Guide to OKRs
By Indeed Editorial Team
Updated August 30, 2021 | Published March 12, 2019
Updated August 30, 2021
Published March 12, 2019
Objectives and key results (OKRs) are a way to set goals and track progress. OKRs help create ambitious goals for each individual in an organization. In this guide, we explain this framework in more detail, provide benefits and drawbacks of OKRs and share some examples.
What are OKRs?
OKRs are a goal-achievement tool that helps a company or individual attain their target through measurable actions. Objectives and key results may seem complex if you’re new to the concept, but the structure is simple when broken down into two parts.
These are brief descriptions of what you wish to achieve. They should be actionable and challenge each employee and team to use their skills and potential to reach the stated goal. Three to five objectives are usually sufficient. More than that can lead to a loss of focus.
These are a set of measures designed to track the progress of your objective. Key results lead to the success of the objective while holding people accountable for their work. Key results are often numerical, making them easier to measure. Up to five key results are common for each objective. Keep in mind that these are living measurements that can change to meet the goals of the organization quarterly or monthly.
What’s the difference between a goal and an objective?
In an organizational sense, goals are usually broad and unfocused. While they can help provide a general sense of direction, they aren’t typically specific enough to measure quality, quantity or timeframe. Setting goals as an individual—especially long-term and short-term goals—is often more productive, as they can be more specific and measurable than company-wide goals.
To define an objective, you should answer the “How?” of achieving a goal, which makes it more measurable. An objective provides strategy and tactics that are easily measured and loosely model the framework of SMART goals.
Examples of OKRs
Now that you understand the basics of OKRs, examples of OKRs are an excellent way to visualize how they work. In this example, a company wants to improve its customer service. Improving customer service would be the goal, but it doesn’t define specific objectives. Therefore, the idea of improving customer service needs to be broken down into actionable steps:
Objective 1: Improve customer service by the end of Quarter 2
Key Result 1: Achieve a customer feedback rating of 85 percent.
Key Result 2: Resolve critical issues within two hours of customer contact.
Key Result 3: Answer customer complaints within one business day.
Objective 2: Improve knowledge and support of the customer service team.
Key Result 1: Conduct training sessions or seminars once a month.
Key Result 2: Require feedback and suggestions from the customer service team on how to improve service.
Key Result 3: Customer service members should attain a customer feedback score of at least 85 percent.
Objective 3: Upgrade tech tools to increase customer support and productivity
Key Result 1: Offer 24/7 support to customers.
Key Result 2: Process customer data and reports 50 percent faster.
From this example, you can see that the objectives are specific and the key objectives are measurable. The number of objectives or key results isn’t permanent. You can adjust them based on assessments of your team and their progress. This model can also apply to any industry or department, as long as you adhere to the ideas of both the objectives and the key results.
Benefits of OKRs
As demonstrated by the successes of several Fortune 500 companies, OKRs have many benefits over traditional strategic planning.
Versatility: OKRs are easy to tweak to meet the ever-changing goals of a business. This is due to shorter goal cycles, often coming quarterly or monthly.
Fewer resources and time usage: Because OKRs are straightforward, tweaking them takes few resources and time. This means you should meet with your team on a monthly or quarterly basis to adjust OKRs as needed.
Transparency: Because the objectives and key results are clearly stated, it creates clarity and motivation among team members.
Built on levels: Prepared bottom-up and top-down, all objectives are easily translated to every level from upper management to entry-level employees.
Creation of ambition: OKRs encourage employees to reach challenging but reachable goals. This pushes ambition at every level of the business.
Application across all industries: The one-size-fits-all approach of OKRs allows them to be applied to nearly all types of businesses across an array of industries.
These are just a handful of the perks of carrying out OKRs in your business but certainly not the only ones.
Common difficulties with OKRs
While OKRs bring many benefits, you should be aware of the risks of poor execution. This includes:
Using OKRs as a department task list: While OKRs can be useful to direct your daily work, using it as a to-do list can be limiting and reduce productivity.
Failure to tweak OKRs: When you don’t analyze and realign your goals, OKRs can become ineffective or irrelevant over time.
Setting too many OKRs: Three to five objectives with two to five key results under each is the optimal way to use OKRs. When you go overboard, employees can forget their tasks, feel overwhelmed or lose focus. OKRs should only include your top priorities, not everyday tasks or side projects.
Like any new business strategy, OKRs require proper implementation that won’t happen within a few days or weeks. It takes time to set up your OKRs. This includes the creation of OKRs and training all individuals involved in the framework.
With many strong benefits, OKRs can transform a disorganized company with a lack of focus into a success story. Also, the concept of OKRs can be applied to you as an individual, helping to realign your goals in a simple format that can take you to the next level of your career.
Explore more articles
- FAQ: What Is a 1-Year MBA? (Plus Benefits and Pros and Cons)
- What Is a Conglomerate? Definition, Benefits and Types
- What Does Sourcing Mean? (With Types and Tips)
- What Is an MSSP? Definition, Benefits and Tips To Consider
- What Is BOPIS in Retail Sales? A Definitive Guide
- What Is A PA?
- What Is an Audited Financial Statement? (And What To Include)
- What Is an Audited Financial Statement? (And What To Include)
- What Is Security Testing? (With Types and Related Jobs)
- What Does Interest Mean for My Financial Health?
- What Is Net Income?
- 11 Ways To Improve Your Accountability When You’re Working From Home