What are OKRs?

OKR is an acronym for Objectives and Key Results, which is a collaborative goal-setting protocol for companies, teams, and individuals. While its definition is straightforward, its effective implementation can be challenging. The purpose of this article is to provide you with valuable tips for creating meaningful and effective OKRs and share some common mistakes made when defining them and how to avoid them.

Definitions and Checklists

An objective defines what you aim to accomplish at a high level, while key results indicate how you will achieve it. An OKR can be summarised as follows:

“We will OBJECTIVE as measured by KEY RESULT via Key Initiatives/Projects.”

To create effective OKRs, it’s essential to review the characteristics of Objectives and Key Results.

What is an objective?

An objective should be a concise statement describing a high-level goal that propels the organisation in its desired direction, ultimately linked to its Mission. A well-written objective possesses the following attributes:

  • Concreteness: The objective precisely guides the team, clarifying what progress entails.
  • Action-Oriented: It articulates a clear direction for the company’s progress toward fulfilling its Mission.
  • Significance: Objectives should align with the company’s top priorities and overall strategy, contributing to the achievement of the company’s mission.
  • Inspiration: Objectives not only prioritise business objectives but also inspire teams to think ambitiously and achieve audacious results. This differentiation from routine tasks provides the necessary stretch to transform the organisation.

What should you include within your objective?

Once you have a draft of your objectives, review them by addressing the following questions:

  • Are they among the top 3-5 priorities for this quarter? (Significance)
  • Are they clear and easy to understand? (Concretion)
  • Do they include qualitative details? (Concretion)
  • Do they inspire and drive change? (Inspiration)
  • Do they start with a verb? (Action-oriented)

What is a Key Result?

Key Results are the metrics used to gauge the progress and ultimate achievement of an Objective. Defining Key Results can be challenging, especially for those new to the framework. Consider the following factors when crafting effective Key Results:

  • Specificity and Time-Bound: Key results should cover the objective from various perspectives. It’s advisable to set 3-5 key results per objective for depth without getting lost in tracking. Clearly define the time period for tracking to measure progress effectively.
  • Aggressive yet Realistic: Key Results should be set ambitiously high, even if they aren’t fully attainable. This stretch encourages significant progress. However, they should still be achievable to motivate the team. Involving the team in defining Key Results can ease engagement.
  • Measurability and Verifiability: Key Results must be clearly quantified, allowing unambiguous measurement and verification at completion.

What should you include in a Key Result?

Cross-check your Key Results with the following questions:

  • Do they identify the drivers for achieving the Objective? (Specific)
  • Are target values defined? (Specific)
  • Are they easy to understand? (Specific)
  • Are they time-bound? (Timebound)
  • Are they measurable? (Measurable)
  • Do they provide regular progress information? (Measurable)
  • Do they offer early warning signals if things aren’t going well?
  • Do they start with a verb?
  • Do they challenge the status quo? (Stretch)
  • Can they be answered ‘yes/no’ at the end of the period to confirm fulfilment? (Verifiable)

Examples of OKRs

We provide three examples of OKRs, taking into account the considerations discussed above:

O: Become the most efficient HR department in our industry, as measured by:

  • KR1: Implement full automation for time-off and administrative leave requests, reducing processing time by 50% by the end of the quarter.
  • KR2: Attain a 100% completion rate for employee and leadership training programs by the end of the quarter.
  • KR3: Ensure that 100% of new employees completed and scored 90% or higher on the follow-up questions accompanying our company orientation video series from actual 90% completion,

O: Design a UX so intuitive that there are no customer service inquiries as measured by:

  • KR1: Design matches 100% of customer requirements.
  • KR2: Fewer than 1 UX-related customer service inquiries per week.
  • KR3: Scale infrastructure to support 1000 users by the end of the quarter.

O: Improve project monitoring, as measured by:

  • KR1: Onboard all stakeholders to Project for the web project plan and monitor weekly updates until project completion.
  • KR2: 100% of projects have weekly status reports registered.
  • KR3: Improve automated reporting in Power BI by 90% this quarter.

Most Common Mistakes When Writing OKRs and How to Avoid Them

Here is a non-exhaustive list of common mistakes when creating OKRs and tips on how to avoid them:

  1. Unclear Objectives: OKRs should be specific and easily understandable for everyone in the organization. A common mistake is setting ambiguous goals that leave room for different interpretations.

Tip to Avoid: Use SMART Criteria: Ensure that OKRs are Specific, Measurable, Achievable, Relevant, and Time-bound (SMART).

  1. Lack of Alignment: It’s important that OKRs align with the organization’s strategic objectives. Often, the mistake is creating OKRs that don’t directly contribute to broader goals.

Tip to Avoid: Start at the Top: Align OKRs from the top down, ensuring that organizational objectives inform departmental and individual OKRs, but ensure also room for collaboration allowing to ladder objectives.

  1. Setting Too Many OKRs: Having too many OKRs can be overwhelming and counterproductive. It’s better to focus on a few key OKRs rather than spreading efforts across many.

Tip to Avoid: Prioritise Objectives. Encourage teams to prioritize and focus on the most critical objectives. Limit the number of OKRs to a manageable quantity that allows for meaningful progress, ideally 3-5 per quarter.

  1. Ineffective Measurement of Results: OKRs should be measurable and based on concrete outcomes. Failing to measure or analyse progress properly is a common error.

Tip to Avoid: Define Key Metrics. Clearly define the key metrics or indicators that will be used to measure progress. Ensure that these metrics are aligned with the desired outcomes and regularly tracked, ideally on a weekly basis. To help OKR definition and tracking, you can use Microsoft Viva Goals.

  1. Treating OKRs as Business as Usual: A significant mistake is treating OKRs as routine, day-to-day tasks. OKRs are meant to be aspirational and transformative, not just a continuation of regular work.

Tip to Avoid: Set Aspirational Goals: Encourage teams to set aspirational and challenging OKRs that go beyond routine tasks. Foster a culture of innovation and growth by emphasising the transformative nature of OKRs. Define and track the task at the Project/Initiative level. Learn more about the relationship between projects and OKRs.

  1. Linking OKRs to Compensation: Tying OKRs directly to compensation can lead to unintended consequences, such as gaming the system or discouraging risk-taking and innovation. It’s essential to find a balance between motivation and fairness in compensation practices.

Tip to Avoid: Decouple Compensation and OKRs: Consider decoupling compensation from OKRs to prevent sandbagging and encourage a focus on personal and professional development. Use other factors, such as performance reviews, for compensation decisions.

The PMO Perspective

AS OKRs start to take hold in organisations looking to better define and achieve their strategic goals, it is important for the PMO to also keep up.

During the Wellingtone PMO Practitioner course, we discuss the importance of PMO Metrics and the PMO Balanced Scorecard.

So to stay ahead of the curve and continue to add value to organisations, PMOs need to review their current metrics to align with the organisation standards, or if there is no measurement in place yet, develop new metrics that will allow internal PMO Customers to not only understand the value of PMO, but also be able to articulate it.

Learn how to build a value-adding PMO now.

Conclusions

Creating effective OKRs can be challenging, especially during the initial stages of implementation. It may require several iterations to reach a level of practice. However, remember that OKRs are rooted in agile principles, and iteration and reflection are key parts of the process.

Instead of succumbing to paralysis by analysis, remember the saying: ‘Perfection is the enemy of good’. Commit to the process and begin to work and learn from it. You’ll find that you and your team will develop your OKR-setting muscle more rapidly than you might expect. Embrace the journey, and with each iteration, you’ll move closer to achieving meaningful and impactful results.

If you would like to learn more about OKRs, PPM tools, or discuss how Wellingtone can help improve your PPM capability, please contact us.

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Monthly Newsletter

By: Francisco Torrejón

Francisco Torrejón

Published: 27 September 2023

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