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Guide to OKRs (Objectives and Key Results)

What are OKRs?

OKR stands for Objectives and Key Results. It is a management framework for regular planning and progress reporting on company goals. OKRs were started by Intel in 1970 and made popular in Silicon Valley by Google in 1999. Today, they are used by many start-ups and leading technology companies including LinkedIn, Twitter, Oracle and others.

Objectives (where we want to go) are high level, qualitative goals of the company that often link to the organization’s overall mission or strategy. They should be ambitious; you should not be consistently achieving 100%.

Key Results (how we will get there) are specific, measurable tasks that contribute to achieving an Objective. Key Performance Indicators (KPIs), like revenue, number of customers, customer satisfaction rates, etc., can be used to track progress on Key Results.

One of the key aspects that differentiate OKRs from traditional goals or MBO’s (Management by Objectives) is the necessity that OKRs be public to the entire company or organization. Every employee should be able to see every other employees’ Objectives and Key Results.

Why use OKRs?

OKRs are so widely used by the most innovative and forward-looking companies because they work. More specifically, OKRs…

  • Increase discipline by linking company, team and individual objectives to measurable results, enabling the entire organization to move together in the same direction.
  • Increase collaboration because all OKRs are visible to everyone in the company, making it easy to assist team members in achieving Objectives.
  • Increase transparency by always keeping Objectives in front of employees.
  • Are simple to implement and don’t require significant time or administration; especially if a software tool is used.
  • Are clear and consistent standards for measuring execution across the organization; employees always know what is expected of them.

Setting OKRs

There are some important principles that should be followed when setting OKRs:

Process: OKRs should be set quarterly (some organizations also set OKRs annually and break those annual OKRs down each quarter). Here’s an example of an ideal cadence:

  1. Decide on Objectives as a team at the start of the Quarter.
  2. Employees set individual Key Results by the end of the first week of the quarter.
  3. Share progress regularly (i.e. weekly, bi-weekly or monthly) during the quarter.
  4. Score the quarter’s Key Results at the end of the quarter and share results with the organization.
  5. Carry-over any unachieved Objectives to the next quarter’s OKRs (if they are still applicable).

Bottom-up: More than half of Objectives should be set by a process that involves the employees providing suggestions and input to management.

Limited Number: Having too many Objectives or Key Results will decrease focus and make them less likely to be achieved. There should only be 3–5 Objectives at one time with about 4 Key Results per Objective and no more than 4 Key Results assigned to each employee.

Measurable: It’s critical that Key Results be set in a way that they can have a number attached to them that measures their progress. This is typically a percentage or 0–1.0 scale (see “Scoring OKRs” below).

Ambitious: OKRs should be ambitious, but should also align to an employee’s role and job responsibilities.

Examples of OKRs

Example #1

Objective: Grow Revenue by 3% this quarter

Key Results:

  1. Increase sales proposals to 35
  2. Increase website conversions by 15%
  3. Sign up 20 trial customers

Example #2

Objective: Increase brand awareness within our industry

Key Results:

  1. Build our social media followers to 1,000
  2. Post original content 3 times per month
  3. Develop 2 co-promotion partnerships

Example #3

Objective: Improve employee engagement

Key Results:

  1. Create 2 incentive-based contests per month
  2. Launch a platform for employee to employee recognition
  3. Develop a survey to measure employee satisfaction

Scoring OKRs

It’s important that OKRs be measurable so that a quantifiable number can be assigned that indicates the level of success in completing that OKR. The preferred method for scoring Key Results is on a scale from 0 to 1.0 (or 0–100%). Key Results’ scores are averaged up to the Objective level. Key Results should be challenging but mostly achievable with some, not all, reaching 100%. And at the Objective level the target should be 60–70% achievement of the average of the Key Results within that Objective.

Implementing OKRs

So, now that you see the value of OKRs, it’s time to introduce them to your organization. The best way to get started is with your own immediate team. Prove the value of OKRs with a small team and then evangelize them to the broader organization. If you are lucky enough to have the buy-in from the highest level of management right off the bat, then roll them out company-wide.

A great way to improve adoption is to automate the process with a great software tool (like AddProgress). Whichever tool you use for OKRs, look for these key elements: 1) it should be super easy and quick to add Objectives and Key Results, 2) it needs a way to score each Key Result and roll-up those scores to the Objective level, and 3) it needs to provide a quick, visual snapshot of progress to the entire organization.

It’s also important to note that OKRs should be separate and distinct from annual performance reviews and compensation decisions. Linking OKRs heavily to performance reviews and/or compensation will encourage employees to set OKRs that are too easily achieved and not ambitious enough to truly drive organizational performance.

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