In recent times, OKRs have become a famous buzzword, with top companies like Google, Facebook, Amazon, Microsoft, etc., embracing them wholeheartedly. For the unversed, OKR stands for ‘Objectives and Key Results’ and it has gained immense popularity for being one of the most effective goal-setting frameworks. For every company, the ultimate goal is achieving their desired success, and OKRs have proved to be extremely helpful in boosting a company’s success rate.
With OKRs still being a fairly new concept for many, we are sure that you have several questions about it and would like to gain more insights about this framework. Hence, we have created this list of the top six OKR questions with detailed answers that will help you broaden your knowledge about OKRs.
Table of Contents
1. What is the OKR framework and some key benefits of using OKRs?
As mentioned earlier, OKR stands for Objective and Key Results and it is a goal-setting methodology that works well for companies of all sizes and types. OKRs enable organizations to create a clear and well-defined connection between the company, their goals, and teams, and measure those goals. In short, OKRs can be defined as achieving your desired goals by fulfilling and achieving certain key results.
Some of the top OKR benefits include:
- Focus – Allows you to focus more thoroughly on the very top priorities.
- Alignment – Enables the entire organization to align all the goals at various levels with their priorities and ultimate purpose.
- Commitment – OKRs facilitate better commitment from the teams involved in achieving the ley results.
- Tracking – With OKRs, teams can track their goals progress and make changes early on.
- Stretching – It allows the team to go beyond or stretch beyond ‘business as usual’ and make a significant impact.
2. What is the difference between OKR and KPIs?
This is one of the most common questions people ask, and often the majority of them think that they need to choose either KPIs or OKRs; however, this is not true. In fact, both these vital tools complement each other, and there can also be instances where KPIs can impact the OKRs or even become OKRs, or vice versa.
KPIs are mainly your day-to-day/monthly/quarterly business metrics that give a picture of how your business is performing while OKRs are implemented to determine the path for driving growth, innovation, and change. In simple words, KPIs focus more on answering the question, ‘did we achieve the target or not?’ whereas OKRs focus more on the future direction and how to achieve those goals to take the business forward.
3. When should OKRs be implemented?
OKRs can be implemented at any time, irrespective of the size of your company. Whether you are a small-sized company with just three members, a medium-sized company of 200 people, or a large-sized company with more than 5,000 people, implementing OKRs will be beneficial for each one of them. When a company has less than 10 employees, it is easier to collaborate and communicate; however, as the number of employees grows, it becomes difficult for everyone to stay on the same page. Implementing OKRs can enable teams to stay aligned and work towards achieving their one common goal. Also, a key reason why OKRs are so popular is because they are easily scalable.
Irrespective of your company size, we recommend you implement OKRs as soon as possible because it takes a lot of time and effort to set the right process in place. Ideally, it can take up to 3-4 quarters for companies to truly understand how their OKR framework is working.
4. Should OKRs be set from bottom to top or vice versa?
Ideally, it should be set both ways! The leaders of the company discuss and decide the main focus areas for the new quarter. This is then cascaded down within the organization in the form of company objectives along with the context on why these objectives were chosen. Once the teams receive these objectives, they brainstorm and come up with the team OKRs which will help in achieving these company objectives.
It is extremely vital that teams have the authority to decide their OKRs since they have more expertise in their fields. Also, encouraging teams to suggest their OKRs helps in boosting their motivation and engagement. When OKRs are directly handed down to the teams, they seem more like KPIs. But teams should ensure that they get the OKRs approved by their leadership.
5. How to structure the OKRs?
If you have decided to roll out OKRs for the entire organization, the first step would be to set up one or two company objectives that will provide the direction and the area of focus for the teams. Ensure that your company objective will help you drive growth and innovation. Also, the objectives should not have any numbers in them as they will be included as part of the Key Results. Once the team is made aware of the company objectives, they will set up their OKRs.
The first step is to establish their objective that will help them achieve the growth and innovation aligned with the company objective. Teams can set up 203 objectives. The next step is to determine the Key Results which will help the teams measure the progress and success of their objectives. This means that your Key Results should have numbers in them so that they can be measured. Ideally, each of the objectives should have at least 3 Key Results.
6. How are OKRs measured?
As discussed earlier, each Key Result should have a number so that it can be measured. The ideal score for every Key Result falls between 0.0 to 1.0 while the target of the Key Result is divided by the outcome. To find the overall score of the OKR, calculate the average of all the scores of all the Key Results. If not the 0.0 to 1.0 format, you can also opt for the 0% to 100% format or the A to F grading option. You need to determine which of the grading formats works the best for your organization.
This is what ideal scores mean:
- Anything from 0.6 to 1.0 is a good score.
- Anything from 0.4 to 0.6 is a passable score.
- Anything below 0.4 means it needs to be reviewed and amended.
Analyzing the scores can give you a clear picture of how successful you are in achieving the objectives.
Conclusion
If you look at the OKR framework, it is quite simple in form and structure, which makes it really easy to implement. When good OKRs are used in the right way, they can truly help your organization to achieve the desired success by focusing on its most vital goals. We hope these seven questions and their answers have helped you to gain more knowledge about OKRs.
You can also check out OKR examples for different departments of an organization, such as Recruitment, Customer Success, Design, etc.
