Objectives and Key Results (OKR) is a goal setting framework, which enables teams to align on strategy and execution. OKRs are usually set on a 3 – 6 months basis.
While OKR sets ambitious goals for a few months period, the KPI measures progress in a long term.
The key components of OKR system are:
OBJECTIVES
3-5 objectives per quarter to support your strategy
- where do you want to go? “Build sustainable sales pipeline”, “Build brand awareness”, “Improve customer service”
- not a metric; “
Achieve $100m revenues“ - not defined as tasks: “
Make 100 calls“
KEY RESULTS
Each objective is accompanied by 3-5 key results
- Measurable
- Time bound
- Not defined as tasks
- Ambitious (expect 80% attainment rate)
- If results are achieved, so are objectives
TASKS
Specific actions that lead to results.
- proposed by teams and individuals
EXAMPLE OKR
CRITICAL CONSIDERATIONS
While OKR should be ambitious and you should expect 80% attainment rate, consider consequences if teams or individuals are not hitting the 80% target.
Consistent underachievement should trigger a post-mortem to identify bottlenecks in performance.
You can also link underachievement to compensation. Less than 60% attainment should cap bonuses to 80%