us the popularization of nanoseconds, the catching and coining of the original computer bug, and the first computer compiler, to name but a few. Her achievements cannot be overstated, her legacy is such that her name was given to a supercomputer and a ship, and, in 1969, she was the first winner of the Data Processing Management Association’s Computer Science Man-of-the-Year Award.

The search for truth, as summarized by the above quote, is more than just about being objective or correct. Instead, by using empirical data, we can approach the truth in a scalable, replicable framework, increasing accuracy as the efforts are repeated. The opposite is true for opinions: the greater the number, the greater the potential for confusion. Indeed, basing business decisions on ‘groupthink' as opposed to robust goal-setting frameworks may be detrimental to the whole as autonomy is decreased, conformity increases, and we “don’t share information, [we] share biases [instead].”

How, then, can we hope to curb conformity and encourage environments that use evidence to improve, increase and enshrine high performance and the right decision-making behaviors?

One approach that businesses are taking is SMART Goals.

Nowadays everything is smart, from washing machines to watches, from televisions to water. But, just how smart are SMART goals and how can they be used with OKRs to achieve success?

 

What are OKRs?

 

For those who already know about OKRs, scroll down to see how they work with SMART Goals.

For those who don’t, Objectives and Key Results (OKRs) is a goal-setting methodology for organizations to set ambitious goals with measurable results. The Objective is the thing you set out to do, and the Key Results are the way you measure the outcome of your actions to attain the Objective.

For a more in-depth explanation, check out this free guide that shows how they work.

 

What is a SMART goal?

 

SMART goals, or SMART criteria, are seen as both a goal-writing guide that gives an approach to creating goals for other frameworks, as well as a goal-setting methodology in their own right.

In 1981, George T. Doran introduced the first version of SMART in an article called “There's a S.M.A.R.T. way to write management's goals and objectives”. In it, he deplores the state of objective setting, stating that most managers did not know how to set objectives and, furthermore, were actively against it, as they saw it as a ‘threat’ to their position by trying to quantify efforts in short-term goals.

Key distinctions were also drawn between goals, which were meant to be continuous, long-term beliefs held by executive management like a value statement, and objectives, which were used to quantify these beliefs into actions.

Having set the scene around business challenges and key vernacular, Doran then showcased the first SMART criteria to write effective goals.

  • Specific - target a specific area for improvement
  • Measurable - quantify or at least suggest an indicator of improvement
  • Assignable - specify who will do it
  • Realistic - state what results can realistically be achieved, given available resources
  • Time-bound - specify when the result(s) can be achieved

The above criteria, however, were not for everyone. Doran advised that middle to senior management should not use Measurable, as it may be detrimental to more ‘abstract’ objectives, and further emphasized that criteria were optional, not imperative, for all.

Further guidelines included how to introduce SMART to an organization, such as when a new job becomes vacant, when promoting someone or when the lack of goals has become too much. He also goes beyond goal-setting criteria and gives advice about how to motivate staff and keep them productive. He recommends that periodic evaluations of ‘job fit’ should be conducted every two to three years (!?), salaries should be reflective of the individual’s contributions, not job type, and managers should be penalized for not removing the ‘wrong person’ from a job.

Since its inception, SMART goals have rapidly grown over 40 or so years, becoming one of the most popular goal-writing frameworks around. However, whilst the letters of the acronym have largely remained the same, the meaning has not. The original approach, popularized by Doran, has been succeeded by a ‘replace words as you see fit' mentality so that the letters have different meanings across different companies. In this sense, there is no true SMART approach and, instead, it is best seen as a collection of interpretations around goal-setting.

Incidence of “SMART goals” in written media

Types of SMART goals

 

Original SMART Goals - The original 1981 writing approach from George T. Doran calls for a Specific target to be identified, that must be Measurable and quantified, Assignable insomuch as there is a given person or team who has ownership of it, Realistic in that it can be achieved given current resource and capacity and, lastly, Time-bound in the sense that it can be accomplished in a given time frame. The intention, far from providing a strict framework, encouraged goal-setters to pick elements of the below criteria as required and stated that goals could be made up of any, not all, of the below pieces. In addition, Doran advised that ‘personal’ SMART goals did not require feedback or to be ‘agreed-upon.'

Specific

Measurable

Assignable

Realistic

Time-bound

 

SMART according to Consultants Online - This SMART framework from Consultants Online makes two key changes to the original format. The first, Agreed in place of Assignable, goes against Doran’s original advice and mandates that a goal must be agreed upon, whether personal or team. Secondly, Resourced in place of Realistic is one of aesthetics and means ultimately the same thing. However, the biggest difference is that this framework states a goal is feasible only if it passes the SMART test, i.e., fulfills all of the below criteria.

Specific

Measurable

Agreed

Resourced

Time-bound

 

SMART(ER) according to Quantum Workplace - The SMARTER approach, espoused by Quantum Workplace, adds an additional layer of specificity. Evaluate goes beyond the original framework by including an element of review, such as looking at performance post-project launch. Revise amends the goal to better reflect performance, measurements or to identify a new area altogether. The concern around this approach, expressed even by the authors in the above link, is that some businesses will not allow revision, or worse, overly allow it to the point where, if goals are not met, they are constantly reduced to the point of having no meaning.

Specific

Measurable

Achievable

Realistic

Time-bound

Evaluate

Revise

 

SMART(IE) according to Ontrepreneur Academy and Management Center - Aside from exchanging Relevant for Realistic, meaning that a goal would need to be forwarding a particular business agenda/mission, it includes further parameters. Incremental, from the authors, means that a goal can be broken down should it be proved to be unattainable, begging the question of why Achievable was also included. Here, they also must be Educational, providing insight as well as an outcome. A twist on this, from the Management Center, switches out Incremental and Educational for Inclusive and Equitable. Inclusive is meant to involve all groups impacted by a goal in the decision-making process, and Equitable is meant to ensure that a goal does not unintentionally marginalize a particular group.

Specific

Measurable

Achievable

Relevant

Time-bound

Incremental

Educational

 

STOOPID Goals according to Performentor - This last acronym is an attempt to remedy the perceived shortcomings of the SMART methodology but uses much of the original approach. The main differences to the standard approach are the inclusion of Objective, the choosing of an incontrovertible metric that employees all agree upon to measure; Observable, that the result must be viewable/verified by multiple people; Iterative, that a goal must be reached twice before being increased; Data-driven, measured with data; and performer-centric, i.e. goals are achieved directly by an individual and cannot rely on external factors. The key advice for this approach from Performentor is that goals need to be ‘relatively easy’ at first, must be performer-centric to reduce ‘stress,’ and should actively discourage stretch goals.

Specific

Time-bound

Objective

Observable

Performer-centric

Iterative

Data-driven

 

SMART goals method

 

Below is a simplified process of how most companies set SMART goals.

  1. Review documentation around the company’s own interpretation of SMART
  2. Write down a goal
  3. Break the goal down into its respective SMART elements using a tabular framework (see below)
  4. Review with manager
  5. Amend or set the goal
  6. Track goal
  7. Review goal
A typical SMART framework

 

Potential pitfalls of SMART goals

 

The primary concern when setting SMART goals is in choosing what the letters mean for your own business. This goes beyond making a pithy mnemonic and instead, the choice of words will directly impact how employees understand and implement their goals.

There are a lot of different definitions online as to what exactly SMART stands for, whether it's S, (specific, strategic, and significant), M (meaningful, measurable, and motivational), A (achievable, aggressive, adjustable, ambitious, attainable, assignable, aligned and agreed-upon), R (realistic, relevant and results-oriented) or T (time-bound, timely, and tangible). This multiplicity of meaning not only creates ample opportunity for employees to have different interpretations of what constitutes a good goal but also heavily dilutes the essence of SMART by constant iteration over time, to the point where few practitioners agree upon a given selection.

Later iterations, such as SMARTER and SMARTIE, add further confusion as they seek to incorporate an element of review and refinement into the process. But again, even amongst them, there is little agreement as to what the letters should be. This lack of consistent meaning and approach will mean high upfront training costs, even if an employee has used SMART before, as well as regular check-ins to ensure consistent usage: there will also be challenges around industry benchmarking, as each company may use a different approach.

Another criticism of SMART is that goals have to be achievable. While this seems straightforward on paper, setting a target that can be achieved comfortably is not always desirable as it promotes stagnation, ignores opportunities for growth, and does not push employees to try out new things. Moreover, knowing if a goal is achievable or not at the outset is nigh impossible, unless the bar is set very low.

An additional area of concern is the lack of urgency and excitement in their setting. SMART goals require a lot of known quantities when being created and significant amounts of time can be spent researching the feasibility of a goal, which might be better spent on its attainment. As stated previously, attainability isn’t particularly inspiring, especially if the bar is set so low as to need little effort or thought to succeed.

The final challenge is in alignment. The planning and fixing of SMART goals is mostly an individual endeavor, requiring employees to create and managers to review goals, and there is very little in the material to support aligning employee goals to bigger objectives or targets. Again, depending on the particular mnemonic you choose, Alignment and Relevance can appear in it but they offer no guidance as to whether the alignment should be top-down/bottom-up, or whether you align the entire SMART goal or just the Measurable aspect (and many more questions besides).

How, then, can we make SMART goals more inspiring, aligned, and smarter… without inventing another acronym?

Objectives and Key Results are the natural, succinct successor of SMART.

Born out of the same Management by Objectives framework created by Peter Drucker in 1952, both the SMART and OKR approaches seek to improve company performance by clearly quantifying goals. However, they differ in many important regards.

  • SMART was originally conceived as a way to write goals and wasn’t a framework in its own right. In this way, an OKR can be SMART so long as it consists of the same or some elements, but SMART isn’t always an OKR.
  • OKRs have a set meaning and SMART does not. An Objective is always the statement of what you want to achieve, and Key Results are always the way you measure outcomes to see if it was achieved.
  • OKRs have set components of Objectives and Key Results, whereas in the original and many succeeding SMART guidelines, parts are optional and open to interpretation.
  • Alignment is not intrinsic to SMART but is fundamental to OKRs. SMART goals improve individual goal-setting in isolation, whereas OKRs are targeted at company-wide adoption and alignment.
  • SMART goals can take significant time to create as they require researched, achievable goals, whereas OKRs set aspirational targets by default and do not need proof they can be achieved in advance of their being set.
  • SMART goals are typically measured by a single metric, whereas OKRs are multi-metric. Achievement in OKRs, therefore, can be measured more holistically.

With the above in mind, let’s explore how they can work together in making powerful objectives.

How OKRs can support SMART goals

 

A SMART approach to OKRs

What SMART does very well is training employees to set objectives in a methodical and consistent manner. For those unfamiliar with creating targets, or who are in their first role with more of a bottom-up approach, this will prove pivotal to fast ramping.

The SMART framework we recommend for OKR training is a twist on the traditional approach.

Superlative - Aim higher than the expected outcome

Measurable - Ensure that progress can be quantified

Aligned - Make sure your objective directly impacts overarching company, department or cross-functional objectives

Resourced - Review whether it is attainable currently or, if not, outline with your manager what is needed to achieve it

Time-bound - Verify that even if the objective is not 100% achieved in the given time period, that some attainment yields beneficial results

Superlative replaces Specific as any target, by its very nature, will choose a given area of business or goal to attain. Moreover, Superlative speaks to aiming higher than the intended outcome, inspiring employees, encouraging trying out new things, and pushing people to go beyond business-as-usual to create new habits and ways of thinking.

Measurable here means the same as other SMART approaches, but unlike Doran’s recommendation that managers are exempt on the grounds of needing ‘abstract objectives,' it mandates all employees to have measurables. If it can’t be measured, it can’t be objectively or universally accepted as being attained. For ‘abstract’ goals, such as vision or mission statements, these sit outside of OKRs and instead provide guiding principles rather than measured approaches in their own right.

Alignment replaces Achievable or Assignable. As with the SMART goals replacement, Assignable is a given, as the person writing it is either the one enacting it or part of a team/cross-functional initiative to deliver it. Achievable has also been removed, as it is contrary to OKR methodology and long periods of research are detrimental to attainment. Alignment, on the other hand, speaks perfectly to the purpose of OKRs. An Objective is only worthwhile if it supports other and overarching goals, and in this way, it creates collaboration and clear alignment and collectively benefits the business.

Resourced has been chosen instead of Realistic, as the latter suffers the same pitfalls as Achievable. However, there is a subtle difference here in meaning as it pertains to OKRs. Resourced in this sense does not mean 'if the current resource is not there, don’t do it.' Instead, it encourages conversation with managers: if all other SMART criteria (Superlative, Measurable, Aligned, and Time-bound) are met, then resourcing needs to be discussed. If the objective is aligned and has the potential to yield results far greater than the additional resource required, additional support could be found, as well as aligning other teams to this objective.

Time-bound remains the same, but the meaning has been amended. Yes, all Objectives should have a timeframe for completion; however, the key difference here is that even if it is only partially achieved, then there must still be a tangible result at the end. If Objectives are set and only achieve an outcome at 100% completion (such as building a new product), then a new Objective must be chosen instead. Time-bound, in this sense, means that at the end of the timeframe, a minimum level of positive outcome must be met. This is very similar to how, in Agile and SAFe Agile, products and projects are built to be incremental and iterated within a given period, so that even if the first of many stages are met, there is still a success.

The above improved SMART framework will train employees to think about Objectives in an aligned, aspirational, and attainable manner conducive to better focus, greater productivity, and improved collaboration.

SMART goals as Key Results

An alternative approach to weaving SMART goals into OKRs is using them at the Key Result level. Unlike Objectives that need to be aspirational, Key Results focus on the very tangible measurement of progress and have greater detail around proof of achievement.

Let’s take the example of an OKR adoption Objective.

The title would be something along the lines of ‘Kill it with OKRs’ or ‘OKRs are the lifeblood of our organization.’ This objective is both inspiring and aiming high for the total adoption of Objectives and Key Results across a company. Were the Objective to be a SMART goal , aside from being significantly longer, it would also typically have a lower, more realistic goal in mind such as ‘75% of our employees have an OKR within 3 months of this project.' It is Specific, Measurable, Assignable, Realistic, and Time-bound, but it isn’t particularly inspiring, high-reaching, or concise.

At the Key Result level, however, this level of detail is beneficial in order to correctly measure progress.

The SMART Key Results would be something along the lines of:

Everyone on the team owns an OKR

Overall attainment at 70%

We are tracking 270 key results

Committed OKRs at 100%

It is Specific (own/attain/track OKRs), Measurable (70%/270/100%), Assignable (Everyone/We/Overall), Realistic (only one Key Result requires 100%), and easily Time-bound, if it is put into a platform that allows the creation of session cadences.

For more free OKR ideas, head to our marketplace

SMART goals for personal/output, OKRs for organizational/outcomes

OKRs are for strategy realization, SMART goals are for individual goal-setting.

The very essence of OKRs is in the setting of connected, transparent goals that envision company, departmental, and team focus. At a glance, anyone within a business can see how their efforts roll up into the progress of bigger, more strategic goals, and likewise for their colleagues. It is this concept that enables OKR adoptees to move quickly, whether it’s adjusting strategy, reviewing performance, or moving onto a new project, to combat threats or take advantage of opportunities en masse.

Interconnectivity of aligned OKRs

 

SMART goals, conversely, like the waterfall methodologies of old, necessitate long-planning and maintaining the trajectory of a goal until it or the timeframe is completed. This approach is perfect for personal objectives where the manner of ending impacts only the individual and each step is almost ‘predictable,’ but falls short when compared to more aligned, agile-focused approaches to goal-setting.

Let’s take the example of adopting OKRs again.

A new starter joins an organization and is unfamiliar with OKRs. Their target for the quarter is to master the finer points of OKR setting and by the end of it, to have created an approved Q2 OKR.

The would look something like this:

OKR adoption as a SMART goal

The reason why this is an effective SMART goal is that the training has few dependencies, the individual can largely control the outcome and can ensure it is achievable in the given timeframe. What it won’t do, is affect the organization as a whole or be strategic enough to tie back to overall company objectives. When goal-setting, what is smart for the individual may not be smart for the business as a whole.

However, were this to be a company-wide initiative, such as all employees adopting and excelling in OKRs, then this would be a perfect OKR.

Kill it with OKRs Objective and Key Result

The nature of a company-wide initiative would require multi-metric tracking, to ensure that it is comprehensively achieved, multiple owners for the individual areas of measurement to manage the initiatives which support it, and to identify the areas where it went wrong if it is not achieved completely.

Turning SMART goals into OKRs

If a company is already heavily entrenched in SMART goals, how then can you easily transition from that to OKRs?

Let’s take the example of setting a company target to make a brilliant work culture in which employees thrive. This is the perfect SMART candidate for transitioning to an OKR.

  • Support culture before improving it - The first and most important step in implementing OKRs is ensuring that people, processes, and technology are prepared for the change. Teams already familiar with SMART goal-setting will find this an easier transition than those who are not, but generally the steps needed are to identify what good looks like, choose the right OKR software and run an effective pilot. Great culture is a combination of factors, from transparency to diversity, visible leaders to clear company values: OKRs are for missions that matter.
  • Aim higher - The second step is aiming higher. If a guaranteed achievable measure of success is 40%, double it. If you’re aiming for 90%, add 10%. Anything which makes that target a little bit higher, that bit more challenging but exciting, do it. In a study by Locke and Latham, 90% of people perform better with challenging goals. If your success metric for great culture is aiming for an eNPS score of 30, make it 60.
  • Measure more - The next step is measuring more. Adding more metrics that analyze performance from multiple perspectives, means better progress tracking, understanding why initiatives are leading or lagging, and better confidence in insights gathered. In the instance of great culture, measure eNPS, internal customer surveys, implementing a new ‘Employee of the month’ programs and more: don’t settle for one metric.
  • Own the objective - The fourth step is identifying owners. Giving one person the sole responsibility of making a company-wide objective succeed is a recipe for disaster: siloes are for grain, not employees. Multiple metrics, from multiple platforms, mean many teams and individuals will be involved both in the initiatives which drive employee engagement, as well as their success. If Marketing needs to build the forms, Talent Acquisition to attract the right employees, or HR to proactively measure sentiment, then they should all have ownership.
  • Alignable - The penultimate step is making sure that the objective is supported by other OKRs. Making employees happy, proud, and productive is more than just an HR ‘thing.’ It's the sum of all employees' efforts in addition to extraneous company achievements. Gaining series C funding, entering a company reorganization, or managing an M&A all contribute to the attractiveness and culture of a company but are not the direct efforts of cultural initiatives. A great culture OKR could be linked to a Talent OKR of 25% increase in internal employee referrals, a PR OKR of 100 positive mentions in leading industry publications or a Marketing OKR of an average G2 score of 5 stars.
  • Make objectives exceptional - The final piece is using words that make an objective motivating. Language shapes how we and our colleagues perceive a target, motivating or demotivating us based on the respective merits of the phrasing. In short, according to a number of eminent behavioral studies, those who are more inspired, display increased goal progress due to setting more inspired goals. To improve company culture, bin BAU phrasing like 'Improve company culture by increasing eNPS score by the end of Q1' and animate your staff and efforts with ‘Create the most awesome culture!’ as an Objective.
Transforming SMART goals into OKRs

How Gtmhub can support SMART goals and OKRs

Gtmhub’s OKRs solution supports you in reviewing your company and employee performance in the most comprehensive and accurate way possible. Our platform enables businesses to track both KPIs and OKRs at any level of business, with beautiful visualizations, dashboards, and over 160+ integrations to give you the data you need to measure and succeed.

If you’re looking to deploy faster, align closer, and execute better on your projects, try out Gtmhub for free or arrange a short chat with one of our OKR specialists today.