Setting clear goals and measuring progress is crucial for any business to engage employees and reach desirable outcomes. OKRs allow managers to provide a framework for setting goals, aligning teams, and driving focus and accountability. Used by some of the world’s biggest companies, (we’re looking at you Google and Netflix) OKRs have proven to be a powerful tool for achieving business success. Here, we dive into everything you need to know to implement and manage OKRs for your business.
What Are OKRs?
OKRs (objectives and key results) are a goal setting framework that helps organizations to define measurable goals — or objectives — and track their outcomes. The framework is designed to help businesses establish ambitious goals in a short period of time.
The formula for OKR goal setting is made up of 2 parts: objectives and key results.
- Objectives are what you want to achieve. These should be motivating and inspiring goals, think big when setting your objectives!
- Key results are how you will reach your achievement. More specifically, key results are the ways in which you will measure if you’ve achieved your objective.
Each objective should have 2-5 key results, and each key result should include a number (something to measure).
OKRs vs SMART Goals
OKRs and SMART goals are both systems used to track and measure progress and are useful tools in helping drive business outcomes. But the two methods have some key differences that set them apart.
OKR goal setting encourages people to aim for the best possible outcome when setting team goals and objectives. The purpose of this approach isn’t actually to achieve a 100% completion rate — reaching 60-80% is the sweet spot.
SMART goals, on the other hand, help you set specific goals that are far more realistic.
Some additional key differences between OKRs and SMART goals are:
- OKRs are best for achieving long-term goals, whereas SMART goals are more suitable for short-term and smaller projects. That’s because OKRs are set up to help you achieve bigger-picture objectives, while SMART goals are built to reach targets that are achievable within shorter timeframes.
- OKRs are meant to be flexible, which means they can adjust with your priorities, while SMART goals are more fixed because of their short-term nature.
- OKRs are effective for achieving multi-metric goals because you can use your key results to focus on multiple initiatives at once. SMART goals, however, are more suitable for single-metric targets.
Here’s an example of an OKR vs a SMART goal:
- Objective: Create the best customer experience
- Key Results:
- Key Result 1: Reduce average customer response time to less than 24 hours to improve customer satisfaction
- Key Result 2: Achieve a Net Promoter Score (NPS) of 80, which increases the likelihood of referrals and brand loyalty
- Key Result 3: Conduct regular check-ins with at least 90% of customers per quarter to identify and address issues and provide proactive support
- SMART Goal: Improve customer satisfaction by 20% over the next 6 months by reducing the average customer response time to less than 24 hours by the end of Q3.
Benefits of OKR Goal Setting for Businesses
Structureless goal setting usually takes place at the beginning of the year, when companies set high-level organizational goals and then forget about them a month or so later. This is why applying a framework to goal setting is so important.
OKR goal setting creates a structure for goals to be identified, measured, and worked towards. Here are the top 4 benefits of OKR goal setting for business.
Aligns employees with broader company goals
Once OKRs are set, managers and employees tie their day-to-day activities to the organization’s company-wide vision, creating alignment that boosts performance, and increases employee engagement.
OKRs provide a clear direction for the team and individuals to work towards as well as a framework for accountability. This clarity helps individuals prioritize their work and stay focused on the goals they’ve set. In fact, research has found teams that consistently use OKRs experience an increase in overall employee performance by 15.5%.
Provides clear direction
By setting specific, measurable key results, individuals and teams have a clear understanding of what success looks like and can track their progress toward achieving the objective. This clarity helps prevent individuals from getting distracted by less important tasks and ensures that everyone is working towards the same goals.
Increases insight and transparency
Every employee has access to your organization’s OKRs, which brings about transparency that makes employees understand what they are working towards – and how their daily efforts are making a difference. And once you have clear directives, management is more equipped to assess their team’s effectiveness.
How to Set and Track OKRs
The process of OKR goal setting should be thought of in 2 parts, identifying objectives and then setting key results.
Let’s take a look at best practices for identifying objectives to start:
- First, you want to encourage your team to think big when establishing OKRs. Remember, OKRs should be aspirational so don’t shy away from ambitious targets.
- Next, hold a brainstorming session where your team can establish which goals will have the most impact in the next quarter. Consider posing a question like, “what are the most important impacts we need to make in the coming quarter?” to get the conversation started.
- Ensure your objectives are tied to larger company goals
- Explain what you’re looking to improve in brief, descriptive language that identifies the qualities you want to achieve
- Remember to keep it simple, don’t set too many objectives or key results, so your team doesn’t lose focus or get overwhelmed.
Now, let’s talk about how to go about setting your key results:
- Avoid turning your key results into a to-do list, instead focus on the outcomes related to business priorities. In other words, explain how certain tasks will produce desired results.
- Create an objective way to assess success by assigning a measurable component to your key result
- Aim to set 2-5 key results per objective, no more than that
- Each key result should also have an owner on the team — that person is responsible for tracking progress and finding ways to achieve the desired outcome.
Finally, let’s look at how to effectively track OKRs
- For starters, you should always store and document your OKRs to monitor goal progress, increase transparency and accountability, and keep your objectives top of mind
- Assign percentage benchmarks for each key result and use weighted measurements to increase progress tracking accuracy
Calculating progress is easy when you have measurable key results.
- Hold regular meetings to discuss progress with OKR stakeholders, this can be a weekly, monthly, or quarterly meeting depending on the scope of the goal
- Discuss key learnings along the way to what worked best, or why a goal wasn’t achieved and take that into consideration for future work
- Lastly, remember to celebrate wins both big and small to keep everyone motivated and engaged
5 Examples of OKR Goal Setting
1. Objective: Build a top ranking website
– Improve website loading speed to less than 2 seconds to improve UX
– Increase organic search traffic by 15% through SEO optimization to improve ranking
2. Objective: Deliver a world-class customer support experience
– Decrease first response time from 1 hour to 45 minutes or less
– Resolve 95% of tier-2 support tickets in under 24 hours to reduce customer pain points
3. Objective: Create a flawless product
– Reduce product defects by 20%, minimizing product returns and negative reviews
– Increase the number of positive product reviews by 15% improving brand image and increasing customer satisfaction
– Implement a product testing program by Q3 to ensure product quality before launch
4. Objective: Build an award winning culture
– Maintain an average employee satisfaction score of 8 or higher, increasing retention
– Create & launch new mentorship program by the end of Q3 to nurture talent and strengthen employee buy-in
5. Objective: Deliver a conversion-driving trial experience
– Collect feedback from 75% of users who trial to assess pain points
– Reach a 30% referral rate from trial users, increasing SQLs
Enhance Business Outcomes with Omni
OKRs are one of the most effective frameworks for establishing business goals, and developing a sustainable tracking system will help your organization efficiently implement and sustain OKR goal setting for your entire business.
Omni’s performance management system powers your business with access to reports and analytics that provide valuable insights for measuring key results. Easily set, track, and measure OKRs across your teams within one, intuitive dashboard. To learn more about how Omni can help you unlock your business’ potential, schedule a demo with our team today.