By Shaun Lee
Determining how to quantify the impact of missional work is among the greatest challenges nonprofit organizations face. Measuring results for nonprofits often isn’t as clear cut as it is in for-profit companies. As a nonprofit leader it can feel like you have a never-ending list of priorities to complete with limited available resources. Waking up daily to the reality of 20 critical tasks that must get done with the weight of feeling as if people’s lives literally depend on you can be suffocating and unsustainable. Nonprofit leaders say yes to far too much, often because saying no feels like missing out on a potential supporter. In a reality of scarce resources, the desire to expand your base of support is understandable, but the best way to grow support is by proving you are world-class at one or two things. To be the best at one or two things you have to say no to a lot of opportunities.
Many executive directors are in constant hustle mode from wake until sleep trying to ensure the viability of their mission. They can’t afford to be engaged in activities that don’t get them closer to accomplishing their long-term goals. Do you know what opportunities to say yes to? Do you have a rationale or decision-making framework to land you on a yes/no answer that you will feel great about and not second guess? Without a solid grounding in your organizational convictions and an understanding of your priorities for the year, it’s easy to see how you might make a bad decision that could be an enormous distraction.
Objectives and Key Results (OKRs), coined in the book Measure what Matters by John Doerr, provide a framework for leaders to develop annual and quarterly priorities. They are a helpful framework for mission-driven organizations because they provide a rationale to create aspirational objectives that can be evaluated by measurable key results. When mission-driven organizations become too data-driven it can feel as though they are losing the soul of the organization. The OKR framework provides a meaningful way to connect qualitative objectives to the measurable results. Once they are developed, leaders can filter opportunities by answering questions to determine if each opportunity gets them closer to achieving their OKR or not. They provide focus, allowing organizations to align their efforts to the advancement of the most important objectives. They provide clarity to everyone in the organization about how individuals can align their work to the most important organizational goals.
Here are some important characteristics of OKRs to help you try them at your organization.
Objectives are the “whats”
- Provide clarity on the most important organizational priorities for the next quarter and year.
- Are aggressive yet realistic (more on this later- keep reading!)
- Must be tangible, objective, and unambiguous; should be obvious to a rational observer whether an objective has been achieved.
- The successful achievement of an objective must provide clear value for the organization.
Key Results are the “hows”
Key Results must:
- Express measurable milestones which, if achieved, will advance objective(s) in a meaningful way.
- Describe outcomes, not activities. If your KRs include words like serve, help, reach, or participate, they describe outputs or activities.
- Include evidence of completion. This evidence must be available, credible, and easily discoverable. Examples of evidence include change lists, links to docs, notes, and published metric reports.
Why OKRs make sense for nonprofits:
- They combine the aspirational with what can be measured. Eliminate the dissonance that exists when it comes time to quantify your impact by marrying qualitative objectives with hard measurable data.
- OKRs provide focus and ensure commitment to priorities- which is critical with limited resources.
- They facilitate collaboration- drive organizational health because everyone understands how their work impacts the organizations most important goals.
- Make progress towards your Change the World Target
Additional OKRs considerations:
- What cadence is right for us? The cadence that best fits the existing rhythms of your organization. At MMG we divide our work into trimesters- so we organize our OKRs around a four-month time period.
- Committed vs. Aspirational: Committed OKRs are those that the organization is committed to completing. If they get off track, you are willing to make the appropriate adjustments to ensure they get back on track and they get done. Aspirational OKRs are stretch goals that the organization doesn’t have to accomplish, but if they are achieved could take you to the next level.
- Scoring– Use at 1.0 scale
- Remember to score your OKRs at the end of your measurement period.
- For Committed OKRs, anything short of a 1.0 should be considered incomplete
- For Aspirational OKRs, anything greater than .70 is considered a success. 70% is considered a success because of the stretch nature of how they are constructed.
Potential pitfalls in setting OKRs:
Trap 1 – Failing to differentiate between committed and aspirational OKRs. If you have a committed OKR perceived as aspirational, team members may think they are making great progress at 70% when this progress is not enough to make significant change. Conversely, if team members think they must meet 100% of an aspirational OKR, individuals may give up from exhaustion. Both mistakes can be detrimental to overall motivation throughout your organization.
Trap 2 – Sandbagging/Business as usual OKRs: This happens when OKRs are written based on what teams can achieve without changing anything or challenging themselves. The purpose of creating OKRs should be to thoughtfully align efforts to make meaningful progress towards your long-term goals and vision.
Trap 3 – Aspirational OKRs that don’t push you: if you’re going to go for it, go for it – stretch!
Trap 4 – Your OKR doesn’t pass the “Who cares?” test. These are the OKRs that, if completed, no one will notice, no one will care, or it won’t make a difference to the organization. Litmus test: Could the OKR get a 1.0 without providing a significant impact? If so, then reword to focus on tangible benefits.
Trap 5– Insufficient KRs for committed Os. OKRs are divided into the desired outcome (the objective) and the measurable steps required to achieve that outcome. It is critical that all KRs are written such that scoring 1.0 on all KRs = 1.0 on objective. In other words, if you complete all the KR’s but don’t feel like you achieved the objective, you need to have different or additional KRs.
Nonprofit OKR example:
|Objective||Key Results (as measured by)|
|Prove the person-centered recovery model works||-Increase the # of clients graduating by 10%|
|-Increase the # of clients attaining sustainable income by 20%|
|-Decrease client recidivism by 15%|
|Become financially sustainable||-Increase cash operating reserve to $1,000,000|
|-Increase private giving to 1,000 unique funders|
|-Generate $100,000 in earned income|
Using OKRs to Deepen a Culture of Learning:
Setting aside time on a regular basis to review and learn from you how you did on your OKRs is just as important as creating and implementing them. One of the most impactful ways to drive organizational learning and build a healthy culture is to prioritize time to conduct retrospectives on your OKRs when the measurement period closes. Dedicated retrospectives should include reflection on KR performance as well as how team members are doing working with each other. The retrospective time should consider the following questions:
- What was the score of each objective?
- For objectives that reached a 1.0, did they stretch the organization enough, or did they sandbag?
- For objectives that scored lower, what conditions existed that caused the lower score?
- Overall, what went well?
- Overall, what could have gone better?
- How did the team do working with each other to achieve the objectives?
- What handful of actions will you focus on to improve scores and teamwork for the next round of OKRs?
It can be common for mission-driven organizations to confuse their mission with an objective. A good mission should effectively point your organization in the right direction. An objective should come with concrete steps (KRs) that the organization is engaged in that help them to move closer to achieving their mission. Your mission will effectively point you to your organization’s true north, but the objectives create a clear path for how to get there.
To learn more about how your organization can implement OKR’s reach out to us at email@example.com