But what is OKR? It's an acronym for a strategic framework - Objective and Key Results. The OKR framework encourages all employees to work towards a common goal.
If you're not achieving the growth you want, it might be because of the way you're setting targets. So, if you're looking for a process to engage your employees and finally achieve your targets, you need to know about OKR.
Read on for the ultimate OKR guide.
Let's get started.
Simply put, an OKR is an objective that you tie to a key result. It's a strategic framework for use in companies, to achieve growth and create a cultural shift. The OKR methodology is simple and uses objective measures to track how well the company is meeting goals.
After setting objectives and key results, the final part of OKR (not in the acronym) is initiatives. Initiatives are the projects and tasks that are set to achieve the key results.
Overall, OKRs are:
Andrew Grove (the president of Intel) created OKRs in 1968. In 1974 John Doerr learned about OKRs when he took a job at Intel. The framework consists of two key questions:
In the late 1990s, John Doerr worked as an advisor for Google in their early years; he introduced and popularized the OKR framework. Twenty years down the line, Google still uses OKRs.
Google's success has led to many companies adopting OKRs and the development of many online OKR tools and resources.
Companies such as Twitter, LinkedIn, Amazon, Spotify, Uber, and many more have adopted the framework. To gain popularity with such major companies, there must be some serious benefits to OKR.
On a basic level, OKR helps businesses keep on-track to achieve targets, growth, improve employee productivity, and increase profits. But there's more to it.
Nurturing workplace culture is essential. If employees aren't "feeling it," the productivity and quality of work produced will suffer. By setting OKRs, employees have a mutual goal to work towards.
When they identified that employees were working hard but were not working towards the bigger picture; Google used OKRs to help switch the culture from "output" to "outcomes."
When Google implemented OKRs, their overall efficiency increased and there was a tangible shift in their office culture that led to individual accountability, increased productivity, and company growth.
Goal alignment is a huge issue for many mid-large size companies.
Individuals can be working towards entirely different goals to other teams or team members. To some extent, this is appropriate. But, every employee (regardless of role or level) should be working towards the same purpose.
OKRs align all employees to a mutual goal and help them identify the steps that each individual can take to contribute to the overall success of the organizational OKR.
A hidden leadership team is the worst thing for employee morale: an employee in a hierarchical company who doesn't know what's going on at the top will not feel valued.
OKRs provide transparency at all levels and enable the entire organization to work together seamlessly. While respecting that employees have unique goals and targets, they also need to understand the bigger picture.
In 2013, Upserve took OKR transparency to a new level and achieved record sales for that year. They made the company-level and individual OKRs public to all employees.
Public OKRs meant that every employee could see what each co-worker was doing. This encouraged open conversation between co-workers, boosting productivity and accountability.
It's easy for directors and high-level managers in traditional organizations to 'think big' – their annual bonus usually depends on it. However, in traditional organizations with strong hierarchies especially, it's not always built into the culture of general office workers, casual, and temporary workers.
OKRs communicate the bigger picture and unite all team members to achieve the same goal, in a way that KPIs don't. When employees engage with a bigger purpose, there is an exponential increase in work output quality and value.
An unfocused workplace can be the death of a company, especially in the growth process. When onboarding more employees, the ultimate company goal is often lost in the process.
OKRs focus on the most critical goals and prioritize the work that will significantly impact the business. Swipely implemented OKRs with success when growing their company from 30 to 80 employees in 2013. They used OKRs to manage their quarterly goals and align employee's weekly targets.
Each of the previous points leads to higher engagement in the workforce. But, if you're looking to improve employee retention, engagement is vital. Bad culture, lack of alignment, purpose, transparency, and focus are big reasons for low employee retention.
Each of the benefits of OKR help keeps employees accountable, engaged, and more likely to stay with the company. If effective OKRs are set, all employees align to the same vision. Working towards a common goal increases both engagement and productivity.
Google, Adobe, Amazon, and American Global Logistics have all attributed OKR to the successes of managing an engaged workforce.
Now, to dive into the components of OKRs in more detail. You should run OKRs in annual cycles with quarterly goals. Per objective, there should be no more than five key results.
OKRs should be realistic and achievable but not too easy.
Every worker should feel challenged but that they can contribute to its success by working smart.
Further, rather than making it a performance evaluation tool, you should use OKRs as an organizational habit to support a common goal and vision.
With that in mind, linking OKRs to compensation or performance reviews is usually a bad idea. Indeed, the goal of an OKR is to accelerate the business as a whole, not reward or punish individual employees.
The OKR methodology is simple, consisting of goals the company wants to achieve and measurable milestones for success. But, you should write OKRs in a specific way to avoid them coming across as yet another KPI.
When he created OKRs, Doerr's goal formula was:
"I will .... as measured by ..."
Following this process is key to writing a successful OKR. It should describe both what you are going to achieve (objective) and how you will measure achievement (key result).
An objective is a goal for what you want to accomplish. It should be ambitious, qualitative, and achievable.
In a nutshell, the objective is where you want to be – it should be memorable and set the company's direction.
The important thing about objectives is to avoid making them too technical:
A great objective should resonate with the team and motivate them with a mutual goal that everyone can relate to.
Some great objectives might be:
Notice how these objectives are sweeping statements that don't contain metrics or objective measures.
Once you have your objectives set, it's time to think about your key results.
Key results are how you measure the success of objectives. Compared to objectives, key results should be quantitative and metric.
Key results are actionable steps to help you reach the objective.
For every objective, you should include 2-5 key results.
The way to write a key result is to include two metrics:
Or, you can include a percentage increase/decrease metric.
Think of key results as the necessary stepping stones to reach your objective.
Some great key results might be:
Notice how each key result is specific and shows the increase needed.
Key results should not leave any room for confusion or misinterpretation: you either met the key result or you didn't.
Initiatives are items on your to-do lists: small tasks and projects that will help you meet the key results and achieve the goal.
Whereas there should be company-wide OKRs that everyone works towards, initiatives should be where individuals feel they make an impact.
Every employee should have an individual set of initiatives to complete to achieve individual, team and company goals.
For every key result, there may be many initiatives needed. You should identify the initiatives immediately after setting your objective and key results, but they must stay fluid.
We all know the corporate world never stays still, so initiatives can be flexible to help achieve the goal.
Regular monitoring of key results is an effective way to measure whether initiatives are having the intended result.
Some great initiative examples might be:
Notice how initiatives read as a to-do list. They are small tasks and projects that you can delegate to multiple team members.
Imagine that there are 2-5 key results for each objective, for every key result, there could be hundreds of initiatives, depending on the size of your company
Now, let's link it all together.
This is by no means an exhaustive list, but it provides an idea of the items needed for a successful OKR.
Once you've got the hang of the formula, you can write an OKR for almost any goal.
🎯 Company objective: Employ a large number of engaged staff
✅ Key result #1: Increase staff from 25-100 workers
✅ Key result #2: Increase uptake of participation of employee engagement surveys from 60% to 95%
✅ Key result #3: Improve annual employee retention rate from 80% to 95%
Initiatives for key result 1:
Initiatives for key result 2:
Initiatives for key result 3:
🎯 Quarterly objective: Increase output productivity at our local plant
✅ Key result #1: Produce 30% more products
✅ Key result #2: Reduce the time spent on the manufacture of each product by 5%
🎯 Quarterly objective: Launch our new product
✅ Key result #1: Obtain regulatory approval
✅ Key result #2: Launch a pro-active advertising campaign that reaches 50,000 consumers
✅ Key result #3: Have our product stocked on the shelves of 5 leading high-street stores
Initiatives for key result 1:
Initiatives for key result 2:
Initiatives for key result 3:
OKRs are a powerful tool but only when used correctly. Although the framework is simple, it takes a little bit of time to see the "outcome over output" mindset change that comes with OKRs.
On average, it takes 2 to 4 quarters to learn how to adopt OKRs.
However, by learning more about OKR best practices, you can shorten the learning experience.
You must consider OKRs as a journey and cultural shift rather than just another target to meet.
When first implementing the framework, between 1 and 3 OKRs are ideal.
Whether you're writing company OKRs, team OKRs or individual OKRs, the first step for writing is to define your objective for each OKR.
Don't be too ambitious to start with: objectives must be challenging but achievable. In the case of a company objective, it should frame the business' direction for the coming year.
Communicate the objectives to everyone in the organization and start setting key results. These key results should be reflective of how each department or team can contribute to the objective.
Setting great objectives and key results is imperative for the framework's success. Hosting OKR workshops that involve team members throughout the organization is a great way to build enthusiasm and get buy-in from everyone.
Once you've written OKRs, it's time to start implementing them. Block out regular check-in times in advance to review your progress. You should have both annual and quarterly objectives, but you should always measure key results quarterly.
You can either roll out OKRs to the entire company at one time or conduct a pilot project with just one department. If you do a pilot project, make sure you collect adequate feedback, so you can learn from any mistakes before rolling it out to the rest of the company.
When implementing OKRs, it's essential to get employees engaged with the process. Running OKR workshops to introduce the idea, co-create OKRs and then review them as a group can help create that engagement.
The worst thing you can do is "set it and forget it."
OKRs should be included in weekly activities and planning. Every employee should factor OKR progress into their weekly schedule.
Make sure you hold regular team and enterprise check in's for OKR progress.
At team level, weekly check-in meetings should focus on updates on initiative progress.
At organizational level, monthly check in's should focus on status updates to identify protential problems early enough to course-correct.
Indeed, you should take a pro-active approach to any issues in order to reduce the risk of not achieving the objectives.
The learning curve that comes with implementing and using OKRs is intense. Taking the time to review OKRs is essential.
Of course, basic reviews must happen on a weekly basis, but you also have to conduct reviews of the entire process.
When OKRs are complete, you should complete a comprehensive evaluation.
Points of importance for the review include:
Closing the loop with evaluation and improvement is a key part of the OKR process.
Each review's results should be shared with the company, along with any action plans for the next quarter and year.
There are many OKR tools, especially software, that can help you implement OKRs in your organization.
Most of them are specialized in project management, like Asana, or goal-setting and OKRs, like Perdoo or Leapsome.
Holaspirit allows you to do it all in one place:
This will allow people in your organization to grow, energize their roles, and simplify processes.
OKR tools can help set, track, and evaluate OKRs at all levels. You should find an OKR tool that provides clear progress bars for each tool, and that team leads can share with multiple team members.
A big part of OKRs is getting everyone in the business to work together.
OKR templates are great to get your started but, ideally, you want a tool that incorporates all aspects of productivity and integrates with your organizational structure and project management tool.
Because it links OKRs directly to the organization's purpose, individual roles, and team projects, the Holaspirit OKR feature provides an extra sense of direction, transparency and tracked focus.
Although the framework is simple, OKRs raise many questions.
New questions will come up throughout the process of writing, implementing, and evaluating OKRs.
Here we've addressed some of the most common questions, so you don't need to figure it out yourself.
Is OKR just a new way of saying KPI?
It may seem like that, but it isn't.
It's true that both OKRs and KPIs support performance review and measurable results.
However, KPIs are focused on performance management and tracking, whereas the OKR methodology is more focused on goal setting and alignment throughout the organization.
Indeed, you can set individual OKRs, but these OKRs are not focused on evaluating individual employee performance. On the contrary, OKRs are designed to link individual goals to team goals to company goals.
KPIs and OKRs can work well in combination: managers can incorporate KPIs into day-to-day tasks while they set OKRs to ensure everybody in the organization is working towards a strategic OKR.
A SMART goal actually falls somewhere between a KPI and an OKR.
SMART targets can be great for employees on an individual level, but it's difficult to implement a SMART target on a company-wide level. If your organization does use SMART targets, be careful not to overwhelm employees with too many unrealistic goals.
You want to create excitement and engagement around meeting the OKR, rather than SMART targets, focus on initiatives for the daily goals and tasks.
In a nutshell, OKRs are the priority. OKRs are the goals that will have the maximum impact on business success.
Other priorities need to fit around your OKRs. If another focus is more important, you should consider making it one of the OKRs.
Of course, achieving OKRs is important. But you want to create genuine engagement with the cause, not just meeting a target with a monetary incentive. We recommend you avoid linking OKRs to compensation.
Because OKRs relate to the broader company purpose and business success, you need to recognize that individual employees cannot be held accountable for this. Although well-managed bonuses can be great for culture - they should not be linked to the OKRs.
OKRs are not a performance evaluation tool, so they should not be rewarded or punished with monetary incentives.
OKRs must be timebound otherwise, how would you track success?
However, OKRs are long-term goals. The OKR cycle works well with annual and quarterly objectives.
Managers can set more stringent timebound goals for initiatives that help track progress day-to-day, but that's not the purpose of objectives and key results.
We recommend you appoint an OKR ambassador, a competent leader with project management experience. They should be the single point of contact for all queries and troubleshooting relating to the OKR.
No matter their role in the company, it is important to include them in leadership talks about the OKR strategy and make them visible to all employees.
The ambassador's role is to keep progress to achieving the OKRs on track and inspire everyone to keep working towards the same objective.
Our recommendation: don't roll out too many OKRs too fast.
An OKR should always be high impact and provide a clear direction of business priority.
Teams shouldn't be working towards more than 5 OKRs at any one time.
Less is more, especially during the initial stages of implementation of the OKRs framework.
Implementing OKRs is more than just a process. It's an entire culture shift. You have to give it time.
Setting and monitoring an OKR objective can be done in as little as three months. However, to see actual change and engagement, it will take longer.
Some organizations have been more successful rolling out a pilot OKR in one department first – that way, you can evaluate what did and didn't work, creating a streamlined process before cascading it to the entire organization.
Once you are comfortable with the system in place, you can roll it out to everyone – it may take a year to get everyone on board, but the success will be exponential.
Don't be afraid to take your time learning how to implement OKRs and make the most of OKR software like Holaspirit – it's there to help.
With this guide, we hope you're well on your way to in-depth understanding how to implement an OKR.
Here's a quick summary to drive home some of the key points identified above:
If your organization is just starting out with OKRs, we recommend you start by hosting a couple of OKR workshops to:
You can read and download our full guide on how to run an OKR workshop right here.
Once you have come up with one or two OKRs at company level, we recommending using the same OKR workshop structure to involve teams and individuals.
Encourage them to come up with their own OKRs, aligned with the overall organizational purpose and objectives.
Frame it as a game that is meant to help everyone pull in the same direction to achieve company goals.
Remind them the goal is not to win individual bonuses through performance.
Once that's clear, you can start implementing OKRs and running your first test!
We recommend a quarterly timeframe that gives people enough time to create momentum and reach ambitious objectives.
And a weekly or bi-monthly review to stay agile and notice early on if there's a problem with how an Objective or Key Result was written.
And why do all the hard work yourself?
Start a 30-day free trial (no credit card required) with Holaspirit today to create meaningful change within your organization!
You'll get an OKR tool that is fully integrated for role-based organizations.