Key Differences & Similarities Between OKRs & Smart Goals
Objectives and Key Results—also known as OKRs—are an objective setting framework that is used to align teams around shared goals, measure outcomes, and motivate employees. Businesses like Google, LinkedIn, Twitter, GE, Oracle, Adobe, Intuit, and others have successfully adopted them.
SMART goals are a tool for getting a structured framework to achieve organizational goals. Both these tools are popular among organizations for various reasons. But which mechanism should you choose? What are the pros and cons of these two approaches?
This article covers the differences between SMART goals and OKRs and gives tips to set them up.
OKRs vs. SMART Goals: The similarities
OKRs and SMART goals offer a method for creating precise, realistic, and time-bound corporate or team objectives that align with personal milestones. A prime difference between OKRs and SMART goals is the justification behind your goals.
Goals should be clear, but justifications could include why you want this particular result over others. It can also have reasons that justify spending more resources on something than another option that would require less work.
OKRs vs. SMART Goals: The differences
OKRs are ideal for setting long-term, inspirational goals. They are not as clear and concise as SMART Goals, which provide you with specific time-based metrics to gauge success in achieving your Objectives or Key Results. They can be more challenging than traditional goal structures because it is less tangible. However, you still need to have this type of accountability.
Key results are more than just an individual goal, so organization-wide success should be the focus. OKRs provide agility by changing your Key Result according to changing circumstances without losing sight of what is critical for the business.
They also make it easy for managers who want updates about their team’s performance on these goals. Managers review them quarterly, which gives plenty of time into assessing where everyone has gone wrong.
OKRs offer a way to adjust goals throughout the year as managers observe how employees work. It gets done in an agile manner, with key results changing when necessary. You can take advantage of changing circumstances and allowing for greater flexibility by using OKR objectives that are general enough.
SMART goals are a more straightforward and measurable approach to achieving success. They focus on one concrete metric, such as profitability or quality assurance. You can also break down a goal into smaller sub-goals that provide feedback on how well you’re doing. It is easier for management to assess measurements from different levels within organizations.
SMART goals often have a link with compensation, whereas OKR achievement gets measured separately in terms of the impact on business outcomes and is typically delinked from the compensation. It encourages experimentation and where teams can grow capable but not fully achieve their aspirations.
SMART goals are essential to achieving incremental development in organizations. However, some people believe they can turn into to-do lists instead. The risk is more when SMART goals become disconnected from strategic targets and internal incentives like performance reviews or bonuses. Employees may sandbag by setting useless tasks that do not further their careers.
Goals should be SMART and annual, not quarterly or monthly. You can complement them by having quarterly or monthly OKR cycles. The combination will become more agile than SMART goals alone. SMART goals are less flexible than OKRs in responding to the market or other factors.
The setup often takes longer because they rigorously get cascaded throughout an organization. Thus, an individual’s goals depend on that of their manager. It can make them difficult for employees with limited authority at different levels within companies.
SMART goals are necessary but not sufficient to achieve the desired results. They are one piece of the puzzle. Without something more than just SMART goals, an organization will be left wanting in its quest for progress towards strategic excellence. Achieving goals is essential because it helps us measure our success or failure and define future plans based on that measurement.
OKRs vs. SMART Goals: When to use them?
Here are some considerations you should keep in mind when considering the two options. The OKR framework is ideal in the following scenarios.
- Understanding the ultimate goal
- It is advisable to use OKRs when you are well aware of what you wish to achieve at the end of the quarter and the year.
- Creating long-term goals
- Teams should focus on large-scale organizational objectives and set goals that could impact them positively.
- Having evolving goals
- OKRs are a useful tool as they allow for better tracking of goals. Weekly reviews can help you monitor changes in key results. It is one of the reasons why you should check the progress frequently. The quarterly process means that you can revamp or remove key results based on business needs. OKRs offer not only a way to track success, but also help users monitor changes.
- Improving organizational culture
- To create well-aligned objectives, an organization needs transparent OKRs. They work best for knowledge workers who need to define goals to align efforts throughout a company. OKR planning provides transparency into what people will do to achieve desired outcomes.
- Creating multi-metric goals
- Differentiating between multi-metric and single-metric targets may matter depending on whether you want to declare victory for the entire OKR package or specific accomplishments. A key result will usually draw from multiple measures of success, like an individual SMART goal. Distinguishing the two can help with understanding the success of OKRs.
You can use SMART goals in the following situations.
- Getting top-down direction
- Businesses that need top-down measures for improving their performance should opt for SMART goals.
- Not having a clear destination
- You should not worry if you are unsure of where you want to get to. SMART goals are helpful in such circumstances as they give you a framework with precise objectives.
- To set individual and team goals
- There are many reasons why a team’s aims might not contribute directly to the large-scale strategic plan. It occurs when individuals and departments work towards behavioural change within themselves or for one another. SMART goals can be an excellent structure in such cases. They help people identify what will take them closer to their desired destination while also providing direction to get there.
OKRs vs. SMART Goals: Pros and Cons
Both the approaches are unique, and you should use them according to situations. Here are a few things to keep in mind.
- Flexibility – Using quarterly goals instead of annual ones help teams and individuals pivot. With a clear objective for each quarter, they can change their key results as needed to adapt to changes in the market or competitor landscape without losing momentum on overall progress.
- With SMART goals, it is hard to alter course midstream. It is because there is not much time between quarters. However, OKRs provide flexibility by allowing you to rethink your priorities every three months rather than just once a year.
- Ambitious – OKR goals are more ambitious than SMART goals for business success. The difference lies in what you want to achieve with your company and how much time is available. If there is room left on the table, it makes sense to reach out into unfamiliar territory. It will help pursue outcomes with impact high enough to make an organization thrive.
- Confidence – When people fail to achieve their goals, they may feel discouraged. A SMART objective narrows down what teams need to accomplish and can cause employees to neglect other tasks or projects altogether out of frustration. When this happens, it is easy for an employee’s morale to tank. There is no long-term payoff on the progress made towards the overall vision of the business.
- Accuracy – SMART goals are excellent if you want precise results and a timeframe. However, objectives can be on a broader level. OKRs focus on key performance indicators rather than just one thing while still changing as circumstances dictate.
OKRs vs. SMART Goals: Tips for smart goal setting
Here are some essential tips to consider when writing OKRs and SMART goals.
- Have thoughtful goals – Give good thought to choosing your goals. If you do not write them well, there is hardly anything to gain out of them.
- Make the approach collaborative – Managers should collaborate with employees on setting team goals and allow them to select some of their own. It will help managers understand what motivates each member of the group better than ever before. Members will also remain invested in attaining success.
- Write goals clearly – Writing down your goals can be a powerful motivational tool and will help you stay on track. Furthermore, sharing them with other team members promotes transparency across the company. Everyone will understand what is going on at any given time.
- Have frequent reviews – Setting goals is just the first step to success. To ensure participants achieve their objectives, they must review progress frequently and manage training resources as well. It is not enough to make plans about what might happen if everyone does their job correctly.
- You may also require some means of assessing whether they are achieving those objectives. The first thing any good strategy should include would be regular check-ins, so you know where things stand.
SMART goals are an easy way to set personal goals, but OKRs provide more context and turn goal-setting into a company-wide exercise. With this system in place, organizations can achieve clarity and focus on what they want from their future.
When you have a lot going for and against at once – whether personal or professional- SMART goals help. But what good does it do by just telling “I want this” without any context? OKRs help turn goal setting into something more organized by creating clarity through focus.