How To Use OKRs to Set Goals For Your Team (Plus Steps)
By Indeed Editorial Team
Updated March 29, 2022
Published September 29, 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Companies use objective and key results, called OKRs, to set and meet organizational goals. A detailed OKR helps track the progress made toward that goal and the business's overall performance. Understanding what an OKR is and how you can use them can help you accomplish your objectives. In this article, we discuss what OKR means how to use them effectively and the difference between an OKR and a goal.
What does OKR mean?
An OKR is a technique businesses use to create goals and define the results they need to meet those goals. Company leadership usually creates goals for the entire business or a department for a long-term period, like a quarter or year. OKRs are specific objectives that can help businesses achieve growth, make changes to increase employee or customer satisfaction or innovate a new product.
What are common uses for OKRs?
Some of the common uses for OKRs include:
Creating a company-wide objective: The process of creating an OKR involves considering company employees at all levels to evaluate how they can help accomplish it. This level of involvement ensures that the company shares a common understanding and agreement on the objective and the plan to achieve it.
Increasing collaboration: Because OKRs work on a company-wide scale, various departments and teams coordinate with each other. Collaboration can help develop teamwork and foster a more innovative and efficient work environment.
Tracking company performance: Your key results can provide you with insights into your company's performance. Evaluating your results involves considering the impact on the company and how you could contribute more.
OKR vs. goal
The main difference between an OKR and a goal is their scope. An OKR involves both an objective and key results, which creates a broader scope to evaluate and accomplish. A goal is a singular aim that can range from small defined tasks to large general achievements. You can consider the steps to accomplish an OKR as goals.
How to use OKRs effectively
Consider these steps in using OKRs:
1. Set your objective
Evaluate your team's or department's current work performance to identify areas to improve or develop. Finding these areas can help you decide on your objectives and optimize performance. When setting your objective, consider your team's work processes and interactions with other teams to apply these objectives across multiple departments.
Example: Your objective is to raise customer retention rates from 25% to 50%. The process can involve the efforts of company leaders, stakeholders and employees at all levels.
2. Plan your steps
Consider the result of your objective and your current starting point to determine the steps you can take. Coordinate with other teams to brainstorm and develop ideas on different methods and strategies. Planning your steps with the teams involved in your objective ensures that everyone understands and works toward the same goal.
Example: The steps to increase customer retention involve the company's customer base, customer service teams, marketing department, merchandising department, manufacturing team and research and development. One main step in your plan is decreasing the response time of your customer service department. The department manager informs you they may require more team members to meet this expectation.
3. Identify your key results
Once you've planned the steps to reach your objective, identify the results you hope to achieve from executing those steps. These key results provide a way to determine if you've completed a step toward your objective and measure your progress. They also ensure that you're regularly achieving results.
Example: You can determine key results for each company division and for each step of raising customer retention. With your customer service department, your key result would be decreasing response times after hiring additional customer service representatives.
4. Define performance measurements
Analyzing performance through key results can be easier if you define them through measurable figures. You can calculate your key results in percentages, revenue figures, client ratings and other business metrics.
Example: With your customer service department, you expect that hiring additional employees can reduce the response time from 30 minutes to 15. Your hope is that the faster response rates can help increase your retention rates by 10%.
5. Create smaller goals
Understanding the smaller tasks that are necessary for achieving a key result can help you remain focused on your objective. Dividing a step into smaller goals can ensure that you complete the step thoroughly. It can also allow you to celebrate more milestone completions, which is useful for boosting morale and productivity.
Example: A step in increasing your customer retention can include expanding your customer base. This might involve establishing goals for your marketing department to target a more diverse clientele or to create outreach methods that are accessible to a broader general audience. Goals like this can include creating a report on historical client databases to predict how your current marketing strategies might perform.
Related: Guide to OKRs
6. Recognize your goal progress
Having smaller goals in the process of completing your professional objective can help you remain motivated. Recognize your small goal accomplishments to evaluate your progress and celebrate each achievement. Objectives may take some time to complete, and keeping your motivation throughout the process can help you stay focused.
Example: Doubling your customer retention rate is an objective that can span years to accomplish. Having key results and smaller goals for each company department can help you see the growth of progress that you and your company are making together. Recognizing and praising the results of your teams in customer service, marketing and other departments motivates and validates the efforts of those involved in achieving the objective.
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