What are OKRs

OKR is a goal-setting tool developed by former Intel CEO Andy Groves to transform top-level strategies into measurable goals and track their results. He laid out the OKR approach in his 1983 book High Output Management. Since then, OKR has been adopted by both small businesses and Fortune 500 companies.

There’re three types of OKRs: individual, team and company. Every OKR has two components: an objective and three to five associated key results. 

The objective is a clearly defined goal for a worker, team or company. It should be significant and inspirational. For example, a company OKR may have the objective of increasing monthly revenue.

Each objective comes with three to five key results. These key results are measurable targets you can use to track the progress of that objective. For the above example objective of “increasing monthly revenue,” you may set these three key results:

• Increase deal closing rate from 20% to 30%
• Improve average annual revenue per client from $120,000 to $140,000
• Increase sales pipeline coverage from 2.5 to 3

Benefits of OKRs

The main benefits of OKRs are:

• Organizational alignment: OKRs promote cross-functional collaboration by getting employees and teams to work toward the same high-level company objectives.
• Faster goal setting: By providing a standardized framework, OKRs can speed up the goal-setting process significantly.
• Improved accountability: Each OKR has a specific owner. This ownership improves accountability, increasing the likelihood of reaching the objective.

Examples of OKRs

To create your OKRs quickly, refer to the following examples of OKRs, including company OKRs and team OKRs. You can pick one that closely matches your situation and modify it to fit your unique needs.

Company OKR examples

Company OKRs should focus on a few strategic goals and align the entire organization toward those goals. They should serve as the foundation for team-level and individual-level OKRs.

Objective: Become a global company

Key results:

• Expand sales in Asia by 50%
• Open five local offices in Africa and the Middle East
• Establish partnerships with three local distributors in South America

Objective: Become an environmentally sustainable company

Key results:

• Increase the proportion of electric vehicles to 40% of the truck fleet
• Increase the use of biodegradable materials to 50% of packaging
• Purchase carbon credits to cover 75% of greenhouse gas emission

Objective: Improve brand awareness

Key results:

• Increase media coverage by 40%
• Improve brand awareness score from 31% to 55%
• Increase share of voice from 14% to 30%

Objective: Improve customer experience

Key results:

• Increase Net Promoter Score (NPS) from 32 to 45
• Improve Customer Satisfaction (CSAT) score from 63% to 80% 
• Increase Customer Effort Score (CES) from 61 to 75

Objective: Create a culture of diversity, inclusion and equity 

Key results:

• Increase the proportion of underrepresented minorities from 16% of employees to 20%
• Provide diversity training for 80% of all employees
• Develop a mentorship program for traditionally underserved employees

Objective: Improve profit

Key results:

• Expand the average gross profit margin of new clients to 40%
• Increase the average revenue per client by 20%
• Increase the proportion of enterprise clients from 35% to 45%

Objective: Become a low-cost leader

Key results:

• Reduce the number of products by 25%
• Lower selling, general and administrative (SG&A) expenses from 28% of sales to 24%
• Consolidate real estate and close down three satellite offices

HR team OKR example

Objective: Increase recruitment effectiveness

Key results:

• Reduce the average time to hire from 95 days to 65 days
• Lower the average cost per hire from $12,500 to $10,000
• Reduce employee turnover in the first year from 11% to 7%

Customer service team OKR example

Objective: Increase customer service efficiency and effectiveness

Key results:

• Reduce first response time from 12 hours to 4 hours
• Lower the average resolution time of customer issues from 2.3 days to 1.2 days
• Increase customer issue resolution rate from 75% to 85%

IT team OKR example

Objective: Improve IT system reliability and availability

Key results:

• Increase network uptime from 98.9% to 99.5%
• Set up replicated databases and application servers in three availability zones
• Reduce server mean time to failure by 20%

DevOps team OKR

Objective: Improve website performance and reliability

Key results:

• Reduce the average Time to Interactive (TTI) from 4.3 seconds to 2 seconds
• Lower error rate from 0.4% to 0.2%
• Reduce the average Time To Start Render (TTSR) from 1.8 seconds to 1 second

Finance team OKR

Objective: Improve the account receivable process

Key results:

• Increase the proportion of electronic bills from 53% to 70%
• Lower Days Sales Outstanding (DSO) from 43 days to 30 days
• Improve Collections Effectiveness Index (CEI) from 64% to 80%

How to write effective company OKRs

The main purpose of company OKRs is to promote organizational alignment by transforming high-level company strategies into measurable goals for teams and individuals. Before writing your company OKRs, make sure you understand your organization’s strategy.

Your high-level strategy should drive your company OKRs, which then act as the foundation of all team and individual OKRs. This flow of information from high-level strategy to company OKRs to team and employee OKRs creates alignment throughout the organization.

Your company’s leadership team should direct the creation of company OKRs. To ensure buy-in, they must get feedback from employees from all departments and levels. This collaborative process creates a sense of ownership throughout the organization, increasing the chance of success of the company OKRs.

The objectives in company OKRs should be broad enough to give each team sufficient freedom to create their own OKRs but specific enough to focus the entire organization on a few strategic issues with clarity. 

The key results in company OKRs must be specific and measurable. These results are the outcomes you want instead of a list of tasks that need to be completed.

OKR best practices

The following best practices can help you create OKRs effectively.

Set achievable but ambitious objectives

The objectives in OKRs should be achievable but not too easy. OKRs serve to inspire and motivate. Target a 70% success rate for your OKRs. Lower than that—your OKRs are too difficult and become demotivational. Higher than that—they’re too easy to act as stretch goals.

Focus on leading indicators

When creating the key results for OKRs, opt for leading instead of lagging indicators. Leading indicators are metrics that predict future performances, while lagging indicators measure past results but lack predictive power.

For example, when measuring profit, gross profit margin per customer is a leading indicator, while total monthly profit is a lagging indicator. Focus on the former when creating key results for profit-related OKRs.

Define a small set of OKRs

Aim for two to three OKRs for the whole organization and each team. Too many OKRs can overwhelm your employees and become demotivational. On the other hand, a small number of OKRs can focus their energy on the most strategic issues.

Roll out the OKR initiative incrementally

Start with a small pilot program to test the idea and correct any implementation issues before scaling up to a full-scale rollout of OKRs across the entire company. This incremental approach lets your OKR team learn from its experience and improve its process, increasing the probability of success for your initiative.

Communicate and educate

It’s important to realize that OKRs exist at every level. While your company has at least one, each department and individual employee will have OKRs. Being transparent about the goal and process of your OKR initiative is vital to success. Include everyone in the process early on to give them a sense of ownership. Provide training to ensure workers have the skills to carry out their OKR responsibilities.