What is the OKR framework?

The OKR framework is a goal-setting and management methodology used by teams to set and track specific and measurable goals. OKR stands for objectives and key results.

Initially proposed by John Doerr in the 1970s, the OKR framework has been instrumental in the success of many global brands, including Intel, Google, Microsoft, and LinkedIn. As an employer or team leader, implementing OKRs helps you align your team’s activities to a higher company goal and track your progress toward it with measurable key results.

Why should teams and individuals set OKRs?

OKRs spell out clear objectives for your employees and establish ways to measure their success. They let you define your goal and how your team can help you achieve it.

Thus, OKRs create accountability and progress. They also allow you to narrow your focus to what matters most, aligning all your activities and projects to a common goal.

What are the key components of effective OKRs?

By definition, the OKR methodology comprises two key components:

1. Objective: The goal you wish to achieve
2. Key results: How you measure your progress toward that goal

Objectives

Objectives are clear, measurable outcomes or goals you want to achieve. For instance, a common goal for a marketing team would be “increase lead generation.”

OKR objectives must be qualitative, ambitious, and inspiring. The idea is to push your team beyond “business as usual” and encourage them to grow.

When formulating OKR objectives:

• Make them hard but possible to push your team to its maximum potential
• Align them to a primary company goal
• Be as specific as possible

Key results

Key results are specific and measurable metrics that indicate your progress toward achieving an objective you set for your team or employee.

You typically set 3 to 5 key results for each OKR objective. For our marketing objective example above, some key metrics that may lead up to the goal include:

• Optimize ten landing pages for SEO
• Rank in the top 5 SERPs for ten primary keywords
• Raise web traffic to 50,000 visitors a month
• Reduce bounce rate by 28% in three months
• Segment content by buyer persona, etc.

Key metrics break down your OKR objectives into tangible steps. They also create accountability and trigger a timeframe, allowing you to monitor your team’s progress during a given period.

Because OKR objectives are often very ambitious, key results must be anchored in reality. If your goal is to become the number one PR firm in the world, your key results should identify the milestones your team must achieve to make that possible.

How does the OKR framework compare to other goal-setting frameworks?

OKR is a goal-setting framework similar to and different from other goal-management frameworks. This section compares OKRs to KPIs, the agile framework, goals, SMART goals, and employee performance goals.

What is the difference between OKRs and KPIs?

OKRs are specific systems for setting, tracking, and achieving ambitious goals. They align your team’s efforts to a wider objective and create a progressive, growth-first mindset among your employees.

In contrast, KPIs, or key performance indicators, are frameworks for tracking high-level performance within broader company initiatives and projects. They give you a general idea of if and when your employees are executing their roles in an ongoing project.

By allowing you to track employee progress in real time, OKRs offer a more specific and holistic approach to goal-setting. However, you can combine both frameworks to align all your goals with your company’s overall mission and produce measurable key results.

Additional resource: Key Performance Indicators Examples to Measure Success

What is the difference between agile and OKRs?

Agile is a project management protocol that breaks down projects into gradual steps, stages, or phases. This incremental approach is very similar to the OKR framework, which is why the two systems often complement each other.

As a project leader, you can use both agile and OKR to push your team towards a specific goal or project deliverable, measuring their progress as you go.

What is the difference between SMART goals and OKRs?

SMART goals are more rooted in reality than OKRs. By definition, SMART goals are achievable, realistic, and actionable. They help you create objectives your team can actually achieve. In contrast, OKRs are ambitious. They are meant to stretch your team’s capabilities and encourage growth, innovation, and transformation.

In most OKR frameworks, success is defined as achieving 70 to 80% of the goal. In fact, it is good practice to adjust your OKR objectives if you achieve 100% success multiple times.

Complementary guide: 40+ Effective SMART Goals Examples for Multiple Roles and Levels

What is the difference between goals and OKRs?

Goals are broad, overarching desired outcomes or aims. They are general, simple, and with little detail about how and when to achieve them. In contrast, OKRs define qualitative goals and the quantitative steps that must be taken to achieve them.

What is the difference between OKRs and performance goals?

While OKRs encourage innovation and growth, performance goals measure employee performance within predetermined roles. They evaluate how an employee does their job and whether they meet the expected performance levels for their assignment.

Further reading: See how to set effective new employee goals with this comprehensive guide. You will also find some concrete examples.

What are the benefits of OKRs in remote or global teams and organizations?

Teams working remotely or across different locations struggle with collaboration and accountability. Implementing OKRs in remote or global teams offers several benefits, such as:

Alignment

OKR objectives align employees with company goals, ensuring all members of dispersed teams work towards the same results. This is because OKRs create clarity in strategy—they tell all your employees where the company is heading and how you will get there.

In doing this, OKR frameworks save time and resources, ensuring every activity a remote or global worker engages in serves the company’s overarching goals.

Transparency

To monitor key results in an OKR framework, you must establish clear communication channels for your employees to receive assignments and share progress.

These communication channels create transparency and connect you to your remote or global employees at all stages of the OKR framework process, allowing you to collaborate more effectively.

Focus

By aligning your remote or global team to a common goal, OKRs facilitate focus. They limit your team’s goals to a small set of priorities, allowing them to prioritize the tasks most crucial to your objectives.

This is why, when writing OKRs, you must establish what NOT to do. Decide what’s important to your company’s goals, and cut out everything irrelevant to the current goal.

For example, while next year’s 10th anniversary celebrations are important, if the objective for this month is to launch a new product, planning the anniversary is irrelevant. OKRs direct your team to work on projects that will produce the results you need now.

Accountability

Setting key results involves more than identifying quantitative goals for your team—it also involves appointing project owners for different tasks under the OKR.

For instance, if the objective is to raise brand recognition by 40%, and the key results are:

• Increase Instagram followers to 50,000
• Run weekly promotional ads on TV with 70% engagement
• Produce YouTube videos for each company product

To execute this OKR, you must assign the social media manager, PR lead, and video content creator as project owners for each key result, respectively. This framework-embedded assignment creates accountability and gives employees a sense of usefulness and job satisfaction. It also tells you who to go to if a task is late or below standard.

Collaboration and engagement

Because OKRs align with a larger company goal, they often connect the objectives of different teams in your organization. This cross-functional collaboration creates a sense of shared purpose and unity.

OKR frameworks also foster engagement. When team members collaborate on a common goal, their connection makes the work more enjoyable. They may feel a sense of responsibility to their team members, which pushes them to complete their tasks well and on time to avoid disappointing them.

Stretching

The primary defining factor for an OKR objective is ambition. OKR objectives push employees to go beyond business as usual and leverage their best abilities and tools to achieve a goal. This push stretches remote and global teams and facilitates innovation and growth, allowing you to tap into hidden talents you didn’t know your employees had.

Tracking and course correction

While tracking your OKR key results, you’re likely to identify areas of weakness in your strategy and adjust your approach before they compromise your primary objective. This allows you to course-correct in real-time and keep your team on track to achieving your OKR.

How can you use OKRs to measure employee performance?

To use OKRs to measure employee performance, set unique goals for each member of your team and align those goals to an overall objective.

For example, in our brand recognition example above, each key result is tied to a single employee, in this case, the:

• Social media manager
• PR lead, and
• Video content creator

To measure each of these employee’s performance, track how they achieve the key result assigned to them:

1. How many Instagram followers does your brand have three months into the OKR?
2. How many did it have at the start of the OKR?
3. What is the growth rate?

By linking employee performance to measurable outcomes like these, you can perform more detailed evaluations and keep employees aligned with your primary goal.

What are some common challenges in implementing OKRs?

Some challenges you might face when implementing OKRs include:

Lack of clarity

74% of employees lack a clear understanding of how their work contributes to company goals. This is because most companies set goals at the beginning of a period and fail to articulate them properly or follow up, leaving employees confused and without direction.

Failing to define your OKR clearly can create similar problems. If employees don’t know what you’re aiming for and how they can contribute to it, they will not prioritize work that is important to your objectives.

Lack of clarity in your OKR also robs your employees of context—they know they need to increase brand engagement, for instance, but they don’t understand why it’s important that they do.

Solution: To avoid clarity issues:

1. Assign no more than 3 to 5 objectives to each individual or team per period
2. Monitor each set of objectives to completion before assigning another
3. Limit key results under each objective to 3 to 5 to avoid overwhelming your employees
4. Eliminate grey areas from your OKR by being very specific and using quantifiable metrics
5. Discuss your OKR with team members before the rollout

Overly ambitious goals

While OKR objectives need to be ambitious, setting goals outside the realm of possibility demotivates your employees.

Example: Let’s say you’re a startup pharmaceutical company with one non-FDA-approved drug. Aiming for a 50% market share within your first three months of operation is unrealistic. It is setting up your team for failure.

Instead, you could aim for a goal just outside your current capabilities. If you have a 2% market share, aim for a 20-point growth. This objective is ambitious but not impossible. If your team hits the 70% threshold, you’ll have a 16% market share by the end of your OKR window.

Also, align your OKRs with your company’s mission and vision. Involve your stakeholders and factor their goals into your goals so you’re not shooting for something even they don’t expect to happen.

Inconsistent execution

Inconsistent use of OKRs across different teams or departments causes inefficiencies and misalignment. If some employees work with an OKR while others do not, you may have trouble streamlining your workflow and deliverables. You may also experience:

• Delays and missed deadlines
• Confusion and lack of direction among team members
• Resource allocation errors
• Poor tracking

If your employees notice you’re not tracking or assigning OKRs consistently, they may also get demotivated, which could affect their quality of work.

Solution: To avoid this, roll out your OKR programs consistently across all teams and, if possible, simultaneously. Align all your team and individual OKRs to one primary goal and assign everyone a task or key result to which they can contribute.

Also, establish open communication channels to keep everyone on the same page about the OKR.

Employee resistance

Your employees may resist adopting a new goal-setting framework, especially if they are accustomed to traditional performance management methods.

To avoid the extra pressure of an OKR framework, they may sandbag you, which is when teams underpromise and over-deliver. This could cause you to misallocate resources and waste time trying to get your team on board.

Solution: The only way to deal with employee resistance is through open communication. If you notice resistance:

1. Conduct one-on-one and group meetings with all employees involved in your OKR strategy
2. Find out how you can make the adoption process easier for them
3. Explain exactly how the OKR fits into their daily work

Poor tracking

Poor review and monitoring frameworks can cause you to miss your key results.

If you don’t follow up with individual employees and teams on their OKR tasks, you may not know until too late that a strategy is failing. Employees who don’t receive oversight also get demotivated and stop working on their OKR objectives.

Solution: To stay on top of your OKR strategy:

1. Assign each employee and team a unique OKR task
2. Conduct regular reviews and offer employees feedback on their progress
3. Check in with your teams weekly or bi-weekly to monitor their progress
4. Address problems as soon as they come up

How can you set effective OKRs for your organization?

A good OKR is specific, measurable, and flexible. When writing OKRs for your team:

1. Set clear objectives: OKR objectives should be specific, significant, and actionable. Leave no room for doubt. Be as descriptive as possible without overexplaining what you want to achieve
2. Define measurable goals (key results: For every objective you set, define clear, measurable results denoting success. Represent these as milestones or SMART goals that mark your progress toward achieving your objectives
3. Align your objectives to a larger company goal: OKRs should always be breakdowns or simplified versions of your larger company goals. Align them to your company mission so that every key result brings you closer to achieving them
4. Review and adjust the metrics: A good OKR is flexible. Leave room for adjustment and review your progress regularly to see if your OKR strategy works

Note: OKR setting is a trial-and-error process. Practice setting effective OKRs for your remote and global teams regularly to refine your approach.

How often should you review and update OKRs?

For the best result OKR, review and update your objectives and key results quarterly. This period is long enough to let you measure the effectiveness of your strategies yet short enough that you can respond to market changes and customer concerns. With a quarterly review framework in place, you can:

• Assess your team’s progress
• Address any arising obstacles
• Adjustment your OKRs to changing conditions

Also, evaluate your employees' performance at the end of every quarter and adjust their key results to ensure continued engagement and productivity.

How should you grade OKRs?

Andy Grove, an early adopter and promoter of the OKR framework, recommends the “Yes/No” approach for grading OKRs. At every end-of-quarterly review, ask yourself, have you achieved the objective or not? If you need more room in your grading, use a color scoring system where:

1. Red means “you failed”
2. Yellow means “you made progress,” and
3. Green means “you achieved your goal

Alternatively, Google uses a percentage grading system with a 0.0 to 1.0 scale. You assign each key result a score, and at the end of the OKR period, you average the total scores for a final metric.

Whatever grading system you choose:

• Use a simple and easy-to-understand grade format
• Aim for growth rather than perfection, 70% is the hallmark of OKR’s success
• Educate your team on your scoring system to create transparency

What common OKR mistakes should you avoid?

When setting and grading OKRs, avoid the following mistakes:

Business as usual: OKRs, unlike KPIs, aren’t supposed to measure health; they should drive change and innovation. Set OKRs outside our team’s comfort zones.

KPIs vs OKRs: Don’t confuse OKRs with KPIs. Key results should be specific, quantitative, and ambitious. They’re about more than “doing the job.”

Static planning: Your first OKR draft is not your last. Revise and update your strategy as many times as needed.

Not involving stakeholders: Seek and consider feedback from your employees and stakeholders when drafting OKRs

How can technology support the implementation of OKRs?

Technology can support the implementation of OKRs in several ways:

• Goal tracking software: Dedicated OKR software solutions provide tools for setting, tracking, and reviewing OKRs, making the process more efficient and transparent
• Collaboration tools: Platforms like Slack, Microsoft Teams, and Asana can facilitate communication and collaboration around OKRs, especially for remote and global teams
• Performance analytics: Data analytics tools can provide insights into OKR progress and performance, helping managers make informed decisions and adjustments
• Integration with HR systems: Integrating OKR tools with existing HR systems can streamline performance management processes and ensure alignment with other HR functions

Set OKRs and help your team reach them with Deel Engage

Deel Engage, our all-in-one talent management suite, will streamline OKR setting and tracking by:

• Defining parent goals (objectives) and sub-goals (key results) so that every individual and department stays accountable
• Assigning timeframes to each objective and key result
• Customizing your feedback systems with competencies, culture, and goals
• Using goals to add more context to 1:1 meetings and performance reviews
• Managing all of the workforce’s goals from a centralized location

Additionally, Deel HR, our truly global HRIS solution, is always included for free

Book a demo today to see how our solutions will help you build a high-performance workforce.