How do Annual OKRs Compare Against Quarterly OKRs

OKRs, started off by companies like Google and Intel are a performance metric set by decision-makers and managers that guide outcome-based success. The goal with OKRs is to turn goal-setting into a more task-driven approach with measurable success points.

When setting OKRs the general rule of thumb is to have 3-5 objectives under each broad goal. By common practice, OKRs are usually set annually to drive the specific goals and objectives.

Goal-Setting Within An Organisation And Its Significance

Name a company that does not have goals. You probably couldn’t find any. Every company has goals – visionary goals, departmental goals, and finally, trickled down version of individual goals. Goal setting is indeed a big part of every organisation; after all, it leads the vision they’re working towards and guides the steps needed to fulfil that vision.

Goal setting is a rather large topic, involving how to set the right goals right till who is the best person to achieve that goal. Time is an important consideration for goals and a goal without a timeline that’s in the foreseeable future – are usually not achieved.

Now, the problem with goal setting is that it is fairly easy to set a yearly goal. OKRs that are set yearly are functioning the way there are supposed to and, might work for some. That means they are well-thought-out and descriptive-enough.

For example, if your key objective is to increase buyer retention by 20% this year by taking steps such as sending more user engagement emails and using updated software to send push notifications – that’s a well-defined goal with a time span of a year.

Annual OKRs And The Challenges They Pose

Consider today done, do you know what your tomorrow is going to look like? Do you know if the government is going to release a law which doesn’t allow you to carry out certain marketing activities? – I don’t and I’m certain you don’t too.

Annual OKRs Can Be Too Vague

A year can sometimes be too long a span and too vague for a  goal when we acknowledge that every single day, change is happening around us. What might change and to what extent – no one knows.

Now, apply that back to yearly goals. Often, it is impractical to have year-long goals when things change day to day, in business and life. When you have annual OKRs, there is way too much room to change. That can be detrimental to the organisation as a whole, since, too much room to wiggle can mean a loss in productivity or sight of goal.

No matter how descriptive your annual OKRs are – they tell you “Send 25 emails to customers that purchase over 10,000INR” but, not, “Send 2 segmented and targeted emails a week to customers who spend 10,000-15,000INR and 15,000-50,000INR”. Can you see the difference?

The Case For Quarterly OKRs Versus Annual OKRs

An annual OKR is like a painter painting an abstract painting on a blank canvas. A quarterly or maybe monthly OKR is like a painter who’s drawn-out what they want to paint before they get to the painting part. There’s a huge difference between the two. This is why we believe the annual OKR must be left behind and a more action-oriented, shorter time span OKR needs to be put in place. A happy place is indeed quarterly OKRs.

Quarterly OKRs Are More Precise

Three months ahead is fairly predictable from a management standpoint, and with three-month OKRs, individuals can prepare and execute the OKRs with precision. When you have quarterly goals and OKRs, the direction, priorities, and tasks can be allotted well. Additionally, running a 50km long marathon is harder to imagine and get to, versus a 5km. The same goes with goals – running a 5k is much more achievable looking.

Quarterly OKRs And Things To Keep In Mind When Setting Them

When setting up quarterly OKRs there are a few things that need to be kept in mind to ensure effectiveness.

• Last quarter did we achieve the OKRs? If not, how close were we?
• When setting quarterly OKRs, is there a support system/infrastructure in place?
• Was the quality of achievement higher/better? Did individuals ‘achieve’ or ‘overachieve’?

What Makes Quarterly OKR Beneficial

When choosing quarterly over annual – there are many benefits that float to the surface. Here are a few:

1. They are agile – being quarterly, they can adapt to current situations easier than yearly OKRs
2. They are simpler – Since timelines are defined and now shortened, it can be made much more precise
3. They make the people achieving them feel more successful, only 50-70% of annual OKRs are ever met
4. They don’t have the ‘set, then forget’ mindset around them – quarterly OKRs will keep you on your feet
5. They don’t cascade through departments – they are very specific and action-oriented
6. They can be tied into performance incentives since tracking 3-month OKRs give you a clear idea on the productivity and efficiency of the person.

Creating alignment in the organization is one of the main benefits of defining OKRs. The goal is to ensure everyone is going in the same direction, with clear priorities, in a constant rhythm.

OKRs are a great tool for organisations, but how you use them does vary. Quarterly OKRs drive transformation and progression at a higher speed and traction than yearly. For employees and the executors, quarterly OKRs serve as a motivation since they are not goals that are too far-fetched.

Does your organisation use quarterly or annual OKRs? What has been the learning from either?