🔑 What are OKRs?
OKR stands for “Objectives and Key Results.”
The OKR goal-setting method was first introduced in Intel by management scientist Andy Grove, before taking the rest of the Silicon Valley by storm. Today, it is used by the biggest tech giants, from Apple and Google to Netflix, Adobe, and Twitter.
The ‘objective’ in an OKR describes where you want to go and sets a clear direction. Ideally, objectives should not be technical, nor should they contain a metric - they are just aspirational, qualitative statements.
Key results, on the other hand, are measurable outcomes that contain a metric with a start and target value.
John Doerr, a venture capitalist, started his career at Intel and went on to invest in companies such as Google and Amazon. He devised this formula when setting OKRs:
I will (objective) as measured by (key results).
To give you an example, here’s what a typical OKR for an employee in the sales team might look like:
Objective: Close $2M in business by the end of Q1
- Average 50 cold calls a day in February/March
- Generate a total of $5M in qualified pipeline by April 1
- Finalize a close rate of 33% in Q1
🎉 Here’s why your team needs OKRs
Many of the world’s leading organizations use OKRs to achieve their business strategies. Here are some reasons why:
✔️ Examples of OKRs
Here are some examples of effective OKRs. Notice how each objective is clear, aspirational and in line with the overarching goal. Similarly, the key results are specific and measurable - they are designed to help achieve the objective.
OKR for a company
Objective: Get the ‘Best Place to Work’ award from XYZ magazine.
1. Increase employee NPS score to 40 or higher
2. Reduce the turnover rate to less than 5%
3. Allow for promotions or raises for at least 25% of current employees every quarter.
OKR for a team
Team: Human Resources
Objective: Increase team engagement and motivation.
1. Increase the team member engagement score from 75% to 90%.
2. Reduce the number of complaints per month from 4 to 1.
3. 100% of team members receive feedback this quarter.
OKR for an individual
Team: Human Resources
Objective: Hold a memorable 10th anniversary event.
1. Achieve >70% attendance of the event.
2. Get >8.5 NPS on the event.
3. Involve at least 1 representative of each department for the event.
📈 Tracking OKRs
OKRs can become a set-it-and-forget-it situation if leaders do not make it a consistent focus. To ensure that OKRs are a part of your team’s work routine, there has to be continuous open communication. This will help fix delays or missed targets in real-time. Cross-functional teams will then be able to work around solutions for changes or course corrections.
A pro-tip is to schedule regular check-ins that are brief and limited to one hour or less. Team check-ins tend to be shorter, with some teams doing 15-minute stand-up check-ins.
A good check-in structure to follow is this 2x2 matrix:
✨ Benefits of successful OKRs
OKRs bridge the gap between strategy and execution.
Here are some benefits you can see when you implement OKRs within your company. When implemented properly, OKRs:
Drive company-wide alignment.
Because OKRs break down silos and centralize goals, every level of the business becomes connected with the outcome.
Help individuals focus on critical outcomes.
OKRs help employees draw clear parallels between their daily tasks and big-picture goals.
Since every team member has their own objective to work toward, OKRs instill a sense of purpose, autonomy and accountability.
Teams can swiftly reprioritize efforts if needed or use resources more strategically to support key initiatives.
Setting challenging objectives motivates team members to think outside the box.
🪜OKRs serve as the bridge between our daily work and goals
Business leaders acknowledge the importance of mission, vision, and objectives to their organization. In fact, 86% of B2B companies say that defining a purpose is important to their growth strategy. So, they share the OKRs at all-hands meetings or company newsletters.
Few realize that this doesn’t go far enough. People might feel a connection to their job for an hour or a day, but eventually lose track about why they’re doing what they’re doing. In Asana’s Anatomy of Work Index, over 10,000 people were surveyed. Less than half of them were able to understand how their day-to-day work contributed to broader goals.
All this goes to show that in order to reap the full benefits of OKRs, goals must feature in our daily work. They’re the missing link between what people do at work everyday and why they do it.
New HR tech startups like Mesh empower teams to connect their day-to-day work to the company’s overarching goals. This not only boosts employee engagement and efficiency, but it also makes performance management easy, real-time, and future-facing.
🔎 The difference between OKRs and KPIs
OKRs are different from standard business reviews.
The most important difference between OKRs and KPIs (Key Performance Indicators) is the intention behind the goal that has been set. KPI goals are the output of a process or project that is already in place, while OKR goals are somewhat more aspirational and ambitious.
To illustrate this, let’s take the example of an art history museum that wants to be more relevant to the community. Here’s how we would define this OKR:
Objective: Be more relevant to the community
- Increase the traffic of monthly visitors from 10% to 15% by the next quarter.
- Host 2 art history events per month that are focused on drawing in new local donors.
With respect to this example, a KPI would be the measure of the metrics (attendance and donations, for example). They do not convey the purpose, progress, or the context of the goal.
To conclude, OKRs help move the needle on your company’s strategic objectives, whereas KPIs monitor the metrics in place to reach the said objectives. Sometimes they can overlap. In the case of our museum example, the KPIs happen to be a part of the KRs. Check out our blog to know more about the differences between OKRs and KPIs.
⚙️ The 5 steps of an OKR cycle
- Set your company-wide strategic priorities: At the beginning of the year, the company leadership defines a set of company-wide OKRs based on strategic priorities and inputs from key stakeholders.
- Share your company-wide OKRs publicly: Teams then begin to devise their OKRs in alignment with company-wide goals using a bi-directional approach (i.e.; top-down cascade and bottom-up alignment).
- Map team interdependencies: Teams check that they are aligned with each other’s goals and initiatives. For example, if an objective of the sales team is to ‘improve sales performance in the target market’, the marketing team can help support them by setting one of their objectives as ‘increase Marketing Qualified Leads (MQLs)’.
- Hold regular check-ins: These help keep a track of results and initiatives. Use the check-in structure above to keep a track of OKR progress, confidence levels, challenges, and initiatives that need to be taken to achieve the KRs.
- Reviews and Retrospectives: A retrospective is a meeting held outside day-to-day work to reflect on OKR performance, past events and behaviors. Team members and leaders share hits and misses; and keep this learning in mind while devising and delivering the next set of OKRs.
💼 Aligning company and team goals
In most traditional organizations, goals cascade from the top-down. While this is common, it is also flawed. With the cascading option, there’s limited room for feedback cycles and decisions simply flow from downwards from the top.
Today’s agile and innovative organizations want a better way of completing their goals. Since OKRs focus on 360-degree alignment - top, down, and sideways - it is one of the most popular goal-setting frameworks used.
The OKR-setting process ought to happen in a way that teams define the OKRs that are aligned with their organization’s objectives, and these in turn are validated by managers. Similarly, teams can solve interdependencies by having conversations during their OKR-setting process. If a team needs something from another, they can discuss it and set shared priorities before the start of the quarterly OKR cycle, or postpone it to the next one. Teams may even set up “local” OKRs too, apart from the strategic ones that are aligned with company goals.
👍 OKR best practices
Here are 5 golden best practice rules when it comes to OKRs:
- Communicate the value of OKRs.
Whether you choose to pilot your OKR process with a particular team or all employees, it’s crucial to get buy-in from all the parties involved. Everyone should have an understanding about how the company OKRs are aligned with team and individual goals. Remind your teams that you trust them and demonstrate how their work contributes to the larger goals.
- Encourage autonomy and ownership.
Let your people have a say in their own OKRs. This can help employees work on projects that interest them, push them to utilize their own skill sets, and develop professionally. Managers, in turn, can review these individual OKRs and check if they align with company goals.
- Strike a balance between aspirational and realistic goals.
No OKR should be easy. Risk-taking should be encouraged - even though not every experiment will succeed, it is important to think boldly and within some boundaries, give it a try. At the same time, your OKR should not be so aspirational that it is impossible to achieve. One good way to balance this is that if you’re only just starting with OKRs, it’s okay to lean towards being conservative. As you get the hang of things, add more aspirational goals.
- Review OKRs regularly.
OKRs can be a major culture change. For people to develop a muscle memory for it, it may help to track the progress of key results every week and develop a habit of reviewing their OKRs to foster cross-departmental collaboration. This is important to stay on track with your goals.
- Hold retrospectives at the end of the OKR cycle.
Use this time to review what went well and what didn’t. Since everyone worked on their OKRs together to deliver results, it helps to have them all come together to see the results. This is a milestone moment which can inspire the next quarter’s OKRs.
🙅 Common mistakes to avoid when setting OKRs
Avoid these common mistakes when it comes to OKR implementations.
- Setting non-measurable Key Results: If there is no number or metric, it is not a Key Result.
- Creating too many OKRs or Key Results: Less is more. It’s ideal to have 3-5 Objectives and 2-5 KRs for each Objective. When tagging OKRs to a team or individual, ensure that you’re not putting more than 6-8 KRs for each individual.
- Including tasks as Key Results: A KR is not something that can be checked off a to-do list. It is a successful outcome of what you did. Tasks are activity-based and should also be outlined to give teams a clear picture of what all needs to be carried out to achieve a KR.
- Creating OKRs in silos: OKRs can be an effective way to drive collaboration amongst teams. It’s important for open communication across teams while setting OKRs to ensure alignment.
- ‘Set and forget’ mindset: OKRs are meant to be continuously worked upon. If there isn’t continuous communication around OKRs and their progress, it can lead to surprising messages at the end of the year when evaluations come around.
- Copying philosophies blindly: There is no one-size-fits-all when it comes to OKRs. Understand the principles involved and tailor them to your organization’s needs.
📲 OKRs for remote and distributed teams
In the early 1800s, employees were expected to clock in 70-80 hours per week. These hours were logged in at the workplace, where supervisors could just look over and feel assured that everybody was putting in an honest day's work. Then, in 1926, Henry Ford popularized the 40-hour work week. Within the next two decades, the 40-hour work week had become the law in the US.
In the 2020s, monitoring productivity and managing performance is not as straightforward. As a direct result of the pandemic, more people work remotely than ever before. Supporting and optimizing for this new way of work comes with its own set of challenges, some of which can be resolved by setting effective goals.
For example, research suggests that employees are less motivated while working from home. Goals - typically OKRs - can help bolster this motivation, especially if you set learning goals (e.g.: discover a way to boost your outreach efforts and contact 500 people over the next quarter). These learning goals can be used instead of, or in addition to performance goals (e.g. conduct 3 webinars that reach over 500 people).
Another problem statement is that employees may not be able to receive the extra direction that they would typically get in person. By creating goals and OKRs, you get to create a shared understanding of what needs to be accomplished as a team, as well as individually.
Finally, there’s the proximity bias, where managers place a higher value on the work they see people doing in their vicinity while discounting work that is done out of sight. When you set clear goals and OKRs for remote teams, you give your employees a bias-free yardstick to compare their performance.
While remote employees have the freedom to decide where they want to work from, they still need clear directions from their managers to stay on track. Setting OKRs with specific metrics, following structured timelines for check-ins and creating expectations about company cultural norms can help remote teams envision success and achieve it.
🤝 CFRs - Your OKRs’ best friends
CFRs stand for Conversations, Feedback, and Recognition.
OKRs can come across as a to-do list to achieve your goals. To humanize the OKR and goal-setting process, you’ve got to integrate them with CFRs. Let’s look at each aspect closely:
When there’s a real, authentic connection between a manager and an employee, it builds mutual trust. For this to happen organically, people need to have frequent conversations. And when OKRs are a part of these conversations, they tend to stay fresh on top of each other’s minds.
Here are some best practices when it comes to having effective conversations:
- Consistency is key. Schedule regular 1:1s.
- Set an agenda. This way, you can have more intentional conversations.
- Listen. Conversations work both ways, so listen as much as you talk.
- Be mindful. Learn to be direct, empathetic and non-defensive.
Ideally, feedback should be multi-directional, in real time and ad hoc. Constructive feedback can help cross-functional teams build effective solutions while also enhancing connections.
Tips to give effective feedback:
- Be specific. Avoid vague generalities. If you’re going to say ‘great job,’ make sure to also point out precisely what was done well. This applies to constructive feedback, too!
- Consider the medium of the message. Positive feedback is great when done publicly - it can keep employees motivated. Negative feedback, on the other hand, is best given in private.
- Don’t wait to give feedback. A common mistake is to reserve feedback for the performance review meeting. It’s actually more effective to give immediate feedback - it allows the recipient to process the information while it’s still fresh.
- Avoid using the ‘positivity sandwich.’ It may seem easy to package negative feedback between two pieces of positive feedback. But this can feel inauthentic and confusing to the recipient.
According to a Glassdoor study, 81% of employees say they feel motivated to work harder when their boss shows appreciation. It’s a small effort, yet so many managers fail to do it.
Here are some tips that can help organizations develop the habit of recognition:
- Celebrate the small wins. Recognize the effort it takes to get a job well done, regardless of how big or small the task is. It can be as easy as sending a Slack DM to say thanks. The cost of one’s time is small, and the impact is huge!
- Share stories of recognition. Take the time out to share appreciation with the whole team, be it via the company blog, an internal messaging group, a peer-to-peer recognition platform, or the notice board in the tea room.
- Recognition has to be in real-time. Tie in company goals with recognition of achievements. When significant milestones are achieved, give real-time shout-outs and don’t shy away from mentioning the specifics!
- Promote peer-to-peer recognition. Positive feedback from peers who are ‘in the trenches’ with each other can be especially meaningful.
Where did OKRs come from?
OKRs were created by Andy Grove at Intel. Later, John Doerr - a former employee of Intel and an early investor at Google - brought them to Google. Doerr wrote a book called ‘Measure What Matters’ which brought OKRs to light and introduced the methodology to a broader audience.
How should I set my OKRs?
Good question! Your OKRs should be created keeping in mind the intent to help your team solve a problem or advance your position. So there can’t be a one-size-fits-all solution here. The important thing is to ask yourself, “What could I do in the next quarter that would have the maximum impact on the company?”
Who should own the OKRs?
There should ideally be multiple layers of OKRs - from team-led OKRs to company-wide OKRs. It also helps to have a specific lead on an OKR so that there is someone accountable for updating the metrics and pushing the team to actively work on achieving their OKRs.
Is it possible for me to have non-quarterly OKRs?
Absolutely! Monthly goals can work great but you may not have enough time to see the progress. Annual goals aren’t exactly perfect though they can help you set aspirational goals. The ideal cadence is a quarterly one so you can see the impact of your project and also course-correct when things go south!
What tools should I use to keep track of my OKRs?
Spreadsheets can create silos and may prevent deep alignment with your team. Using software like Mesh will make it easy for your team to see who’s working on what. You can also have weekly reflections on your OKR progress. This isn’t possible on spreadsheets and helps you and your team work with purpose, even if you’re operating remotely.