OKRs are simply another acronym or buzzword in the world of business. This strategy-execution framework is gaining more and more recognition and popularity in business across verticals, all over the globe. OKR best practices are essential for businesses today to propel their business forward.
Goals are pure fantasy unless you have a specific plan to achieve them.
When done right, OKRs provide realistic yet challenging milestones for your business. Rather than a traditional milestone setting process, OKRs, based on the objective or what you want to accomplish, also include key results. Those key results are how you’re going to achieve the objective, and the outcomes you need to see in your business in order to know your objective is complete.
O = Objective (what)
KR = Key results (how)
Before we dive into best practices for setting up, tracking and keeping things aligned with your OKRs, let’s avoid any confusion about OKRs and KPIs. For years, the business world talked about KPIs (key performance indicators). So, are OKRs just a newer term for KPIs?
In a word, no. While OKRs are a comprehensive strategy-execution framework, key performance indicators are simply metrics that businesses use to evaluate business performance. There are KPIs in every industry and every department within a business.
However, KPIs are used when creating OKRs. KPIs, when combined with a baseline value, a target value, and a time frame in which to reach the target, are called key results. The process of a KPI becoming a key result looks like this:
A common analogy to understanding OKRs versus KPIs is that, if you are on a road trip, your OKR is your destination, where you are driving towards, and your KPIs are the dials on your dashboard that tell you how fast you are going, how much gas you have in your tank, and the temperature of your engine.
While there is crossover between OKRs and KPIs, OKRs are quickly becoming a valuable project management tool in organizations today.
As with any system, OKRs have a set of best practices you can follow to get the most out of this goal-setting methodology. OKRs follow a simple framework:
I will [objective] that is measured by [key result].
OKRs serve a specific purpose. It’s not just another goal-setting exercise. OKRs stretch the norm, present new challenges, but are still achievable.
Google uses OKRs in its business processes and openly shares its tips on getting the most bang for your buck with OKRs.
There are 3 key pillars for effective OKRs that make them a worthy exercise:
1. OKRs are an opportunity to define your goals as a company, team, or individual.
2. They’re measurable so that you can see the results.
3. They help you and your team step outside of their comfort zones.
Why Bother with OKRs?
We’ve all learned how important goal-setting is to running a successful business, but it’s still a challenge for many of us each year. However, achieving stretch goals quarter after quarter is easier with OKRs, thanks to the actionable terms of the framework.
The OKR process offers a chance for interdisciplinary collaboration because most OKRs aren’t exclusive to one team. For example, the design team’s projects are directly affected by the marketing team’s OKRs. Furthermore, both teams are affected by the corporate OKRs and so on.
One of the challenges organizations face is getting employees to buy into the organization’s goals. OKRs can be aligned from the top-down or bottom-up, allowing everyone in the company to stay aligned. The balance between top-down and bottom-up alignment allows for companies to have a more interconnected map of OKRs, and can also boost employee engagement. When employees are allowed to set their own goals, they will naturally take a greater sense of pride and ownership when completing them, thanks to the behavioral economic principle called the IKEA Effect.
OKRs offer much more than a project management process or a simple goal-setting exercise. First, creating the OKRs gives employees the chance to feel connected to the overall organization, stretch their own goals, and helps boost productivity throughout the entire organization.
The OKR framework makes goal setting much more effective because the goals are set clearly and are specific to a certain department or team, as well as to the company’s topmost priorities.
OKRs unite teams, inspire and motivate employees, and keep the organization wholly aligned. So, if you want a cohesive, strategic, and motivated team, OKRs are the answer.
Best Practices for Keeping OKRs Aligned
But, even with the best of intentions, we have to remember, OKRs are set up, tracked, and worked on by humans. Putting an OKR “in writing” means everyone has agreed on the importance of that objective and key result. However, remembering the human side of this process means that sometimes, things happen we don’t expect. With different departments and cross-collaboration happening, challenges happen, and things go off-kilter with the OKRs.
But, with proper communication, OKRs stay on track (at least with the expectations) because everyone knows what to expect. Support from upper management and across the teams keeps things on track, and people understand the progress.
The best way to stay aligned during the planning process and throughout the entire quarter is to have full-company transparency. By using an OKR software such as Profit.co, companies can make OKRs at every level of the organization visible to all employees. This way, accountability for certain outcomes becomes a part of the company’s culture, and everyone knows what team members are working on. Employees can also see how their individual key results contribute to higher-level outcomes. This offers a sense of purpose and pride in their work, and increases employee engagement and, therefore, employee productivity.
Key results should be checked in on a weekly basis to ensure that employees are dedicating their time to their top priorities. Weekly meetings, called PPP meetings, can be held within each team, department, or even with the entire company to go over progress made, plans for new progress, and problems or roadblocks that employees are running into.
When OKRs are aligned and reviewed regularly, following OKR best practices, everyone involved has a much higher chance of achieving their objectives and key results.
Best Practices for Setting up OKRs
At times, there can be a learning curve for teams setting up their OKRs– especially if they were just introduced to the framework. However, by following OKR best practices, you’ll be able to hit the ground running and quickly set up OKRs in your business.
If you haven’t already created an OKR system, the simplest way to get started is to pick a timeframe or schedule for setting them. Typically, like other goal-setting practices, setting OKRs quarterly is logical and practical for most companies.
It’s equally important to ensure every OKR has timeliness to it; there must be a deadline to accomplish the objective and key results, or there will be no sense of urgency or stretch.
Educate your team on what OKRs are and the best practices you’ll be implementing into your business. Since some may not be familiar with OKRs, spending time on what OKRs are and how to create them helps get people into the right mindset.
With every OKR you set, you should ask yourself two questions:
1. What do I want to achieve?
2. How will I know when I’ve achieved it?
If anyone struggles to establish clear objectives, get out the whiteboard markers, pen, paper, and start brainstorming. Especially if OKRs are a new process, it’s a great way to create conversation, and you never know what brilliant ideas come out of the session.
It helps to consider your company’s vision, mission, and three to five year strategy. What are your long term goals? Once you know that, you’ll be able to break those down into smaller piece. Instead of looking at your five year plan, consider what needs to happen within one year in order to stay on track. And further than that, what needs to happen each quarter? Deliberation and discussion are the keys to setting great objectives. Don’t rush the planning process. Take at least a week to think through and establish your OKRs for the quarter.
The Key Results
The second question, how do I know when I’ve achieved it?, should be asked when creating your key results.Again, the key results are the steps or actions taken to achieve that objective. Typically, there are 3, no more than 5, key results for each objective.
Profit.co has seven different key result types: Percentage Tracked, Milestone Tracked, Task Tracked, Baseline KPI, Increase KPI, Decrease KPI or Control KPI. These seven can be split into two categorie:
1. Trackable key results (interview, hire, and onboard a second project management team)
2. Measurable key results (Maintain an average click through rate from social media posts at at least 5%)
Effective key results are:
- Challenging, yet achievable
Best Practices for Tracking OKRs
OKR best practices state that key result progress needs to be tracked on a regular basis. Most companies check-in on a weekly basis to ensure all team members are consistently moving towards their objective and aren’t facing any roadblocks.
It’s like keeping score at a sporting event. First, everyone knows the score as the game along the way; then, the teams and coaches respond to that progress. If the opposing team is scoring more points, tracking that progress tells the coach to make adjustments to get things aligned. The winning team likely will keep their same tactics unless the progress changes.
The only way to know if everyone on the team is making progress toward the OKR objective is by tracking the key results along the way.
For OKRs to work, everyone must be on the same page. From the CEO and upper management to the customer service representatives, OKRs affect everyone in the company. The only way for OKRs to be in alignment is for everyone to know:
- What are the objectives?
- What are the key results expected?
- How am I involved with making the OKR successful?
Of course, not everyone has the same level of involvement with the OKR process and implementation. Let’s look at an example of how an OKR stays aligned at the different company levels.
Now, how do those affect the different teams, employees, and how can they stay aligned?
- The marketing and sales team members need to increase their successful results.
- The web and app development team adjust the website’s back-end workings, app, and other related software integrations.
- Customer service representatives promote referrals from existing happy customers and treat every interaction as a gold-star experience.
When the key results progress is reported openly to the company, each affected employee can see the impact of their work on the OKR. In addition, supervisors, managers, and other leaders need to be transparent in the goals and progress and encourage individual support to the overall success.
As we already discussed, OKRs connect every employee to company-wide objectives. But, OKRs are not just company-wide. They can also be by department, team, and individual. Now, not every company uses individual OKRs. For example, Spotify reported that it stopped using individual employee OKRs in 2013, primarily because they slowed us down without adding value.”
So, as long as OKRs add value to the company and the people involved, they can be practical tools for employee management. While there are pros and cons for using every combination of OKR levels in your OKR program, it’s best to start simple and add more levels as you become more advanced in the OKR framework.
At Profit.co, we recommend enabling company-level OKRs as well as Departmental-level OKRs. If, when you’ve been using OKRs for a few quarters, you find that you require individual OKRs or cross-functional team OKRs, you can add those as needed.
OKRs enable Strategic Decision-Making
If you want to move your business forward strategically, with united and motivated employees, creating OKRs with best practices in place sets your organization up for success. It makes it easier for everyone to create challenging objectives or goals that are still achievable by implementing key results to make it happen. Accomplish what you want (objectives) and know how you’re getting there (key results.) Join organizations like Google, Dell, and Netflix in creating strategic OKRs designed to help your company achieve its mission and vision.
To learn more about OKRs and how Profit.co can help you better focus, measure, and achieve your goals, get started on our software completely free today. To speak with one of our OKR experts about your business’s OKR or management needs, you can book a demo with us.