What are OKRs? Explanation, examples & how to set them
At first sight, “OKRs” may sound daunting or make you roll your eyes — after all, if you don’t yet know what an OKR is, you may take it for an empty buzzword. But once you understand the meaning and the potential of this goal-setting methodology, you’ll find that OKRs are something to embrace, not fear.
Setting the right goals is the most challenging part of rolling out OKRs. In this blog post, we’ll answer the question, “What are OKRs?”, discuss their role as a strategic planning tool in employee engagement, show you examples of company and team OKRs, and share best practices to set goals and create alignment.
By the end of this read, you’ll be equipped with the tools to use the OKR framework to propel your organization forward.
OKR is a management methodology that stands for Objectives and Key Results. Its essence is quite simple: to break down ambitious objectives into clear, manageable, measurable results, setting out a path for success that advances employee engagement to boot.
The OKR framework’s design is attributed to Andy Grove, Intel’s third employee and former CEO. In 1983, Grove laid out the term in the book “High Output Management.” Another influential OKR authority, John Doerr joined Intel in the mid-1970s. Doerr describes the OKRs as “deceptively simple, but also the polar opposite of the conventional management by objectives (MBO) systems, which tend to be top-down, hierarchical, annual, and linked to compensation.”
Now a venture capitalist, Doerr presented the OKRs system to 100 organizations since 1980 — but it wasn’t until recent years that it gained tremendous traction. Doerr further explored OKRs in the 2017 book “Measure What Matters,” and the framework is now used by fast-scaling startups and large corporations like Google and the Bill & Melinda Gates Foundation.
The OKR formula
We will make progress in pursuit of [OBJECTIVE] by achieving [KEY RESULTS].
An objective is what you want to achieve: the direction you’re heading in. Objectives make the idea of “working towards the same goal” palpable across the entire organization. They’re bold and ambitious, yet not make-believe. They’re qualitative and have the power of uniting team members.
You can have plenty of objectives for your business. To achieve them with the support of the OKRs framework, they must be clear and concise. On top of that, we recommend working with quarterly OKR cycles. At the start of each quarter, you should go through the planning exercise to define your OKRs at each level: company-wide, team-wide, and individual.
An objective is an ambitious goal, but not a pipe dream. Yet, it should be groundbreaking — not a mere expansion of something you’ve already mastered. And if you end up reaching a goal easily or faster than expected, you should consider setting stretch goals: aspirational objectives that exceed initial expectations. This way, there will always be something exciting to work towards.
Key Results are the milestones you pass on the way to your objectives. They define how you’ll hit your goals and measure progress.
Quantitative and tied to a timeline, key results are pieces of the bigger picture: the objective to which they’re attached. Like signposts, these desired results tell you if your team is headed in the right direction and how far you still have to push.
As measurable pieces of your vision, key results require balance: they should guide, fuel, ease, and not compromise your audacious plans. Key results shouldn’t be too easy to reach but should be meaningful enough to warrant a good team celebration if achieved.
💡 Top tip: Don’t conflate OKRs and KPIs (Key Performance Indicators). While KPIs evaluate how effectively your company performs a particular activity, the key results in OKRs are guided by objectives anchored in an overarching mission.
KPIs and key results should be quantifiable and might even speak to the same achievements (e.g., number of qualified leads in a quarter). But unlike an OKR, a key performance indicator isn’t necessarily guided by a broader vision and company strategy.
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The role of OKRs in employee engagement
Voluntary employee turnover costs U.S. businesses one trillion dollars every year. The main reason is that the cost of filling out positions can be up to two times the allocated annual salary — an estimate presented as conservative.
On top of massive financial loss, staff turnover affects team morale and overburdens colleagues. It can also mean rebuilding customer relationships and losing top talent that’s hard to replace.
Voluntary turnover is often preventable with increased engagement: 52% of employees say something could have been done to keep them at the organization. Surprisingly to some, listening to your staff, nurturing their professional development, and making them feel their work has meaning is more effective than investing in nap pods and unlimited ice cream.
On that note, OKRs are a sure path to transparency and making work more meaningful; carefully chosen OKRs can give purpose to tasks that might otherwise seem like items to tick off an endless list.
When someone understands that their contribution is impactful and can see themselves growing with the company instead of just filling someone else’s pockets, they feel more motivated. They’ll likely challenge themselves, adopt a team player’s attitude, and think of creative solutions to help their teams achieve OKRs.
Granted, there’s an art to choosing the most fitting objectives and key results, but anyone can master it if they want to.
🚀 Ready to make a start with OKRs in your business?
👉 Download our free OKRs template to set strategic and ambitious Objectives and Key Results!
Objectives & key results examples
Here are company and team OKR examples, that give you an idea of how to go about setting the most effective Objectives and Key Results:
Mars Marmalades company OKR
• Objective: UK market entry
• Key Result 1: Hire a UK country manager to lead regional sales and operations
• Key Result 2: Set up legal entity in the UK
• Key Result 3: Win 20 new clients headquartered in the UK
• Key Result 4: Reduce cost per lead in the UK by 20%
Mars Marmalades HR team OKR
• Objective: Build and maintain a successful talent operations function
• Key Result 1: Increase the overall employee retention rate by 15% over the next 12 months
• Key Result 2: Improve the time-to-fill metric for critical roles by 20% by streamlining the recruitment process and leveraging technology solutions to automate recruitment workflows.
• Key Result 3: Develop and implement an employee development plan for all employees that includes at least one stretch assignment or learning opportunity per year, resulting in a 10% increase in employee satisfaction with career development opportunities.
Notice how the team OKR (objective: to set up UK talent operations) connects to the company OKR (objective: UK market entry) — this creates alignment and is known as the cascading goals methodology.
In both cases, the objective is ambitious enough to be broken down into multiple key results. When defining key results that fit your objective, think about how you measure progress. In our example, the key results are easily trackable and enable the more abstract, ambitious objective.
We’ll now get into some tricks to OKR planning.
How to set the right Objectives & Key Results for your business [7 steps]
1. Keep it simple: choose 3 to 5 objectives (& key results for each)
Between three and five objectives for each OKR period is a realistic amount to keep teams stimulated without feeling overwhelmed. With any fewer, goals may feel limiting. With too many OKRs, you risk focusing on too much at once and not achieving anything.
Depending on its essence, an organization may work better with OKR periods different from our recommended quarter. Still, bear in mind that a 13-week timeframe allows you to aim for 10% progress each week, with a handy 2-3 week grace period to get going.
Speaking of numbers, Google advises setting around three key results per objective; other experts say that up to five key results are fine. Consider your team’s size, the complexity of your OKR system, and your objective’s scope before determining how many key results to put in place. You don’t want to set more key results because it looks more challenging — remember that simplicity is crucial for success.
Essentially, key results should cover enough ground to allow for objectives to be reached. If the fulfillment of key results makes for only 40-50% of your objective, you know those key results are insufficient. Don’t forget that key results exist to serve your goals — otherwise, they won’t have the intended impact.
2. Be specific & don’t fear numbers
A common drawback of ambitious planning is being too imprecise. That’s why, as pillars for your objectives, key results must be measurable. For example, if you wanted to become a master chef, a key result like “get better at cooking” isn’t very helpful. Precisely what defines getting better? When would you know that you had achieved such a vague outcome? A budding chef would be better off writing this: “Take five cooking classes.” At any given moment, you can look at that key result and know for sure if you’ve achieved it.
3. Aim high & use challenges in your favor
Make your OKRs ambitious. Despite what many people believe, easy work isn’t more motivating than challenging work. Harvard Business Review research states that “in some situations people perceive higher goals as easier to attain than lower ones — and even when that’s not the case, they still can find those more challenging goals more appealing.”
Feeling some discomfort is usually a healthy sign that your objective is challenging enough to make it worth your while. On the other hand, if your OKRs seem terrifying, you may have gone too far. Such far-fetched goals could harm your team’s motivation — perhaps keep them as stretch goals if you exceed expectations with your ambitious, but realistic OKRs.
Moreover, objectives should never boil down to maintaining something you’re already doing. If they include words like “keep doing,” “continue to,” and the like, you’re shying away from setting audacious objectives that would test your efforts and take your organization to the next level.
Like objectives, key results should require some elbow grease to accomplish. If they’re too easy, they won’t make a noticeable impact on the OKR progress. Hitting 60-80% is a good indicator of a high-impact key result, whereas fulfilling 100% without difficulty shows that the key result was unambitious.
Remember: key results should push your people to go the extra mile, stimulating employees to draw on their resourcefulness and innovation capacity. What’s more, be mindful that teams and companies change. What may have been challenging and exciting last year may make for low-hanging fruit this quarter.
4. OKRs are teamwork
Engage your workforce by asking them how they can contribute to objectives, rather than simply assigning top-down responsibilities to teams and individuals.
Ask yourself — and your teams — several questions. Is there a need or space for a special project? Does a team want to tackle a particular aspect of the objective? By asking employees for their input instead of presenting a fixed plan, you encourage stakeholders to take the initiative and work with (and on) their strengths. As a consequence, transparency and trust in your team’s capacity give room for thriving OKRs.
Besides, remember that the OKR framework can also boost individual development, as each team member can have their own objectives (personal OKRs) to work towards (Here is a guide for with examples for performance-oriented goals). Nurture engagement and a sense of purpose by empowering everyone to have a say in their individual goals. Should someone’s manager decide against an individual-level OKR, reasons should be laid out and not seem arbitrary.
5. Communicate, listen & foster a feedback culture
Even if you’ve involved your team in the OKR development process (good on you!), teamwork isn’t finished. You’ll need your team’s understanding and cooperation to ensure the established OKRs make sense in practice and benefit the organization.
If an OKR is linked to another team’s objectives, you will benefit from understanding how they set and manage their goals, as that will affect the way you manage yours. And if your company is setting OKRs for the first time, it may be wise to focus on setting business goals (company-wide) first. That way, smaller-scale team objectives can fall in step with the organization’s purpose, aligning OKRs on every level to company goals.
On a related note, make sure wording is always clear. When it comes to implementing OKRs, the last thing you want is for growth to be hindered by avoidable misunderstandings.
But that’s not the finish line for transparent communication. More than sharing one-directional information, listening to employees and fostering a feedback culture is one of the cornerstones of successful OKRs. We’ve explored how OKRs can sustain engagement, but this goes both ways.
Invest in engagement surveys and keep communication open while ensuring that your employees feel psychologically safe to express their opinions. That’ll also empower your team to seek advice from their management when facing roadblocks. This way, obstacles will still be learning opportunities, but they won’t hold OKRs back if addressed fast enough.
6. Track progress, focus on the outcome & celebrate success
A surefire approach to keeping your OKRs in shape is to monitor progress and recognize every accomplishment. Praising your team for their achievements — no matter how big or small — is an excellent way to have everyone engaged and keep the potential of OKRs top of mind.
At this point, we hope the need for quantifiable key results is clear to you. To-do-list tasks have no precise endpoints, and that’s where key results thrive as a strategy. As finite milestones, key results support accountability and call for focusing on the outcome.
Vague examples make it hard to provide evidence of accomplishment. When negotiating a salary raise, would you rather hear your employee say that one of their feats was “researching software,” or that they examined all options and pitched the most fitting software to management on a specific date? Undoubtedly, the latter would be more impactful.
Focusing on gaugeable results doesn’t contradict the process. With no work done, key results can’t be magically achieved (unless they were unambitious), but the OKRs framework helps you envision the intended outcome and know how far you are from it.
Remember that objectives don’t have to be fully completed to be celebrated. If teams always achieve 100% of their bold objectives, there’s room to think bigger.
We recommend scheduling regular OKR check-ins to discuss roadblocks, find solutions, and align expectations. Also use this time as an opportunity for employees to know that their progress is recognized and valued by their managers. Appreciation goes a long way.
7. Know when it's time to readjust & don't beat yourself up
We’ve argued that 100% fulfillment isn’t what you should focus on when establishing OKRs. If you’ve set the right OKRs (in a sweet spot between challenging the status quo and a “pie in the sky”), hitting 80% of your target should more than validate your efforts and courage. Be proud of yourself and your team.
Yet, things change unexpectedly, as the 2020 pandemic proves. We’ll all fail at some point (most likely many) in our lives, and as much as we should use losses as opportunities to learn and evolve, they don’t feel good, do they? But this isn’t the time to abandon your OKRs.
Chin up. Reassess your situation. Be conscious of what you can do and make peace with what you can’t control (easier said than done, we know, but we must keep trying). Make the necessary adjustments to your key results (decrease numbers? Break down key results into smaller parts? Extend time frames?) — and keep walking. Well-structured OKRs will help you bounce back.
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Using OKR tools to achieve company objectives
Having an OKR tool for setting and keeping track of company, team, and individual OKRs is essential for building a transparent company culture and creating alignment. With Leapsome, you can go beyond simply tracking your goals and also share and request feedback.
It’s easy to lose track of goals in your day-to-day work — but Leapsome keeps your goals front and center, providing you with progress updates, visual dashboards, and check-in reminders, as well as integrating with your 1:1 meetings and performance reviews.
🎯 Leapsome is the only platform that closes the loop between performance management, engagement, and continuous learning.
👉 Request a demo today and learn how Leapsome empowers companies and employees to create an effective goal-setting process!
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