Bottom-up? Or Top-down? What’s the best way to set OKRs?

Posted on July 12, 2021.
Goal setting should be a collaborative process between teams and their leaders.

Given organizations’ natural tendencies towards top-down goal setting, it’s not surprise that’s the first pattern attempted when companies bring in Objectives and Key Results (OKR). Leaders and managers are used to telling their teams what their goals are and when they are expected to hit them so why would OKRs be any different?

It turns out though that the best implementations of OKRs practice both a top-down and bottom-up approach to setting team-level goals. At the leadership level strategic OKRs are set for the organization, department or business unit. Each team that supports this strategic goal is then asked to create their own OKRs that function as leading indicators of the strategic goals. Teams answer the following question: what can we influence that will help the department hit its overall goal?

Let’s say for example that one of the organizational goal is reducing cost of operations. And, again, let’s say you work on the team in charge of the authentication portion of your customer journey. What can your team influence that will help reduce operational costs? I would expect to see outcome-centered options from your team like “reduce failed password entry attempts” and “decrease the number of calls to the call center asking for password resets.” These key results are leading indicators of cost reduction. Best of all, these are user behaviors that your team can influence which means you’re setting a goal your team can achieve with minimal dependencies.

Each team that comes up with its own OKR goals then brings those to their leadership teams and explains why they chose these goals and how they believe they will help achieve the strategic goals the leadership team has set. There certainly could be a negotiation, adjustment of targets or rethinking of which KR’s make the most sense for the team to work towards but these decisions are being made together with leaders rather than being dictated to the team.

While there are many benefits to collaborative goal-setting perhaps the most impactful one is that teams simply do better work when they’re working on their own ideas and towards their own goals. They feel a greater sense of ownership and it’s reflected in their work. Their pride shines through and it’s all because their leaders trusted them to do the job they were hired to do.

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