OKR: Objectives and Key Results FAQs

April 22, 2016 - 38 minute read - Posted by

Table of Contents

What are Objectives and Key Results (OKRs)?
Who created Objectives and Key Results (OKRs)?
Who were the early adopters of Objectives and Key Results (OKRs)?
What’s the difference between OKRs, KPIs and MBOs?
What are the benefits of using Objectives and Key Results (OKRs)?
How do I write my own Objectives and Key Results (OKR)?
How do I get started planning Objectives and Key Results (OKRs) for my company? / Planning Timeline
What are some Objectives and Key Results (OKR) implementation best practices?
Can employee performance be partially evaluated by Objectives and Key Results (OKRs)?
How often should Objectives and Key Results (OKRs) be set?
What are some Objectives and Key Results (OKRs) measurement best practices?
What metrics should be used for Objectives and Key Results (OKRs)?
How are Objectives and Key Results (OKRs) reviews conducted?
What is important to look for in an Objectives and Key Results (OKR) tracking platform?
OKR Webinars and Additional Q&As

What are Objectives and Key Results (OKRs)?

Objectives and key results (OKR) is a goal-setting methodology driven by outcomes. In companies, OKRs are often used to guide outcome-based success. Using outcomes instead of tasks as a driver, OKRs encourage accountability in every step of achieving success through metric indicators. OKRs are driven by core value-based outcomes.

Who created Objectives and Key Results (OKRs)?

Although popularized by Google’s John Doerr, OKRs were actually created by Intel. Prior to Google’s wide adoption of OKRs, the methodology was first introduced to companies such as Intel and Oracle some decades ago. As OKRs have become a widely adopted practice by growing companies like Google, Twitter and LinkedIn, you will find they are most commonly used in the technology and healthcare sectors.

John Doerr’s successful introduction of the OKR methodology to Google made way for today’s wide spread goal-based management in new companies. If you’re wondering whether Peter Drucker’s Management by Objectives (MBO) methodology came before or after OKRs, the MBO system was actually created prior to OKR. The OKR practice is generally not based on compensation of employees. The idea is that stretch goals can be made and completed with transparency across entire organizations, even in different time zones. Collaboration and focus on core value alignment are of high importance in the execution of OKRs.

Who were the early adopters of Objectives and Key Results (OKRs)?

  • Intel
  • Google
  • Twitter
  • LinkedIn
  • Spotify
  • Eventbrite
  • GoPro

What’s the difference between OKRs, KPIs and MBOs?

Now that we know MBOs came before OKRs and which companies have been championing the use of OKRs, we can dive into the difference between OKRs, KPIs and MBOs. Overall, there are two key distinguishers that make the OKR methodology unique:

The use of OKRs is not linked to compensation

More often than not, KPIs and MBOs are create by manages and delegated to employees. These goals are due to be reviewed annually or semi-annually depending on their purpose and used to determine employee compensation. OKRs on the other hand, eliminates performance reviews and allows employees to set individual stretch goals that align with departmental objectives. As a result of these ambitious stretch goals, organizations that use OKRs keep them separate from determining individual compensation. OKRs are meant to be set-up in collaborative discussions with a recommended quarterly review within departments to ensure alignment and track progress.

The aim of using OKRs is to achieve transparency across teams and organizations

While MBOs and KPIs are often kept private within management teams, OKRs aim to keep all company and team objectives transparent to employees. In this way, OKRs holds all levels of an organization accountable for OKRs they have created each quarter.

What are the benefits of using Objectives and Key Results (OKRs)?

No matter what size the company, one of the looming pain points is always limited resources to accomplish all objectives they have in mind. That’s why it’s so important to be able to focus these resources on the right priorities and ensure maximized impact. OKRs provide the benefit of a performance management framework that allows the alignment of company driven core values and objectives; all of which are delivered with transparency—driving employee engagement.

OKRs bring alignment from strategic planning to actual execution

With OKRs, you don’t have to wait until things aren’t working well to jumpstart change. Transparency breaks the assumption that performance needs to be “managed,” moving focus on sharing organizational vision. With a deeper understanding of what their efforts are working to achieve, employees become equals, not slots in a hierarchical tree. Everyone is able to see how priorities are progressing at an individual level, all the way up to if the organization is on track as a whole. This creates a visual where teams can reflect on roadblocks, assess current actions and easily document next steps. OKRs take the guess work out of how each role impacts the next person. As a result of increased visibility, each team can create clear expectations for all interactions. This inspires cross-functional team growth.

Managers can spend less time crunching numbers and more time coaching employees. Everyone on the team works towards value-driven goals; everyone is accountable. OKRs create an internal platform for ongoing dialog in real-time where employees can engage in meaningful-to-them conversations tied directly to their role within the team.

OKRs bring transparency to organizations

In using OKRs, transparency is inherent. Teams are positioned to know what is important to the organization at all times, meaning they can become more agile. Effective adaptability means frequent assessment on priorities and replaces a static, annual review of strategy. This makes it easy to adjust priorities throughout the year without having to get caught up in any potential backlogs.

How are Objectives and Key Results (OKRs) created?

Objectives are outcomes that reflect current business priorities. They are:

  • Time based (Due date)
  • Non-numeric (Qualitative)
  • Aspirational (Saying this with confidence sounds hard)
  • Answers: “What am I working towards without focusing on the tasks that get me there?”
  • Empowers and promotes collaboration and cross-functionality
  • Has a clear subject, object and journey that the subject goes through

Every objective has corresponding key results that are:

  • Numerically measured
  • Utilize a threshold or delta to measure change (from x to y)
  • They are the end result of a series of tasks, but not the tasks themselves
  • There’s a baseline measurement to move away from or towards
  • Answers: “How do I know if I have achieved my outcome?”

Each key result has supporting projects, which have their own to-do tasks, but are kept separate from OKRs. Great OKRs have a clear subject, object, and journey that subject aims towards.

Here’s an example of an OKR that follows this model:

Objective: Customers consistently find our product useful

  • KR1: 80% of new customers continue their subscription after 2 months.
  • KR2: 50% of new users return within 2 weeks.
  • KR3: Churn rate is < 2% this quarter.

This objective sounds difficult to achieve. This means it’s challenging and aspirational, but can also have multiple projects spanning multiple quarters so it’s something that can be worked on continuously. Multiple departments can adopt this OKR creating various key results that fit their projects. Start writing your own OKRs today with the 7Geese OKRs workbook!

How do I get started planning Objectives and Key Results (OKRs) for my company? / Planning Timeline

This 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. This timeline is meant to be a guide to help build great habits so you can create a frequency that works best for you.

Education and draft OKRs

FIRST QUARTER PLANNING: Have all leadership team members put draft OKRs into the OKRs review template. Review as a team once complete. Template: http://bit.ly/DraftOKRs Each team lead can continue to repeat these steps with their direct teams and 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.

PRO TIP! As you create your OKRs, think about how you’ll provide updates. Is this OKR something you assess weekly or monthly?

Progress updates and check-in’s

A great objective is one you think about in everything you do. Every time you check-in, you’re consistently turning goal-setting into a natural habit. This changes how individuals approach engagement at work. Work is no longer a series of tasks, but higher-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 gets asked, ”can you realistically commit to all of this?” Have conversations that answer what success means, how each team will support the other, and what resources are needed.

CHECK-IN: Check-in within your first week to start building a habit. Weekly check-ins also will leave you with 12 snapshots in time at the quarter’s end to reflect back on.

PRO TIP! Download the browser extension to check-in without disrupting where you’re already working. Click the … in the 7Geese navigation or here: http://bit.ly/7GChrome to download

STATUS UPDATE: By week 3 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 (tangible, or in the form of coaching) increases the likelihood of completion of 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 the men-tee. As a goal-setting mentor, you should keep goal conversations focused on, “can your goal really be done?” where you break down long-term goals into short-term, actionable items.

LEADERSHIP MEETING: It’s important to meet at the half way mark to discuss where things are at, provide team-level updates on whether OKRs are being understood at all levels

SUGGESTED DISCUSSIONS: Were we realistic? Any roadblocks? How can we help each other?

SECOND QUARTER PLANNING: Go over yours 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 quarters organization objectives + dept. projects.

Focus on breaking long-term OKRs into actionable next steps and how OKRs fit into their day-to-day.

SUGGESTED TEMPLATE: Monthly OKRs 1-on-1 http://bit.ly/Monthly1-on-1Template

Grading and coaching

REMEMBER! OKRs, when done great, are a tool for motivating and aligning people to work together. They spur perspective sharing, moments of discovery and make even your high performers achieve more. They increase transparency, accountability and empowerment. They are not designed to be used as a process or tool to use against your team to keep tabs, micro-manage, or couple with negative performance assessments.

CLOSE OKRS: Individually, have everyone assess their OKRs. 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 OKR that you committed to? Why or why not. Self-reflect! Team leads should have 1-on-1s with their direct team to talk career journey in relation to their OKRs and performance.

PRO TIP! Close your OKRs directly from the home page. Once over due, a close option appears when you hover over the objective.

SUGGESTED 1-ON-1 TEMPLATE: Quarterly Performance Reflection—Accessible here: http://bit.ly/Quarterly1-on-1Template

What are some Objectives and Key Results (OKRs) implementation best practices?

Set the right cadence for your OKRs

Setting the right cadence for your OKRs is defined by measurable targets that occur within rhythmic time frames. Quarterly, every three months beginning in January, is most common. However, objectives on any level can always be stretched quarter over quarter if the impact on success of an objective is more long-term. While quarterly is recommended, it is important the cadence matches the culture of the business. The key to OKRs is the transition from annual assessments to more frequent and transparent goal setting.

Define realistic team and individual priorities

Every OKR should reflect realistic priorities achievable in a three-month-cycle that are still challenging. Make sure to have conversations that answer what success means in relation to how each team needs to support the others. Having OKRs on both a team and individual level is highly 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.

It isn’t a task list, don’t create too many OKRs

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 that will be held accountable for them. By setting a limited number of OKRs, it directs teams to focus on priorities in order to produce better results.

Can employee performance be partially evaluated by Objectives and Key Results (OKRs)?

Most organizations that practice the OKR methodology use it as their primary performance management system. However, some do continue to use approaches like MBOs and KPIs in addition to their OKR process. While possible, it is not recommended because many have found it to be too time consuming to manage and inefficient in communicating objectives.

How do you align OKR in departments where performance is directly tied to rewards like and bonuses (i.e. Consulting, Sales)?

First let us make several points clear…

  • Compensation is referring to an employee’s base salary. Therefore, OKR can be linked to incentives where part of a job’s performance metrics is based off of bonuses or commission but not base salary.
  • OKRs can be used as part of the compensation structure as a performance metric, but not as an overall rating system.
  • If companies find bonuses to be motivating, consider giving the same bonus to all employees when a company objective is reached. The same applies for larger teams and departments.

While OKRs are not linked to any incentive compensation process by design, it is inevitable that some positions and teams track progress and made on Key Results and heavy correlation to incentive compensation. In most cases, we consider that incentive pay varies across departments and thus, not all will require their OKRs to be tied to compensation. However, in the case that they do, here are examples:

When the Key Result 100% tied to incentive compensation
A sales employee who has the Objective “Reach $250k in new sales this quarter” will likely have a percentage of incentive compensation linked to the Key Result which can be pre-determined. (Performance metric correlated to commission, not base salary)

When the Key Result is NOT tied to incentive compensation
A manager who has the Objective “Conduct 20 face-to-face client interviews this quarter”. In this case, a manager should not have their Key Result linked to compensation as this is an expectation and not a stretch goal to be reached within their job function. (Performance metric correlated to base salary)

How often should Objectives and Key Results (OKRs) be set?

Quarterly, every three months beginning in January, is most common. However, this depends on the culture individual organizations. Quarterly OKRs are most realistic on a team level, while organizations sometimes set annual objectives and adjust according to align with long-term goals. It is not uncommon for objectives that take longer than one quarter to achieve to be retained carried over for 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 are some Objectives and Key Results (OKRs) measurement best practices?

A one size fits all measurement for OKRs doesn’t exist

OKRs can be very different for different teams and functional positions. It’s important to consider the difficulty of each OKR when grading and assessing. It’s important to establish a grading scale before committing to an OKR to ensure expectations throughout the quarter are clearly defined.

Were expectations met?

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 OKR that you committed to?

Try practicing the traditional 0-1 scale

When grading OKRs the traditional way, the recommended scale is 0 – 1. For each of your key results, the highest it can score is a 1, and lowest a 0. OKRs are meant to be challenging, so every individual should be aiming for a 0.6 – 0.7 in the grading process. After rating each of your KR, you can then add them all together. Any objective with cumulative scale of under a 0.4 might be alarming, but a low score isn’t a failure. It’s a sign you need to re-evaluate whether the objective is still worth pursuing, or rethink your approach. How you chose to assign a grade depends on the circumstances of your team’s priorities. Perhaps a 0.5/1 is great because priorities shifted halfway through the quarter.

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 an “acceptable” metric. For example, having a support ticket response time of 4 hours or less has 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 > 80%, you’re moving in a positive direction. Negative metics 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 moving in a negative direction.

Threshold target metrics

Threshold metrics are a numerical range that is considered acceptable. Here’s an example: Sales needs to make a minimum of $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 an acceptable low and high values, creating a range of metric-centric goals that are acceptable.

How are Objectives and Key Results (OKRs) reviews conducted?

OKRs are supposed to be challenging, but also realistic and doable within a quarter’s worth of time. Aligning conversations is extremely important, especially for operational goals that are cross-functional. What one team defines as success may not be another team’s vision. Sync up to discuss! There should be no lack of understanding on, for example, how an OKR supports an organizational goal. Utilize the power of a conversation for 1-on-1 employee reviews.

Reflect on individual priorities

Every great planning day incorporates a discussion where everyone gets asked ”can you commit to all of this?”

Assess cross-functional objectives and results

Have conversations that answer what success means in relation to how each team will support the other, and what resources are needed to make that support a success.

Discuss outcome of alignment

Clearly discuss how goals will be tracked and how everyone will be held accountable. Clear expectations are key.

What is important to look for in an OKR tracking platform?

Once you’ve decided that tracking and measuring OKRs will be critical to your organization’s performance management process, it is 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 is what to keep an eye out for when selecting the right OKR tracking system for you:

Spotlight on setting OKRs

This might seem obvious, but finding the right platform to set company OKRs will help with the adoption across teams. 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 a software that supports employees on an individual level when it comes to creating 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 within a company. Ensuring the performance management system being adopted is easy to use with a trial run is best. You can look to replace Google spreadsheets with a performance management platform that is more organized along with added features and benefits.

Aligns individual, team and organizational objectives (not necessarily hierarchical)

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 tied to just top-down management approaches.

Supports employee engagement and recognition

In order to successfully implement the use of OKRs, it requires the adoption of employees on every level of a company. A tool that supports features like notifications for weekly check-ins, ability for managers and peers to request feedback and provide individual updates on a common dashboard is essential.

OKR Webinars and Additional Q&As

How can we guide the team/individual to set the right targets? For instance, run 10Km in 50 mins or 45 mins? What is the optimal target? Are there recommended processes to identify this?

It is important not to set too challenging of a goal. You need to be able to identify, given our resources, human capital, time etc, what can be achieved. From there, you might want to push the limit a bit to go above and beyond. One thing to be careful of is too challenging of a goal will be demotivating for the rest of your team. It is difficult for employees to find motivation in achieving goals they don’t believe they can reach. Start with what can be achieved 100% and let’s push ourselves for an extra bit

Can you compare OKRs to the Balanced Scorecard?

Many companies will use the Balanced Scorecard in combination with objectives and key results (OKRs) in the following way—the leadership team uses the different perspectives of the Balanced Scorecard to finalize their financial and non-financial metrics. Objectives and key results (OKRs) is then used to communicate how all objectives from the organizational level are aligned to the team level OKRs, and eventually to the individual level.

Is there a magic formula to make them work seamlessly together? The answer is “No”. For both Balanced Scorecard and objectives and key results (OKRs), there are no single solutions that fits all. It’s important to take what works the best for the organization into consideration. As mentioned before, the Balanced Scorecard is a great stepping stone to developing your objectives and key results (OKRs). It encourages you to look at the different perspectives of an organization and make sure that you are not missing out on any core aspect of your business. Objectives and key results (OKRs) are beneficial to share with the whole organization on what needs to be executed for everyone to be successful.

By definition, OKRs are always related to “results goals”. What are the best practices for alignment in departments where performance is directly tied to rewards like compensation and bonuses (i.e. Consulting, Sales)?

While OKRs are not linked to any incentive compensation process by design, it is inevitable that some positions and teams track progress and made on Key Results and heavy correlation to incentive compensation. In most cases, we consider that incentive pay varies across departments and thus, not all will require their OKRs to be tied to compensation. However, in the case that they do, here are examples:

When the Key Result 100% tied to incentive compensation
A sales employee who has the Objective “Reach $250k in new sales this quarter” will likely have a percentage of incentive compensation linked to the Key Result which can be pre-determined.

When the Key Result is NOT tied to incentive compensation
A manager who has the Objective “Conduct 20 face-to-face client interviews this quarter”. In this case, a manager should not have their Key Result linked to compensation as this is an expectation and not a stretch goal to be reached within their job function.

How do you quantify objectives like “improve our reputation” or “improve client communication” down to measurable Key Results?

When it comes to quantifying these types of objectives, you can consider testing arbitrary metrics. In the case of and objective like “Improve our reputation”, an appropriate key result might be “Increasing our NPS score by 10%” or “Increasing our satisfaction rating from 50 to 70%”. These metrics are arbitrary in the sense that it might not be company wide to start with. It is good to ask the question, “What triggers the OKR to start with?” For example, “Why are we trying to improve our reputation?” did you get a bad review, did you see a continuous trend of customer leaving etc.

How do you cope with project-based objectives where projects may be one week or one year and any one person may be working on two or three project simultaneously?

Each OKR should have their own due date. While many organizations have a standard schedule where lots of their OKRs can be set quarterly there are certainly project based companies. Consulting is one of the biggest fields where work is very project based. In that situation, your more functional departments (i.e. Sales, HR) might still following a quarterly cadence and each of your projects might then have their own individual due date scheduled as you see fit.

In a agile scrum development process are OKRs or specifically Key Results the product roadmap? So scrum is the execution process for OKR.

The outcome is what is your product roadmap planning to achieve. For example, increasing adoption rate of ‘Feature A’ by 10%. Your Key Results are the specific characteristics of the product roadmap that will lead to increased adoption. For example, “Launch email notifications on a weekly basis”. The work that your team is doing on a daily basis will lead to the completion of the Key Result.

How do we communicate to management that the assigned Key Results and timeline is not realistic?

One of the best ways to communicate to management that assignment Key Results and timelines aren’t realistic is being more specific with plans and priorities. Often times we are left with “ASAP” or “next week” for deadlines on various tasks that we’re not sure which to prioritize. This is where looking at immediate needs and objective alignment comes in. By asking questions to clarify and making an active effort to schedule check-in’s and/or status updates on the progress of your Key Results, you’re able to provide management with a more realistic view of why the timeline does or doesn’t work.

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