Like the sound of implementing a new goal-setting methodology but don’t know where to start? Heard of OKRs but not sure what makes them different from alternatives? Need to find a way to get your whole team on board to meet strategic objectives? You’re in the right place.
Implementing Objectives and Key Results (OKRs) is a great way to bring transparency and objectively to how you to plan and set goals. If you’re confused how it all works, don’t worry. OKRs are straightforward once you understand what they’re all about. To help you do just that, we’re answering common questions about OKRs and how they work.
What are Objectives and Key Results (OKRs)?
Objectives and Key results (OKR) is a goal-setting methodology driven by outcomes. Using OKRs encourages alignment, transparency and accountability through measurable goals.
Who created Objectives and Key Results (OKRs)?
Although popularized by Google’s John Doerr, OKRs were actually created and implemented decades ago before by Intel. In recent years OKRs have been adopted by growing companies like Google, Twitter, and LinkedIn, and are used widely across the technology sector and beyond.
What are the benefits of using Objectives and Key Results (OKRs)?
Companies of all sizes struggle to accomplish their objectives with the resources they have available. They need a way to focus resources on the right priorities and ensure maximum impact. OKRs offer a performance management framework that allows the alignment of company-driven core values and objectives, delivered with transparency, which drives employee engagement.
How are Objectives and Key Results (OKRs) created?
Objectives are outcomes that reflect current business priorities. They should:
- Be time-based (i.e., with a due date), non-numeric (qualitative) and aspirational
- Answer the question, “What am I working towards?”
- Empower and promote collaboration and cross-functionality
- Have a clear subject, object and corresponding journey
Every objective has corresponding key results, which should:
- Be measurably numerically, with a clear start or end point
- Utilize a threshold or delta to measure change (i.e., from x to y)
- Be the end result of a series of tasks, but not the tasks themselves
- Answer the question, “How do I know if I have achieved my outcome?”
Every key result has supporting projects that have their own to-do tasks but are separate from OKRs.
How do I start planning Objectives and Key Results (OKRs) for my company?
The following timeline view covers suggested best practice milestones to help you through your first quarterly cycle with objectives and key results. OKRs are unique in that every time you go through a full cycle, there will be a different structure. They link to areas of responsibility, business priorities and stages of your business. Every cycle you’ll discover new things. You’ll have different milestones based on your priorities and strategies.
- Education and Drafting
- First quarter planning: Have all leadership team members put draft OKRs into the OKRs review template. Review as a team once complete. Each team lead can continue to repeat these steps with their direct reports.
- Discussion Topics: Grading criteria that will be used at the end of the quarter, what defines “success” for each OKR, supporting KPIs and major contributing projects.
- Progress Updates and Check-Ins
- A great objective is one you think about in everything you do. Every time you check in, you’re turning goal-setting into a natural habit. This changes how individuals approach engagement at work. Work is no longer a series of tasks, but high-level achievements tied to team success and business impact. This focuses conversations on what needs to be done next to aim even higher.
- Every great OKR incorporates a discussion where everyone is asked, “Can you realistically commit to all of this?” Have conversations that answer what success means, how teams will support each other and what resources are required.
- Check-In: Check in within your first week to start building a habit. Weekly check-ins will leave you with 12 snapshots in time to reflect back on at the end of the quarter.
- Status Update: By week 2 add an on/off track indicator. Assess what resources, priority shifts or adjustments need to be made. Get through the rest of the quarter with confidence, feeling empowered. Knowing you have the proper resources increases the likelihood of completing your OKR.
- Roadblocks and Planning
- Goal-setting coaches concentrate on keeping goals manageable and on-time. Short-term goal coaching should focus on the achievable, action-oriented component of long-term achievement. Coaching keeps goals not just realistic, but relevant to the long-term personal development of a mentee. As a goal-setting mentor, you should keep goal conversations focused on, “Can your goal really be done?” and break down long-term goals into short-term actionable items.
- Leadership Meeting: It’s important to meet at the halfway mark to discuss where things are at and provide team-level updates on whether OKRs are being understood at all levels.
- Second Quarter Planning: Review you and your team’s current OKR performance and evaluate how things went and why. Document how you plan to ensure mistakes from this quarter aren’t carried over.
- Outcome: Commit to next quarter’s organization objectives and department projects. Focus on breaking long-term OKRs into actionable next steps and how OKRs fit into day-to-day schedules.
- Grading and Coaching
- When done well, OKRs are a great tool for motivating and aligning people. They spur the sharing of perspectives and increase moments of discovery, helping your high performers achieve more. They increase transparency, accountability and empowerment. They are not designed to be used as a processor tool to use against your team to keep tabs, micromanage or couple with negative performance assessments.
- Close OKRs: Have everyone assess their OKRs individually. A great place to start with grading is providing a simple expectations assessment: at the end of the quarter, did you meet the expectations for your OKRs that you committed to? If not, why? Self-reflect! Team leads should have 1:1s with their direct team to talk career journey in relation to their OKRs and performance.
What are best practices for implementing OKRs?
We have the following advice:
- Set the Right Cadence
Setting the right cadence for your OKRs is defined by measurable targets occurring within rhythmic time frames. Quarterly is most common. However, objectives on any level can always be stretched quarter over quarter if the impact on the success of an objective is more long-term. While quarterly is recommended, it’s important the cadence you choose matches the culture of your business.
- Define Realistic Team and Individual Priorities
Every OKR should reflect realistic priorities achievable in a three-month cycle while still offering a real challenge. Make sure to have a conversation that asks what success means in relation to how each team needs to support others. Having OKRs on both a team and individual level is essential for company alignment. One of the key elements of using the OKR methodology is to align core values and objectives across teams and organizations.
- Don’t Create Too Many OKRs
Remember, OKRs aren’t just a task list. Setting 3 OKRs each quarter is a good place for teams and organizations to start. Most of these objectives will have 2-4 results and a clear owner who will be held accountable for them. Setting a limited number of OKRs directs teams to focus on priorities in order to produce better results.
Can employee performance be partially evaluated by Objectives and Key Results?
Most organization that practice the OKR methodology use it as their primary performance management system. However, some continue to use additional approaches like MBOs and KPIs. While possible, this is not recommended for the simply reasons that it takes too much time to manage.
How often should Objectives and Key Results be set?
The most common cadence is every three months, beginning in January. However, this depends on the culture of individual organizations. Quarterly OKRs are most realistic on a team level, while organizations sometimes set annual objectives and adjust accordingly to align with long-term goals. It’s not uncommon for objectives that take longer than one quarter to be carried over for the next quarter. Similarly, OKRs can be set on a shorter cycle than quarterly. This is more often done by individual employees who have shorter time frames in mind for their goals.
What metrics should be used for Objectives and Key Results (OKRs)?
Any metric used in key results should be specific to the business, measurable, attainable in the given cycle of the objective, relevant to your OKR and time-bound. The following are several metrics that may fit your company’s OKRs:
- Baseline metrics
A baseline metric is a single number that is considered “acceptable”. For example, having a support ticket response time of 4 hours or less means a baseline KPI of 4. Anything above 4 hours is unacceptable.
- Positive and negative metrics
A positive metric is used when you want to increase your baseline metric. For example, if your average usability score for a core workflow in your product is currently 70% and you want to increase it to more than 80%, you’re aiming to move in a positive direction. Negative metrics are used when you want to decrease your baseline metric. For example, if your average support response time is 10 and you’d like it to be 4, you’re aiming to move in a negative direction.
- Threshold target metrics
Threshold metrics represent a numerical range considered acceptable. Here’s an example: Sales needs to make a minimum for $90,000 in monthly recurring revenue for the business to stay cash flow even. For the business to be cash flow positive, the recurring revenue must be over $110,000 per month. This is a threshold target metric since it specifies acceptable low and high values, creating a range of metric-centric goals that are acceptable.
What is important to look for in an OKR tracking platform?
Once you’ve decided that tracking and measuring OKRs will be critical to you organization’s performance management, it’s important to find the right medium to conduct these processes. While many companies start off using Google Docs for this purpose, they soon outgrow spreadsheets and need a platform that manages and stores past data. Here’s what to keep an eye out for:
- Spotlight on setting OKRs
This might seem obvious, but finding the right platform to set company OKRs will help with adoption. Not all goal setting platforms are created the same. Ensure the OKR software you’re looking for is based on OKRs, to begin with. Successful OKR implementation although simple can be made easier with software that supports employees on an individual level when it comes to creative quantitative and qualitative targets for key results.
- Easy to use
Ease of use in a performance management system indicates the adoption rate of employees as well as the longevity of it living with a company. If possible, take a trial run first.
- Aligns individual, team and organization objectives
Look for a performance management system that has the ability to align objectives on every level of your organization, no matter the structure. It should be flexible enough to allow for alignment across organizations and not only tied to hierarchical management approaches.
- Supports employee engagement and recognition
In order to successfully implement the use of OKRs, you need buy-in from employees on every level of a company. A tool that supports features like notifications for weekly check-ins, the ability for managers and peer to request feedback and provide individual updates on a common dashboard is essential.
How Paycor Helps
Paycor builds HCM software solutions for leaders. With Paycor, you can modernize every aspect of people management, from the way you recruit, onboard and develop your team, to the way you pay and retain them. See how Paycor can help the leaders of your organization solve the problems of today and tomorrow.