We've seen two opposite strategies: top-down and bottom-up. We often recommend a mix approach: company objectives are set first, then each team chooses a few objectives that falls directly under their responsibility (e.g. sales to increase revenue, R&D to develop a new product).
Then individual contributors can choose to contribute to other objectives that they're well positioned to positively impact.
The reality is that no process will be adequate for all teams. But you've got to start somewhere. Check out how the following cases influence how goals are set.
When using goals for the first time, don't take more than you can chew. Our typical recommendation is to:
If your organization suffers from a lack of focus, you can use OKRs to focus everyone's attention on a few areas. You can relax the constraints as you get better results.
It happens. The failure to reach goals or sometimes even to agree on goals can reveal a deeper problem. The good news is that goals can help, the bad news is that OKRs aren't a panacea and you'll still be required to fix the root cause.
Is your organization executing slower than its competition? Goals can help you instill a sense of urgency.
Start with quarterly goals. If you need more velocity, set more aggressive goals. You could set monthly goals for some teams but don't go more frequent than that: goals should remain high level.
Often a low morale can be attributed to a lack of understanding of the strategy of the organization. It's important to re-emphasize company-wide goals.
If you notice low employee engagement, there are a few things you can do with respect to goals:
This is a common fear: are we creating more work for ourselves? Most often, the goal discussion already takes place in another format: a weekly staff meeting, a monthly report, or informal water cooler exchanges.
When you update your goals, you're doing just that on your own time. Use the tool that lets you manage your goals to automatically distribute updates or even status reports.
Although less common, it's possible to adopt shorter goals for some teams. In a company with quarterly goals, a team can have monthly goals to reflect a faster pace. This works well for certain stages of software project.
If you don't have any of the issues mentioned above, adjust your process as follows:
We find the talk of Astro Teller - former head of Google X - to be a good summary of what celebrating failure is.