What are OKRs? Guide to OKRs For Performance Management

Using Objectives and Key Results for performance management: boosting alignment, nurturing professional development and setting goals for teams

Objectives and key results are the yin and yang of goal setting.

John Doerr, author of Measure What Matters

Goals are a fundamental aspect of the business world, helping to drive sales, develop new products, and deliver results that exceed the competition. But in order for goals to be successful, they need to be clearly defined and worked towards within a universally understood framework.

For many companies, Objectives and Key Results provide the solution to the challenge of setting and achieving goals. This guide will explore what exactly OKRs are, the methods used to establish them, and how they can transform your performance management processes.

Objectives and Key Results (OKRs) – A Brief Overview

Businesses have a range of methods to choose from when it comes to establishing and tracking goals. One of the most popular – and versatile – methods is Objectives and Key Results (OKRs), which allows HR administrators, managers and team leaders to set and monitor goals across a wide range of metrics.

OKRs can be entered and tracked through OKR software, allowing employees to understand how they are progressing, communicate with management, and adjust priorities in real-time. These tools also allow users to set up personalised dashboards for OKRs, giving employees and managers daily insights into progress as well as the foresight to deal with obstacles.

Some of the advantages gained from using OKRs include:

• Boosting engagement. When individuals and teams are crystal clear on their objectives, they become more engaged with their work. 
• Adding focus. OKR real-time tracking allows employees to see their current priorities, helping them to focus on the main priorities of the day.
• Improving autonomy. Employees can chart their own progress through performance management dashboards, taking ownership of their work.
• Enhancing alignment. By tying individual OKRs to team, department and company-wide goals, employees become increasingly aligned with the company’s overall strategy.

Let’s take a look at some best practices for choosing objectives and the appropriate key results for measuring progress.

Making your objectives SMART

There are many ways to define your objectives, but perhaps the most popular method is to set SMART objectives. SMART is an acronym for Specific, Measurable, Achievable, Relevant, and Time-Bound, with adherence to each step helping to ensure maximum value is achieved from the goals you set.

Let’s take a closer look at each of these elements of SMART objectives:

• Specific. When setting SMART objectives, avoid vague language and ambiguous definitions. Goals such as “sell more products” and “make a profit” are no use for orienting employees on the right path. Instead, make sure the objective has a specific measure applied which produces tangible outcomes.
• Measurable. Putting a specific figure on a given goal gives managers and employees an objective way to measure progress. Performance management tools can then be used to track this progress on a daily basis to make sure everyone is on track.
• Achievable. Stretch goals can be an effective way to push employees above and beyond expectations, but there’s a time and a place for this approach. When it comes to SMART objectives, goals should be clearly attainable, so employees can work towards accomplishing them with confidence.
• Relevant. As with any type of goal, SMART goals need to be in line with an organization’s broader objectives. As such, individual SMART goals should be carefully aligned with the aims of teams, departments and the company.
• Time-Bound. Lastly, a SMART objective should be set with a specific end in sight, which means establishing clear deadlines for its completion. Open-ended goals are far less likely to be achieved, so setting expectations in stone is crucial to ensure they don’t overrun.

Choosing the appropriate Key Results

Key Results allow managers and employees to break the objective down into its constituent components, which can be tracked through performance management tools to chart progress. 

These can be tied to anything from sales figures and marketing leads, to career development goals and the acquisition of new skills.

Here are a few examples of objectives and their related key results:

Setting OKRs for enhanced performance management

Integrating objectives and key results into the performance management process transforms how these tools can be effectively utilised throughout workforce processes. By linking performance to measurable goals, managers can conduct fair appraisals and OKRs can become the cornerstone of great performance management.

Performance management OKRs for personal development

Ultimately, innovation depends on the people with advanced skills who have the ideas, and on the business risk-takers willing to back them.

Anthony Pratt, executive chairman Visy Industries

Objectives and key results aren’t limited to performance-related metrics such as sales targets and units of production. They can also be implemented to measure “soft” skills and other tangible measures of an individual’s personal and professional development. These can apply to all manner of different scenarios, from helping employees improve their communication skills, to developing promising leadership candidates into the next great managers.

When done right, developmental OKRs can wield an effective dual function, helping employees to build their talent stacks, but in a way that also directly relates to – and benefits – the needs of the company. These OKRs can also be run in tandem with more role-specific performance-related metrics so that the new skills being developed are adopted directly in line with an employee’s roles and responsibilities.

An effective way to achieve this continuity between employee development and overall performance is to integrate developmental OKRs within an individual’s Personal Development Plan (PDP). Established whenever a new hire begins life at the company, PDPs lay out the bedrock from which employees plan and execute the growth of their talent stack through their working processes. 

Some examples of OKRs for personal/professional development include:

• Increase productivity. Key results for this objective could include completion of time management courses, drafting up detailed work plans for better use of time and resources, and removing distractions from the working environment.
• Develop stronger leadership skills. This could be measured through requiring the employee to lead a specified number of meetings, attend a management course, and learning how to use management-based software.
• Add a new skill to your talent stack. Employees looking to increase the range of their existing talent stack can use developmental OKRs to help achieve this. Time spent with mentors, courses completed, shadowing colleagues and reading related research material can all be measured to chart progress towards the acquisition of these new skills.

Using OKRs to align employee goals with organizational objectives

The article from Gallup, Leaders: Bring Your Strategy Back Into Focus, outlines the importance of establishing OKRs which are set publicly and transparently. Everyone in the organization who is associated with such a goal should be able to monitor progress and review the objective at a given moment in time.

The article from Gallup states:

“Employees need line of sight to leaders’ objectives, strategies and future directions because they need to feel like part of the strategy. Inclusion is empowerment, and empowerment is activation. Activation is the difference between a highly effective strategy that leads a company forward.”

With this in mind, managers and team leaders should set OKRs which are explicitly linked to organizational goals. If a high-level goal for the company is to bring in more customers, individual goals should be measured as an appropriate extension of these goals. 

As such, organizational goals should be established first, so that objectives at the departmental, team and individual level cascade down in alignment with this overarching strategy. Transparency of these various goals is also important to consider since employees will work better towards achieving their personal goals when they can see the bigger picture. 

Fundamentally, this means bringing clarity to both the company’s vision and the employee’s role within that vision, achieved through clear communication of strategic aims and transparency regarding how to reach them.

Setting OKRs for teams and departments

As well as being an effective way to align individuals with the organization, OKRs can also be set for teams and departments to help ensure employees within these groups are aligned towards a common goal.

Jeff Gothelf explains why team-based goal setting is crucial in his article for the Harvard Business Review, Use OKRs to Set Goals for Teams, Not Individuals:

“A shared objective and quantifiable metrics can help a team to coordinate their activities, align with stakeholders, and act with more than just their own immediate goals in mind. Within this framework, success is measured not by what any one individual does, but rather, by the impact of the team as a whole on the users of the products and services they’re building. As such, instead of attempting to define OKRs at an individual level, it’s far more effective to take a team-level view in which performance reviews and compensation are tied not to individual goals and metrics, but to the extent to which individual contributors support their team’s objectives and key results.”

By running these shared goals through performance management software, team members can gain instant insights into progress through a high level of visibility and transparency.

Best practices for setting performance management-based OKRs

Whether you’re setting OKRs for an employee’s personal development, or using them to orient entire teams towards a collective goal, there are some rules of thumb you should consider following. 

For example, consider:

• Involving employees in the OKR creation process. While it can be tempting for business leaders and managers to look at the outcomes desired by the company and dictate the objectives based on these needs, effective OKRs come from a collaboration between leadership and individuals. Strengths and limitations in their roles and responsibilities can be easily overlooked if the employee in question doesn’t have the opportunity to provide input.
• Being selective in your choice of OKRs. Managing time and resources can sometimes feel like spinning plates, and assigning too many OKRs can lead to one or more of the proverbial plates smashing to the ground. OKRs can span a considerable time between their creation and completion, so take a judicious approach to which goals are really worth the time before making a commitment.
• Checking in regularly. Clear and consistent communication around OKRs is an important aspect of maintaining transparency and accountability. This can be achieved with variou layers of communication and feedback, from the ability to add comments and replies to OKRs within a performance management system, to conducting regularly scheduled one2one check-ins.
• Updating all progress with performance management software. With transparency and accuracy in data vital for the success of any OKR, monitoring progress through performance management software is essential. Dashboards, notifications and data analytics tools all help managers and employees to track progress, identify problems and update their tactics in real time.

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