What is an OKR? Meaning, Definition, and Examples for 2023

Harvard Business Review found up to 95% of a company’s employees aren’t aware of or don’t understand its growth plans.

When nearly your entire company doesn’t know what they’re working to achieve, you’ve got a problem. In such a scenario, a company can set all the goals it wants, but teams are likely to get stuck in the execution of those goals and underachieve. 

What you need is a clear, easy-to-understand framework for every employee to have at hand. We know it as an OKR or Objectives and Key Results. 

A goal implementation strategy like an OKR develops clear roadmaps for defining goals and tracking the progress of completing them across the organization.

Let’s dive into what OKR means and how you can use this framework to establish and meet business goals.

What are OKRs?

As established, the acronym OKR stands for “Objectives and Key Results”, which is a goal-setting framework that helps individuals and teams track the progress of achieving them by creating engagement and alignment around measurable metrics.

OKRs represent a strategy that enables leaders to provide employees with precise, comprehensive layouts of company goals and the plan to achieve them.

The main purpose of OKR is to make sure that all members of an organization are working towards a common direction at a constant pace with clear priorities. The objective describes ambitious goals and a vision that’s concrete, significant, and action-oriented. 

As for the key results, they’re the benchmarks that tell you how to reach the objective. To be as effective as possible, a key result should be measurable, verifiable, time-bound, specific, realistic, and challenging. Together, they set clear expectations for each team member.

OKR meaning within the context of Agile

Agile is an iterative approach to project management composed of multiple incremental stages or steps that lead toward completing a project. In other words, the Agile life cycle provides gradual phases that eventually end with delivering a project.

Combining the OKR framework with the Agile philosophy of work management can help leaders and managers align their teams’ efforts with the company’s goals, improve employee engagement, and increase productivity.

Not only can OKR and Agile coexist, but they can also complement each other for even better results.

For one, using OKR and Agile together helps align more strategic metrics with more strategic goals. Adopting the Agile approach when formulating OKRs is an excellent way to make the company’s visions, missions, processes, and tasks a lot more meaningful.

The iterative nature of Agile allows for improved collaboration and proactiveness on both an individual and departmental level. Additionally, combining OKRs with the Agile approach is an effective solution to maximize transparency across the entire organization.

When every employee is able to view the company’s goals, it only serves to boost awareness of business values, enhance collaboration, and raise their sense of accountability for the work done.

What are some examples of OKRs?

You can use OKR methodology across various departments from sales, marketing, and HR to customer service, finance, and engineering. But they will vary depending on the area you’re looking to develop in.

The following are some examples of OKRs in a range of departments. 

OKR examples in HR

For talent management:

For learning and development:

For HR Compliance:

For employee relations:

OKR examples in customer service

For customer relations:

OKR examples in finance

For debt status:

For budget status: 

OKR vs KPI

OKRs are used to set goals and track the achievement progress by meeting and assessing measurable metrics.

Key Performance Indicators (KPIs), however, are the metrics themselves. They’re used to measure performance and show progress across programs, products, projects, and other initiatives. One thing to note about key performance indicators is that they should, like key results, follow the SMART criteria.

What are the benefits of the OKR framework?

According to Harvard Business School, organizations often succeed in coming up with strategies but fail when it comes to the execution process. Experts estimate the failure rates range between 60 and 90%.

To support the successful growth of your company and accomplish effective strategy execution, align your key management methods. OKRs effectively shift focus on goals that matter, align the efforts of individuals and teams to a common goal, and allow for accurate and continuous tracking of progress.

OKR strategies also serve as methods for employee engagement and development. The more you apply OKRs across your company processes, the more efficient and productive your employees will become.

For more insights into boosting productivity and performance, check out the white paper “Performance in the Future of Work.”

How to write good OKRs

One of the things that make OKRs so attractive and effective is that they’re flexible. OKRs don’t come from closed boardroom meetings, but rather from everyone’s input regarding what the objectives should be and how they think they can be achieved.

As such, when OKRs succeed, every employee in the company does as well.

Here’s how you can create effective OKRs for your company that can work at an organizational, team, and employee level.

1. Understand your company’s vision

Writing great OKRs begins with a thorough understanding of your organization’s vision. When you know the grand goals, you can then break them down into actionable team-level missions using OKRs to further your business growth.

2. Pick the right tools

Think of writing OKRs as a project that requires proper tools to brainstorm ideas, monitor progress, and achieve results.

These tools can include a wide range of instruments from whiteboards and goal libraries to continuous performance management solutions, project management apps, and tracking helpers.

3. Get the whole team to chip in

Just as we said earlier, OKRs shouldn’t be developed by just one person or a group of isolated individuals as all of the components in an OKR should ladder up into one another. Individual OKRs are derived from team OKRs which come from well-strategized company goals. This ensures that everyone is aligned and works in the same direction.

You can describe writing OKRs as a bi-directional process where each member of the team should contribute with their input on the objective and how to make it happen. This will solidify the sense of shared ownership and responsibility within your team.

After fully understanding your business goals and choosing the right tool to carry out the project, schedule a meeting for the whole team to start brainstorming and refining the OKRs for a quarter.

Make sure to have some one-on-one time with each team member to talk about how their individual OKRs integrate into the grand mission.

As time goes on, you want to continuously provide the team with insights on the progress so they stay in the loop and are up to date on the impact of their work individually and as a unit.

4. Draft the objective statement

You may be tempted to write the key results first since they’re the quantifiable aspect of the OKR, which means they’re usually easier to come up with. However, a great OKR will happen only when you start with your objective. 

Objectives act as destinations for your and your employees’ efforts. So it only makes sense to know where you’re heading before taking off on the journey.

Before the key results and initiatives, write your objectives in the form of one sentence each. You can include a short description if necessary.

Your objectives should be challenging to push the company to a higher level. As such, don’t worry if you feel somewhat nervous or uncomfortable when coming up with them. Otherwise, you may end up setting the bar too low without realizing it.

However, this doesn’t mean that you should make them so ambitious that they’re unachievable. 

5. Set key results

As we explained earlier, key results are the metrics that enable you to measure progress toward achieving the objective. Think of them as the checkpoints on the route to your destination.

Key results should be relevant to the objective and possible to measure with a number. They should follow the MECE principle, which means you need to make them mutually exclusive and collectively exhaustive.

You want each set of key results to be unique yet cover as many aspects of the plan as possible.

6. Add the initiatives

The last thing you need to do to finalize your OKR framework is to add initiatives. If objectives are the destination and key results are the key points, initiatives are the supplies you’ll use during the journey.

For example, if your objective is to become a highly successful remote work company and your key result is to reach an eNPS score of 50, one of your initiatives would be conducting eNPS surveys with your employees every month.

7. Closely track the OKRs

Once you have your OKRs ready and you put them into action, you want to stay on top of things by reviewing and tracking them consistently. Remember, it’s not enough that the OKR template looks nice, they need to deliver just as well.

So how can you do this? Fitting OKR reviews into your process can happen in weekly team meetings to track team or individual OKRs. Reviewing company OKRs can also be an agenda item during town hall meetings. 

8. Embrace the imperfection

Part of creating good OKRs is to make them challenging.

Leaders may lose sight of this and forget that OKRs are meant to be just out of reach. So when objectives aren’t 100 percent achieved, they get disappointed and deem it as a failure.

It’s like shooting for the stars but getting upset when you land on the moon. If the company showed demonstrable proof it took steps forward, that’s a win. 

FAQs

Wrapping up

When businesses set goals but fail to achieve satisfactory results, one of the main reasons is the fact that the employees don’t fully comprehend your expectations. 

Understanding what OKRs are and how you can implement them in your workplace can help establish and complete company goals by clearly setting expectations and giving everyone a source of truth for their work.