What are Objectives and Key Results (OKRs)?

Objectives and key results (OKR) is a goal­setting methodology driven by outcomes. In

companies, OKRs are often used to guide outcome­based success. Using outcomes

instead of tasks as a driver, OKRs encourage accountability in every step of achieving

success through metric indicators. OKRs are driven by core value­based outcomes.

Who created Objectives and Key Results (OKRs)?

Although popularized by Google’s John Doerr, OKRs were actually created by Intel.

Prior to Google’s wide adoption of OKRs, the methodology was first introduced to

companies such as Intel and Oracle some decades ago. As OKRs have become a

widely adopted practice by growing companies like Google, Twitter and LinkedIn, you

will find they are most commonly used in the technology and healthcare sectors.

John Doerr’s successful introduction of the OKR methodology to Google made way for

today’s wide spread goal­based management in new companies. If you’re wondering

whether Peter Drucker’s Management by Objectives (MBO) methodology came before

or after OKRs, the MBO system was actually created prior to OKR. The OKR practice is

generally not based on compensation of employees. The idea is that stretch goals can

be made and completed with transparency across entire organizations, even in different

time zones. Collaboration and focus on core value alignment are of high importance in

the execution of OKRs.

Who were the early adopters of Objectives and Key

Results (OKRs)?

Intel

Google

Twitter

LinkedIn

Spotify

Eventbrite

GoPro

What’s the difference between OKRs, KPIs and

MBOs?

Now that we know MBOs came before OKRs and which companies have been

championing the use of OKRs, we can dive into the difference between OKRs, KPIs and

MBOs. Overall, there are two key distinguishers that make the OKR methodology

unique:

The use of OKRs is not linked to compensation

More often than not, KPIs and MBOs are create by manages and delegated to

employees. These goals are due to be reviewed annually or semi­annually depending

on their purpose and used to determine employee compensation. OKRs on the other

hand, eliminates performance reviews and allows employees to set individual stretch

goals that align with departmental objectives. As a result of these ambitious stretch

goals, organizations that use OKRs keep them separate from determining individual

compensation. OKRs are meant to be set­up in collaborative discussions with a

recommended quarterly review within departments to ensure alignment and track

progress.

The aim of using OKRs is to achieve transparency across teams and

organizations

While MBOs and KPIs are often kept private within management teams, OKRs aim to

keep all company and team objectives transparent to employees. In this way, OKRs

holds all levels of an organization accountable for OKRs they have created each

quarter.

What are the benefits of using Objectives and Key

Results (OKRs)?

No matter what size the company, one of the looming pain points is always limited

resources to accomplish all objectives they have in mind. That’s why it’s so important to

be able to focus these resources on the right priorities and ensure maximized impact.

OKRs provide the benefit of a performance management framework that allows the

alignment of company driven core values and objectives; all of which are delivered with

transparency—driving employee engagement.

OKRs bring alignment from strategic planning to actual execution

With OKRs, you don’t have to wait until things aren’t working well to jumpstart change.

Transparency breaks the assumption that performance needs to be “managed,” moving

focus on sharing organizational vision. With a deeper understanding of what their efforts

are working to achieve, employees become equals, not slots in a hierarchical tree.

Everyone is able to see how priorities are progressing at an individual level, all the way

up to if the organization is on track as a whole. This creates a visual where teams can

reflect on roadblocks, assess current actions and easily document next steps. OKRs

take the guess work out of how each role impacts the next person. As a result of

increased visibility, each team can create clear expectations for all interactions. This

inspires cross­functional team growth.

Managers can spend less time crunching numbers and more time coaching employees.

Everyone on the team works towards value­driven goals; everyone is accountable.

OKRs create an internal platform for ongoing dialog in real­time where employees can

engage in meaningful­to­them conversations tied directly to their role within the team.

OKRs bring transparency to organizations

In using OKRs, transparency is inherent. Teams are positioned to know what is

important to the organization at all times, meaning they can become more agile.

Effective adaptability means frequent assessment on priorities and replaces a static,

annual review of strategy. This makes it easy to adjust priorities throughout the year

without having to get caught up in any potential backlogs.

How are Objectives and Key Results (OKRs) created?

Objectives are outcomes that reflect current business priorities. They are:

Time based (Due date)

Non­numeric (Qualitative)

Aspirational (Saying this with confidence sounds hard)

Answers: “What am I working towards without focusing on the tasks that get

me there?”

Empowers and promotes collaboration and cross­functionality

Has a clear subject, object and journey that the subject goes through

Every objective has corresponding key results that are:

Numerically measured

Utilize a threshold or delta to measure change (from x to y)

They are the end result of a series of tasks, but not the tasks themselves

There’s a baseline measurement to move away from or towards

Answers: “How do I know if I have achieved my outcome?”

Each key result has supporting projects, which have their own to­do tasks, but are kept

separate from OKRs. Great OKRs have a clear subject, object, and journey that subject

aims towards.

Here’s an example of an OKR that follows this model:

Objective: Customers consistently find our product useful

KR1: 80% of new customers continue their subscription after 2 months.

KR2: 50% of new users return within 2 weeks.

KR3: Churn rate is < 2% this quarter.

This objective sounds difficult to achieve. This means it’s challenging and aspirational,

but can also have multiple projects spanning multiple quarters so it’s something that can

be worked on continuously. Multiple departments can adopt this OKR creating various

key results that fit their projects. Start writing your own OKRs today with the 7Geese

OKRs workbook!

How do I get started planning Objectives and Key

Results (OKRs) for my company? / Planning Timeline

This timeline view covers suggested best practice milestones to help you through your

first quarterly cycle with objectives and key results. OKRs are unique in that every time

you go through a full cycle, there will be a different structure. They link to areas of

responsibility, business priorities, and stages of your business. Every cycle you’ll

discover new things. You’ll have different milestones based on your priorities and

strategies. This timeline is meant to be a guide to help build great habits so you can

create a frequency that works best for you.

Education and draft OKRs

FIRST QUARTER PLANNING: Have all leadership team members put draft OKRs into

the OKRs review template. Review as a team once complete. Template:

http://bit.ly/DraftOKRs Each team lead can continue to repeat these steps with their

direct teams and reports.

DISCUSSION TOPICS: Grading criteria that will be used at the end of the quarter, what

defines “success” for each OKR, supporting KPIs, and major contributing projects.

PRO TIP! As you create your OKRs, think about how you’ll provide updates. Is this OKR

something you assess weekly or monthly?

Progress updates and check­in’s

A great objective is one you think about in everything you do. Every time you check­in,

you’re consistently turning goal­setting into a natural habit. This changes how

individuals approach engagement at work. Work is no longer a series of tasks, but

higher­level achievements tied to team success and business impact. This focuses

conversations on what needs to be done next to aim even higher. Every great OKR

incorporates a discussion where everyone gets asked, ”can you realistically commit to

all of this?” Have conversations that answer what success means, how each team will

support the other, and what resources are needed.

CHECK­IN: Check­in within your first week to start building a habit. Weekly check­ins

also will leave you with 12 snapshots in time at the quarter’s end to reflect back on.

PRO TIP! Download the browser extension to check­in without disrupting where you’re

already working. Click the … in the 7Geese navigation or here: http://bit.ly/7GChrome to

download

STATUS UPDATE: By week 3 add an on/off track indicator. Assess what resources,

priority shifts, or adjustments need to be made. Get through the rest of the quarter with

confidence, feeling empowered. Knowing you have the proper resources (tangible, or in

the form of coaching) increases the likelihood of completion of your OKR.

Roadblocks and planning

Goal­setting coaches concentrate on keeping goals manageable and on­time.

Short­term goal coaching should focus on the achievable, action oriented component of

long­term achievement. Coaching keeps goals not just realistic, but relevant to the

long­term personal development of the men­tee. As a goal­setting mentor, you should

keep goal conversations focused on, “can your goal really be done?” where you break

down long­term goals into short­term, actionable items.

LEADERSHIP MEETING: It’s important to meet at the halfway mark to discuss where

things are at, provide team­level updates on whether OKRs are being understood at all

levels

SUGGESTED DISCUSSIONS: Were we realistic? Any roadblocks? How can we help

each other?

SECOND QUARTER PLANNING: Go over yours and your team’s current OKR

performance and evaluate how things went and why. Document how you plan to ensure

mistakes from this quarter aren’t carried over.

OUTCOME: Commit to next quarters organization objectives + dept. projects.

Focus on breaking long­term OKRs into actionable next steps and how OKRs fit into

their day­to­day.

SUGGESTED TEMPLATE: Monthly OKRs 1­on­1 http://bit.ly/Monthly1­on­1Template

Grading and coaching

REMEMBER! OKRs, when done great, are a tool for motivating and aligning people to

work together. They spur perspective sharing, moments of discovery and make even

your high performers achieve more. They increase transparency, accountability and

empowerment. They are not designed to be used as a process or tool to use against

your team to keep tabs, micro­manage, or couple with negative performance

assessments.

CLOSE OKRS: Individually, have everyone assess their OKRs. A great place to start

with grading is providing a simple expectations assessment: at the end of the quarter,

did you meet the expectations for your OKR that you committed to? Why or why not.

Self­reflect! Team leads should have 1­on­1s with their direct team to talk career

journey in relation to their OKRs and performance.

PRO TIP! Close your OKRs directly from the home page. Once over due, a close option

appears when you hover over the objective.

SUGGESTED 1­ON­1 TEMPLATE: Quarterly Performance Reflection—Accessible

here: http://bit.ly/Quarterly1­on­1Template

What are some Objectives and Key Results (OKRs)

implementation best practices?

Set the right cadence for your OKRs

Setting the right cadence for your OKRs is defined by measurable targets that occur

within rhythmic time frames. Quarterly, every three months beginning in January, is

most common. However, objectives on any level can always be stretched quarter over

quarter if the impact on success of an objective is more long­term. While quarterly is

recommended, it is important the cadence matches the culture of the business. The key

to OKRs is the transition from annual assessments to more frequent and transparent

goal setting.

Define realistic team and individual priorities

Every OKR should reflect realistic priorities achievable in a three­month­cycle that are

still challenging. Make sure to have conversations that answer what success means in

relation to how each team needs to support the others. Having OKRs on both a team

and individual level is highly essential for company alignment. One of the key elements

of using the OKR methodology is to align core values and objectives across teams and

organizations.

It isn’t a task list, don’t create too many OKRs

Setting 3 OKRs each quarter is a good place for teams and organizations to start. Most

of these objectives will have 2­4 results and a clear owner that will be held accountable

for them. By setting a limited number of OKRs, it directs teams to focus on priorities in

order to produce better results.

Can employee performance be partially evaluated by

Objectives and Key Results (OKRs)?

Most organizations that practice the OKR methodology use it as their primary

performance management system. However, some do continue to use approaches like

MBOs and KPIs in addition to their OKR process. While possible, it is not recommended

because many have found it to be too time consuming to manage and inefficient in

communicating objectives.

How do you align OKR in departments where performance is directly tied to

rewards like and bonuses (i.e. Consulting, Sales)?

First let us make several points clear…

Compensation is referring to an employee’s base salary. Therefore, OKR can

be linked to incentives where part of a job’s performance metrics is based off

of bonuses or commission but not base salary.

OKRs can be used as part of the compensation structure as a performance

metric, but not as an overall rating system.

If companies find bonuses to be motivating, consider giving the same bonus

to all employees when a company objective is reached. The same applies for

larger teams and departments.

While OKRs are not linked to any incentive compensation process by design, it is

inevitable that some positions and teams track progress and made on Key Results and

heavy correlation to incentive compensation. In most cases, we consider that incentive

pay varies across departments and thus, not all will require their OKRs to be tied to

compensation. However, in the case that they do, here are examples:

When the Key Result 100% tied to incentive compensation

A sales employee who has the Objective “Reach $250k in new sales this quarter” will

likely have a percentage of incentive compensation linked to the Key Result which can

be pre­determined. (Performance metric correlated to commission, not base salary)

When the Key Result is NOT tied to incentive compensation

A manager who has the Objective “Conduct 20 face­to­face client interviews this

quarter”. In this case, a manager should not have their Key Result linked to

compensation as this is an expectation and not a stretch goal to be reached within their

job function. (Performance metric correlated to base salary)

How often should Objectives and Key Results (OKRs)

be set?

Quarterly, every three months beginning in January, is most common. However, this

depends on the culture individual organizations. Quarterly OKRs are most realistic on a

team level, while organizations sometimes set annual objectives and adjust according to

align with long­term goals. It is not uncommon for objectives that take longer than one

quarter to achieve to be retained carried over for next quarter. Similarly, OKRs can be

set on a shorter cycle than quarterly. This is more often done by individual employees

who have shorter time frames in mind for their goals.

What are some Objectives and Key Results (OKRs)

measurement best practices?

A one size fits all measurement for OKRs doesn’t exist

OKRs can be very different for different teams and functional positions. It’s important to

consider the difficulty of each OKR when grading and assessing. It’s important to

establish a grading scale before committing to an OKR to ensure expectations

throughout the quarter are clearly defined.

Were expectations met?

A great place to start with grading is providing a simple expectations assessment: at the

end of the quarter, did you meet the expectations for your OKR that you committed to?

Try practicing the traditional 0­1 scale

When grading OKRs the traditional way, the recommended scale is 0 – 1. For each of

your key results, the highest it can score is a 1, and lowest a 0. OKRs are meant to be

challenging, so every individual should be aiming for a 0.6 – 0.7 in the grading process.

After rating each of your KR, you can then add them all together. Any objective with

cumulative scale of under a 0.4 might be alarming, but a low score isn’t a failure. It’s a

sign you need to re­evaluate whether the objective is still worth pursuing, or rethink your

approach. How you chose to assign a grade depends on the circumstances of your

team’s priorities. Perhaps a 0.5/1 is great because priorities shifted halfway through the

quarter.

What metrics should be used for Objectives and Key

Results (OKRs)?

Any metric used in key results should be specific to the business, measurable,

attainable in the given cycle of the objective, relevant to your OKR, and time­bound. The

following are several metrics that may fit your company’s OKRs:

Baseline metrics

A baseline metric is a single number that is considered an “acceptable” metric. For

example, having a support ticket response time of 4 hours or less has a baseline KPI of

4. Anything above 4 hours is unacceptable.

Positive and negative metrics

A positive metric is used when you want to increase your baseline metric. For example,

if your average usability score for a core workflow in your product is currently 70% and

you want to increase it to > 80%, you’re moving in a positive direction. Negative metics

are used when you want to decrease your baseline metric. For example, if your average

support response time is 10 and you’d like it to be 4, you’re moving in a negative

direction.

Threshold target metrics

Threshold metrics are a numerical range that is considered acceptable. Here’s an

example: Sales needs to make a minimum of $90,000 in monthly recurring revenue for

the business to stay cash flow even. For the business to be cash flow positive, the

recurring revenue must be over $110,000 per month. This is a threshold target metric

since it specifies an acceptable low and high values, creating a range of metric­centric

goals that are acceptable.

How are Objectives and Key Results (OKRs) reviews

conducted?

OKRs are supposed to be challenging, but also realistic and doable within a quarter’s

worth of time. Aligning conversations is extremely important, especially for operational

goals that are cross­functional. What one team defines as success may not be another

team’s vision. Sync up to discuss! There should be no lack of understanding on, for

example, how an OKR supports an organizational goal. Utilize the power of a

conversation for 1­on­1 employee reviews.

Reflect on individual priorities

Every great planning day incorporates a discussion where everyone gets asked ”can

you commit to all of this?”

Assess cross­functional objectives and results

Have conversations that answer what success means in relation to how each team will

support the other, and what resources are needed to make that support a success.

Discuss outcome of alignment

Clearly discuss how goals will be tracked and how everyone will be held accountable.

Clear expectations are key.

What is important to look for in an OKR tracking

platform?

Once you’ve decided that tracking and measuring OKRs will be critical to your

organization’s performance management process, it is important to find the right

medium to conduct these processes. While many companies start off using Google

docs for this purpose, they soon outgrow spreadsheets and need a platform that

manages and stores past data. Here is what to keep an eye out for when selecting the

right OKR tracking system for you:

Spotlight on setting OKRs

This might seem obvious, but finding the right platform to set company OKRs will help

with the adoption across teams. Not all goal setting platforms are created the same.

Ensure the OKR software you’re looking for is based on OKRs to begin with. Successful

OKR implementation although simple, can be made easier with a software that supports

employees on an individual level when it comes to creating quantitative and qualitative

targets for key results.

Easy to use

Ease of use in a performance management system indicates the adoption rate of

employees as well as the longevity of it living within a company. Ensuring the

performance management system being adopted is easy to use with a trial run is best.

You can look to replace Google spreadsheets with a performance management

platform that is more organized along with added features and benefits.

Aligns individual, team and organizational objectives (not necessarily

hierarchical)

Look for a performance management system that has the ability to align objectives on

every level of your organization, no matter the structure. It should be flexible enough to

allow for alignment across organizations and not tied to just top­down management

approaches.

Supports employee engagement and recognition

In order to successfully implement the use of OKRs, it requires the adoption of

employees on every level of a company. A tool that supports features like notifications

for weekly check­ins, ability for managers and peers to request feedback and provide

individual updates on a common dashboard is essential.

OKR Webinars and Additional Q&As

How can we guide the team/individual to set the right targets? For instance, run

10Km in 50 mins or 45 mins? What is the optimal target? Are there recommended

processes to identify this?

It is important not to set too challenging of a goal. You need to be able to identify, given

our resources, human capital, time etc, what can be achieved. From there, you might

want to push the limit a bit to go above and beyond. One thing to be careful of is too

challenging of a goal will be demotivating for the rest of your team. It is difficult for

employees to find motivation in achieving goals they don’t believe they can reach. Start

with what can be achieved 100% and let’s push ourselves for an extra bit

Can you compare OKRs to the Balanced Scorecard?

Please stay tuned for our next OKR webinar. We will be addressing this question.

By definition, OKRs are always related to “results goals”. What are the best

practices for alignment in departments where performance is directly tied to

rewards like compensation and bonuses (i.e. Consulting, Sales)?

While OKRs are not linked to any incentive compensation process by design, it is

inevitable that some positions and teams track progress and made on Key Results and

heavy correlation to incentive compensation. In most cases, we consider that incentive

pay varies across departments and thus, not all will require their OKRs to be tied to

compensation. However, in the case that they do, here are examples:

When the Key Result 100% tied to incentive compensation

A sales employee who has the Objective “Reach $250k in new sales this quarter” will

likely have a percentage of incentive compensation linked to the Key Result which can

be pre­determined.

When the Key Result is NOT tied to incentive compensation

A manager who has the Objective “Conduct 20 face­to­face client interviews this

quarter”. In this case, a manager should not have their Key Result linked to

compensation as this is an expectation and not a stretch goal to be reached within their

job function.

How do you quantify objectives like “improve our reputation” or “improve client

communication” down to measurable Key Results?

When it comes to quantifying these types of objectives, you can consider testing

arbitrary metrics. In the case of and objective like “Improve our reputation”, an

appropriate key result might be “Increasing our NPS score by 10%” or “Increasing our

satisfaction rating from 50 to 70%”. These metrics are arbitrary in the sense that it might

not be company wide to start with. It is good to ask the question, “What triggers the

OKR to start with?” For example, “Why are we trying to improve our reputation?” did you

get a bad review, did you see a continuous trend of customer leaving etc.

How do you cope with project­based objectives where projects may be one week

or one year and any one person may be working on two or three project

simultaneously?

Each OKR should have their own due date. While many organizations have a standard

schedule where lots of their OKRs can be set quarterly there are certainly project based

companies. Consulting is one of the biggest fields where work is very project based. In

that situation, your more functional departments (i.e. Sales, HR) might still following a

quarterly cadence and each of your projects might then have their own individual due

date scheduled as you see fit.

In a agile scrum development process are OKRs or specifically Key Results the

product roadmap? So scrum is the execution process for OKR.

The outcome is what is your product roadmap planning to achieve. For example,

increasing adoption rate of ‘Feature A’ by 10%. Your Key Results are the specific

characteristics of the product roadmap that will lead to increased adoption. For

example, “Launch email notifications on a weekly basis”. The work that your team is

doing on a daily basis will lead to the completion of the Key Result.

How do we communicate to management that the assigned Key Results and

timeline is not realistic?

One of the best ways to communicate to management that assignment Key Results and

timelines aren’t realistic is being more specific with plans and priorities. Often times we

are left with “ASAP” or “next week” for deadlines on various tasks that we’re not sure

which to prioritize. This is where looking at immediate needs and objective alignment

comes in. By asking questions to clarify and making an active effort to schedule

check­in’s and/or status updates on the progress of your Key Results, you’re able to

provide management with a more realistic view of why the timeline does or doesn’t

work.