Are you looking to align employee priorities within teams and your overall company? The OKR methodology might be your solution.
If you care about business success and employee engagement (who doesn’t?), you need to care about setting clear goals. That’s why so many companies are embracing objectives and key results (OKRs) as the best practice for committing to goals and following through on them. But if you’re new to OKRs, it can be hard to know where to start, which is why we wrote this guide.
We’re going to tell you everything you need to know about how to write great OKRs. Better yet, we’re offering 45 OKR examples, covering different departments, industries and employee-ranks.
Here’s what to expect:
- An introduction to the OKR methodology
- How to Write OKRs
- Finding the Right OKR Cadence
- Creating OKRs on a Company Level
- And 45 Examples of Great OKRs
What is the OKR methodology?
The OKRs methodology is a system for setting, cascading and communicating goals throughout your company.
There are 4 key reasons OKR users find success…
- Common Language: Translating long-term strategies into actionable quarterly focus.
- Transparency: Breaking down silos on a team and individual level.
- Accountability: Taking clear ownership of areas of responsibilities.
- Alignment: Ensuring focused execution across the whole organization.
We use OKRs at Paycor, and they’ve proven to save time and help build a transparent culture where everyone feels involved.
How to write OKRs
Simply put, objectives are outcomes that reflect current company, department or personal priorities.
Every objective corresponds with up to 5 corresponding key results that…
- Answer the question, “How do I know if I have achieved my outcome?”
- Are the end result of a series of tasks, but not the tasks themselves
- Are Measurable
If it’s not quite clear yet, don’t worry. Have a look at the following OKR example…
Objective: Create more transparency across the organization (by the end of FY21 Q4) by achieving these key results
- Increase employee satisfaction rate for transparency in pulse survey by 25%
- Implement OKRs methodology with 100% of employees creating an objective
- Achieve average of 80% OKRs weekly check-ins for progress updates
The objective is challenging, but that’s how it should be.
The key results indicate essential milestones that need to happen before your objective or outcome can be achieved. This should break down the actions you need to take to make it happen.
Beware: don’t confuse key results with tasks. Tasks should be generated based on key results.
Selecting an OKR alignment model that fits your company
One of the benefits of using OKRs is the alignment of individual objectives to high-level company objectives, to drive focus and understanding of why an objective is important to the organization as a whole.
To see the full benefits of the OKR methodology, you need to select the appropriate alignment model for your company. Let’s talk through the two most common OKR alignment models.
The Full Alignment Model
The full alignment model appeals to corporations and large departments, integrating well with established management processes that are usually top-down.
It’s also more manageable to establish cascading OKRs in this way because employees can clearly see how goals are being aligned.
As you can see, the CEO sits at the top level of the company.
One level down, we have the Director of Product and Director of Marketing. In this top-down model, their objectives will be taken directly from the key results of the CEO.
The Flexible Alignment Model
The flexible alignment model appeals to startups and smaller teams.
The nature of this OKR alignment inspires companies that have flexible cultures which promote agile changes and growth. While all objectives are ultimately aligned with higher level OKRs, there is no strict alignment that prevents individuals from setting personal growth OKRs.
The CEO still sits at the top level, just as in the Full Alignment Model. However, the change lies in how the OKRs are being cascaded to the next level. Rather than creating objectives from a superior’s key results, managers can set their own department OKRs, as long as they align with the company OKRs.
Selecting a cadence for setting OKRs
OKRs are time-boxed and run for a predetermined amount of time. It’s your decision as to how long that span is.
Most organizations use a quarterly cadence, meaning every OKR runs for a three-month span. This is often seen as short-term enough that every week counts, but long enough that real progress can be made.
Selecting a cadence for updating OKRs
The OKR methodology is most successful when there is a rhythmic process attached to it.
While most organizations devote time and resources to create OKRs, leaders should also focus on internal processes such as check-ins, 1-on-1s, and feedback loops in between to receive real-time updates as well as to provide proactive support.
How to roll-out OKRs to your company
As a leader, selecting an OKR methodology is just the start. Your next job is to make it a success. The good news is, you have a secret weapon: managers.
Any company that leads from the top won’t get far without manager buy-in: you need them to demonstrate by example.
Your managers or department heads are the best people to consult when creating annual OKRs. Task them with drafting alternative objectives that fit the company, keeping in mind they have different departmental priorities.
At Paycor, we recommend rolling out OKRs before a new year or quarterly cycle within your company.
Here is a quick overview of the steps you’ll need to take to roll-out OKRs for the first time…
- Brainstorm company OKRs with an annual plan in mind
- Collaborate with managers to draft their first set of department OKRs
- Communicate the OKR methodology to the entire company
- Employees draft their own OKRs
- Finalize OKR alignment company-wide
- Review individual OKRs and continue to monitor performance
Where to Start with Company OKRs
For leaders to begin setting company OKRs, it’s important to take a look back at where this whole process starts. The cascading diagram below shows how your vision is linked all the way down to both your annual and quarterly OKRs.
Companies look to OKRs at different stages of their lifecycle. When looking at companies in the mature stages of their growth lifecycle, we can easily distinguish their vision, mission statement and long term goals. For these mature companies, converting company visions, missions statements and even annual plans into annual or quarterly OKRs is a shorter process as the foundation has already be laid given developed metrics and strategies of success. Companies at earlier stages of their growth lifecycle on the other hand may fall anywhere in the development stages from defining performance management metrics to building success strategies.
Why Defining a Company Vision is Important for Setting Objectives and Key Results (OKRs)
Many goal setting methodologies help with the “What” but do not emphasize the “How”. To be able to execute as a company, it is necessary to discover the “Why” factor. It’s important for employees to understand what is driving the company. When a company is able to strongly define why they are doing what we are doing, it then allows for more transparency and insight on what success is and how it can be reached.Defining a Company Vision for OKRs
The magic of OKRs is that everything begins with the end in mind. In other words, all goals should be directed by what your vision statement describes. A company vision should be easily stated in one sentence describing what your company aspires to be. It’s time to dream big.
Here are some examples of company vision statements:
Disney: To make people happy.
Ikea: To create a better everyday life for the many people.
Paycor: To help leaders develop winning teams.
As you can see, vision statements are aspirational. It’s asking the company and leadership team, “Why are we doing what we are doing?”
In the tech industry, company vision is often linked to a Big Hairy Audacious Goal (BHAG). A term coined by Jim Collins in “Built to Last”, BHAG pushes boundaries and challenges the company.
Here are some questions to help narrow down your BHAG in a 3-step process:
- What is your core purpose?
- What are your core values?
- What is your BHAG?
Company vision statements can often be mistaken as something of a catchy tagline. While a vision statement can sound smart and memorable, like the examples above, it’s for your team and culture, not a sales tactic. Therefore, it’s not necessary to pigeonhole the company vision statement in order to make it sound appealing to everyone else. A company vision needs to be big and challenging. Sure it might take years achieve the company vision, but at the end of the day, no one said it would be easy.
Defining a Company Mission Statement for Objectives and Key Results OKRs
You might be wondering “How does my whole vision translate into my mission statement?” or “What is the difference between my vision and mission?”. Your vision describes the end result of your efforts, but your mission statement details the reason for your company’s existence. Your mission statement is where you outline how your products or services will lead to accomplishing your vision. Let’s revisit two of our previous examples: Disney and IKEA.
Disney’s vision is “to make people happy”. Here is their mission statement:
The mission of the Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop creative, innovative and profitable entertainment experiences and related products in the world.
IKEA’s vision is “to create a better everyday life for the many people”. Here is their mission statement:
Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.
One highly recommended exercise for all leaders is the Hedgehog Concept by Jim Collins. The Hedgehog Concept is based on an ancient Greek parable that states: “The fox knows many things, but the hedgehog knows one big thing”. To narrow down your mission statement, the Hedgehog Concept encourages you to think of 3 main components:
- What are you deeply passionate about – This is all about your vision. Ask yourself: “What is the end result of this journey?”
- What you can be the best in the world at – Think about your skills, experiences, resources etc. Find out what your talents can contribute to the world.
- What drives your economic engine – Pinpoint the main economic denominator that is crucial for your organization. This economic metric should answer the question: “When will the company be on the right track strategically and succeed?”
Company-wide Strategic Planning for OKRs
Revisiting the hedgehog concept, it can be used as a starting point for strategically planning to achieve a mission statement as it outlines three main categories:
- What are you deeply passionate about: This question should help the company focus on what product/service it wants to offer to its target audience. Market research can help guide the company to finding product-market fit and identify the industry benchmarks.
- What you can be the best in the world at: Take a deeper look at the company’s current resources: knowledge, skills, experience etc. By finding out what the company is best at in the industry, it will allow for the opportunity to set up strategies around internal processes.
- What drives your economic engine: Usually, revenue indicators can be narrowed down by finding out what economic metric of success fits your marketplace. Is the company charging per user? Per usage? Per month?
Think big! Set the appropriate expectations for team members. There are companies who are all for pushing the boundaries. Setting challenging OKRs and pushing everyone to go above and beyond is not a bad thing. If that’s the case, make sure the right benchmark is set. Over-challenging objectives tend to be demotivating to team members if they feel out of reach and unattainable. It’s important to strike the right balance.
Download 45 OKR Examples
Writing OKRs isn’t easy. The best goals combine broad company vision with specific, measure results. It’s good to be ambitious, but OKRs also need to be achievable and measurable. To help businesses, Paycor is offering 45 examples of great OKRs, covering a wide range of job functions and department-levels. Fill out the form at the top of the page for access.