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Objectives and key results (OKRs) are a powerful framework for aligning employee efforts with organizational goals. Whether it’s driving revenue growth, improving customer satisfaction, or boosting employee engagement, OKRs provide clarity and direction for employees at all levels. They establish meaningful goals and define clear metrics that let team members track progress towards them, encouraging a culture of transparency and accountability.
Let’s take a look at how your organization can use OKRs to keep team members motivated and focused on the initiatives that matter most to your company’s success.
What is an OKR?
Objectives and key results, also known as OKRs, are a goal-setting framework used by companies to define and track critical organizational priorities. As its name indicates, an OKR consists of two main components: objectives and key results. Objectives are ambitious, qualitative goals that articulate what an organization or team aims to achieve at a high level. Key results are quantitative ways to measure progress towards achieving these objectives. Key results should be clear, specific, and time-bound, so your organization can accurately assess ongoing performance.
OKRs are typically visible to all employees within an organization, so team members can better understand how their daily work tasks contribute to organizational goals. This transparency can reveal opportunities for employees to collaborate on common priorities that might otherwise go unnoticed as well. Employees should also be encouraged to be transparent in turn and provide honest feedback on OKRs, whether they have input regarding how to better reach current targets or ideas on how OKRs should be changed to better meet the needs of the business and its customer base.
The history of OKRs
The concept of OKRs was first introduced by Andy Grove, the former CEO of Intel, in the 1970s, as an evolution of the management by objectives (MBO) framework. Grove developed OKRs as a strategic management tool to align the efforts of employees with the company’s objectives and drive organizational performance. Inspired by the management philosophy of Peter Drucker, Grove refined the OKR framework to suit Intel’s fast-paced and dynamic environment.
OKRs gained widespread popularity in the technology industry during the 1990s and 2000s. Google played a particularly significant role in popularizing OKRs and refining their implementation for modern organizations. Under the leadership of John Doerr, a former Intel executive and early advocate of OKRs, Google embraced the framework as a core component of its management philosophy. The success of OKRs at Google and other companies led to increased adoption by organizations across many industries, cementing OKRs as a leading methodology for goal setting and performance management.
OKR examples
Here are three examples of objectives and related key results, demonstrating how the OKR framework can drive success in many important areas.
Objective: provide every customer with a great experience
Our business will provide every customer with a great experience by:
- Key result 1: Achieving a Net Promoter Score (NPS) of 80 or higher by the end of the year.
- Key result 2: Reducing average response time to customer inquiries to less than 24 hours.
- Key result 3: Increasing YoY customer retention rate by 10% by the end of the year.
Objective: drive sustained revenue growth
We will drive sustained revenue growth through:
- Key result 1: Increasing monthly recurring revenue (MRR) by 15% by the end of the fiscal year.
- Key result 2: Achieving an average customer lifetime value (CLV) of $10,000 or higher.
- Key result 3: Expanding market share by launching three new apps.
Objective: engage employees every day
Our organization will engage employees every day by:
- Key result 1: Implementing an employee recognition program with an activation rate of 95% or above.
- Key result 2: Achieving an average score of 4 out of 5 on the Likert scale in response to the question “Do you feel excited about coming to work?” based on data from weekly pulse surveys delivered with an employee engagement solution.
- Key result 3: Encouraging employees to actually use at least five days of PTO on average each year.
Types of OKRs
The flexibility of OKRs is one of the framework’s biggest advantages. Here are three of the most common types of OKRs you can use at your company to achieve your most pressing goals.
Aspirational OKRs
Aspirational OKRs are ambitious goals that stretch the capabilities of an organization or team, pushing them beyond their comfort zones to achieve significant breakthroughs. These OKRs typically focus on long-term objectives that have the potential to transform the company. Aspirational OKRs can improve innovation and keep employees engaged as they work on novel projects and explore new responsibilities. For example, the goal to “become number one in market share within five years” sets a clear and exciting vision for the organization.
Committed OKRs
Committed OKRs represent the organization’s top priorities and commitments over a specific period of time. They’re a better fit for immediate strategic objectives than aspirational OKRs, helping to guide decision-making and resource allocation. A committed OKR for a software company might be to “achieve 99.9% uptime for our primary product by the end of the year.” This lets employees know where they should focus their efforts in the short term to contribute the most to organizational success.
Learning OKRs
Learning OKRs focus on supporting both individual and organizational growth through the acquisition of new knowledge, skills, and capabilities. These OKRs are a great way to incentivize employees to actively pursue professional development and track team members’ individual learning progress. Businesses that set learning OKRs should strive to make learning engaging and personalized by establishing a modern talent development program. A learning OKR for a marketing team could be to “familiarize all team members with digital inbound marketing strategies by the end of the year.”
OKR grading
OKR grading helps organizations assess the effectiveness of their OKRs by assigning scores or ratings to objectives and key results. There are many grading methods, from qualitatively assessing whether the objective is met, in progress, or completed, to assessing objective progress on a percentile basis. This latter method requires organization to evaluate progress from 0 – 100 percent based on the collective performance of relevant key results. OKR grading lets leaders assess progress towards goals and key results at a glance, so they can celebrate successes with their team members while addressing areas that require additional attention.
4 best practices for creating good OKRs
By following these four best practices, your organization can get the most out of its objectives and key results.
1. Focus on impactful objectives
Defining clear and impactful objectives that are ambitious yet achievable is the first step to successfully employing OKRs. Objectives should be specific and actionable, with easy-to-understand language that concisely communicates your company’s goal. A generic objective like “increase sales revenue” is straightforward enough, but lacks both specificity and any connection to your company vision. Instead, craft an objective that remains understandable while connecting more closely to your organization’s culture and priorities, such as “develop the largest digital marketing footprint in our industry.” And ensure your company strikes the right balance when it comes to the number of objectives, avoiding an overwhelming amount of goals or one or two objectives that lack focus.
2. Define measurable key results
Once you’ve defined one or more objectives, it’s time to establish key results you can use to measure your progress towards reaching them. Key results should be quantifiable metrics or outcomes that directly contribute to completing related objectives. For instance, if your objective is to “make customer satisfaction a cornerstone of our success,” key results could include metrics such as Net Promoter Score (NPS), customer retention rate, and average response time to customer inquiries. Remember that vague or unrealistic key results can reduce the effectiveness of OKRs and erode employee trust and motivation, so keep them concrete and attainable.
3. Don’t be afraid to revise your OKRs
OKRs should be treated as dynamic tools that evolve in response to feedback and changing circumstances. Regularly review OKRs to ensure they remain aligned with shifting organizational priorities and market dynamics. And empower teams to iterate on their OKRs, so if they realize partway through the OKR cycle that certain key results aren’t feasible or no longer reflect organizational priorities, they can make the necessary adjustments. This keeps OKRs relevant and impactful, ensuring that team members don’t spend time and effort on projects that won’t make a real difference.
4. Make progress towards your key results with ownership and accountability
Over the long run, the success of OKRs relies on a culture of ownership and accountability among employees. If employees don’t believe in the validity of the OKRs set by managers and other leaders, progress will be slow and conflicts likely. That’s why all objectives and key results should be developed collaboratively with input from team members at all levels of your company. When employees are involved in creating OKRs, they’re more likely to feel invested in reaching them and motivated to give their best. Your company can also improve buy-in by setting team-level OKRs that focus on initiatives more specific to employees’ core responsibilities.
Your company should hold individuals and teams responsible for delivering on their OKRs as well. Adopt HR solutions that include real-time reporting features, so you always know where key results stand. Hold regular check-ins to share this data and address any obstacles or challenges that arise during the OKR cycle. And don’t forget to recognize employees for their contributions, both big and small. With the right employee recognition platform, employees can show appreciation every day with the touch of a button, while backing up their messages of thanks with tangible rewards from a catalog featuring millions of options.
Develop and measure meaningful OKRs at your organization
Successful OKRs rely on collecting and analyzing data on everything from how your key results are progressing to how employees feel about your OKR initiatives. Your organization needs a centralized place to collect and process all this information, and that’s just what you’ll get with the Achievers Employee Experience Platform. Through Achievers Listen, it leverages modern data collection tools, like pulse surveys and AI-powered feedback channels, to gather information on HR-related OKRs and employee sentiment. It then guides your people leaders from insight to action with powerful, intuitive reporting features and guidance on next steps. And with Achievers Recognize, your company can take immediate action on two primary drivers of organizational success – employee engagement and recognition – with fun, easy-to-use social recognition features and a rewards marketplace with over 3 million reward options and 2,500 global brands.
Request a free demo of Achievers today to see how it can help your organization create and reach OKRs for yourself.
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