What are OKRs? Explanation, examples & how to set them

At first sight, the term “OKRs” may sound daunting or make you roll your eyes — after all, if you don’t know what an OKR is, you may take it for an empty buzzword. However, once you understand the meaning and the potential of this goal-setting methodology, you’ll find that objectives and key results are something to embrace, not fear.

Setting the right goals is the most challenging part of rolling out OKRs. In this article, we’ll provide a detailed explanation of what OKRs are, discuss their relationship with employee engagement, show you examples of company and team OKRs, and share a seven-step guide to help set up your own OKR system.
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What are OKRs

Explaining what OKRs are is more straightforward than you might think. OKRs, or objectives and key results, form a management methodology that breaks down ambitious objectives into clear, measurable results and initiatives. As noted in the MIT Sloan Management Review, OKR systems have the power to foster a culture of accountability and adaptability, as well as create organizational alignment.

The OKR management framework’s design is attributed to Andy Grove, Intel’s third employee and former CEO. In 1983, Grove laid out the term in the book “High Output Management.” Another influential OKR authority, John Doerr, joined Intel in the mid-1970s. Doerr describes the OKR technique as “deceptively simple, but also the polar opposite of the conventional management by objectives (MBO) systems, which tend to be top-down, hierarchical, annual, and linked to compensation.”

Now a venture capitalist, Doerr presented the OKR system to 100 organizations since 1980 — but it wasn’t until recent years that it gained tremendous traction. Doerr further explored OKRs in the 2017 book “Measure What Matters,” and the framework is now used by fast-scaling startups and large corporations like Google and the Bill & Melinda Gates Foundation.
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The OKR formula: Simplified

We will make progress in pursuit of [OBJECTIVE] by achieving [KEY RESULTS].

Objectives

An OKR objective is what you want to achieve. Think of it like the direction you’re heading in. It’s bold and ambitious but not make-believe. It’s inspirational and has the power of uniting team members. Objectives bring people together and make the idea of “working toward the same goal” palpable across an entire organization. 

Companies have many objectives, but your goals have to be clear and concise to harness the power of OKRs in business. On top of that, we recommend working with quarterly OKR cycles for the best results. At the start of each quarter, you should go through the planning exercise of defining your OKRs at each level: company-wide, team-wide, and individual. However, depending on your company needs, you may want to tweak certain business OKRs monthly or come up with larger-scale, big-picture objectives you only revisit yearly.
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Key Results

‍OKR key results are the milestones you pass on the way to your objectives. They define how you’ll hit your goals and measure progress.  

Quantitative and tied to a timeline, key results are pieces of the bigger picture — the objective they’re attached to. Like signposts, these desired results tell you if your team is headed in the right direction and how far you still have to go.

As measurable pieces of your vision, key results require balance. They shouldn’t be too easy to reach, but need to be meaningful enough to warrant a good team celebration when achieved.
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💡 Top tip: Don’t conflate OKRs and KPIs (key performance indicators). While KPIs evaluate how effectively your company performs a particular activity, the key results in OKRs are guided by objectives that are anchored in an overarching mission.

KPIs and key results should be quantifiable and might even speak to the same achievements, for example, the number of qualified leads in a quarter. However, unlike an OKR, a key performance indicator isn’t necessarily guided by a broader vision and company strategy.

🤔 Need help writing your OKRs?
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Our free OKR template provides a solid starting point so you can establish your objectives with confidence.

 👉 Download the template

The relationship between business OKRs & employee engagement

Voluntary employee turnover costs US businesses as much as one trillion dollars every year. The main reason is that it can cost as much as two times someone’s annual salary to fill a vacant position.

On top of massive financial loss, staff turnover affects team morale and overburdens colleagues. It can also mean rebuilding customer relationships and losing top talent that’s hard to replace.

Engagement helps work against voluntary turnover — tellingly, 52% of employees say something could have been done to keep them in a position they left. Surprisingly to some, listening to team members, nurturing their professional development, and making them feel their work has meaning is more effective than investing in nap pods and unlimited ice cream.‍

OKR processes can make work environments more transparent, aligned, and meaningful. Indeed, carefully chosen objectives give purpose to tasks that might otherwise seem like nothing more than items to tick off an endless list.

It’s equally gratifying for team members to track OKRs over time and see how their work contributes to the bigger picture. That way, they can visualize how they’re helping the company grow rather than just working on tasks in isolation. As a result, they’ll be more likely to challenge themselves, adopt a collaborative attitude, and think of creative solutions to help their colleagues achieve their business OKRs.
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Objectives & key results examples

Writing great OKRs depends on having a deep understanding of your company, team, and personal objectives and being able to determine all the small actions you’ll have to take to achieve them. These company and team OKR examples should provide you with a great starting point that you can customize when you start working on your own.
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💡 Need OKR inspiration? We’ve got a comprehensive OKR guide that outlines 25 concrete OKR examples. If you’re ready to take things a step further and implement a dedicated solution for OKRs within your organization, we’ve also got a detailed breakdown of the top OKR software on the market right now.

Example company OKR
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• Objective: Make such a strong entry into the UK market that it gets competitors’ attention
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‍• Key Result 1: Hire a UK country manager to lead regional sales and operations
• Key Result 2: Set up a legal entity in the UK
• Key Result 3: Win 20 new clients headquartered in the UK
• Key Result 4: Reduce cost per lead in the UK by 20%

Example HR team OKR

• Objective: Build and maintain such a high-performing talent operations function that it consistently attracts new hires and makes team members want to stay in the long-term

• Key Result 1: Increase the overall employee retention rate by 15% over the next 12 months
• Key Result 2: Improve the time-to-fill metric for critical roles by 20% by streamlining the recruitment process and leveraging technology solutions to automate recruitment workflows.
• Key Result 3: Develop and implement an employee development plan for all employees that includes at least one stretch assignment or learning opportunity per year, resulting in a 10% increase in employee satisfaction with career development opportunities.

Notice how the team OKR (setting up a top-tier talent operations function) connects with the company OKR (UK market entry) — this creates alignment and is known as the cascading goals methodology.

In both cases, the objective is ambitious enough to be broken down into multiple key results. When defining OKR key results that fit your objective, think about how you measure progress. In our example, the key results are easily trackable and enable the more abstract, ambitious objective.
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A 7-step guide to setting the right OKRs for your business

1. Keep it simple: Choose 3 to 5 objectives (& key results for each)

Between three and five objectives for each OKR period is a realistic amount to keep teams stimulated without feeling overwhelmed. If there are any fewer, the goals may feel limiting. With too many OKRs, you risk focusing on too much at once and not achieving anything.

Depending on your organizational needs, you may prefer managing OKRs in periods that are different from our recommended quarter. Still, bear in mind that a 13-week timeframe allows you to aim for 10% progress each week, with a handy 2-3 week grace period to get going.

Speaking of numbers, Google advises setting around three key results per objective. Other experts say that up to five key results are fine. Consider your team’s size, the complexity of your OKR system, and your objective’s scope before establishing what your key results are. Avoid coming up with additional key results just for the sake of it — remember that simplicity is crucial for success.

As a general rule, key results should cover enough ground to allow for objectives to be reached. If the fulfillment of key results makes for only 40-50% of your objective, you know they’re insufficient.
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2. Be specific & don’t fear numbers

A common drawback of ambitious planning is being too imprecise. That’s why, as pillars for your objectives, key results must be measurable. For example, if you wanted to become a  chef, a key result like “get better at cooking” isn’t very helpful. What defines getting better? When would you know that you had achieved such a vague outcome? A budding chef would be better off writing this: “Take five cooking classes.” At any given moment, you can look at that key result and know for sure if you’ve achieved it.
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3. Aim high & use challenges in your favor

‍Make your OKRs ambitious. Despite what many people believe, easy work isn’t more motivating than challenging work. Harvard Business Review research states that “in some situations, people perceive higher goals as easier to attain than lower ones — and even when that’s not the case, they still can find those more challenging goals more appealing.”

Feeling some discomfort is usually a healthy sign that your business OKR is challenging enough to make it worth your while. On the other hand, if your OKRs seem terrifying, you may have gone too far.

In addition, objectives should never boil down to maintaining something you’re already doing. That defies the purpose of OKRs. If they include words such as “keep doing” or “continue to,” you’re shying away from setting audacious objectives that would test your efforts and take your organization to the next level.

Key results should require some elbow grease to accomplish. If they’re too easy, they won’t make a noticeable impact on the OKR results. Hitting 60-80% is a good indicator of a high-impact key result, whereas fulfilling 100% without difficulty shows that the key result wasn’t ambitious enough.
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4. Prioritize teamwork

‍Engage team members by asking them how they can contribute to objectives rather than simply assigning top-down responsibilities to teams and individuals.

Ask yourself — and your teams — several questions. Is there a need or space for a special project? Does a team want to tackle a particular aspect of the objective? By asking employees for their input instead of presenting a fixed plan, you encourage stakeholders to take the initiative and leverage their strengths. 

In addition, remember that the purpose of OKRs is also to boost individual development, as each team member can have their own personal OKRs.
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Pro tip 💡: Want to help employees set meaningful individual OKRs that’ll lead them toward their professional goals? Check out our guide on performance objective examples.

5. Communicate, listen & foster a feedback culture

‍Even if you’ve involved your team in the OKR development process, the time for collaboration isn’t finished. You’ll need your team’s understanding and cooperation to ensure the business OKRs you came up with make sense in practice and benefit the organization.

If an OKR is linked to another team’s objectives, you’ll benefit from understanding how they set and manage their goals, as that will affect the way you manage yours. In addition, if your organization is setting OKRs for the first time, it may be wise to focus on establishing company-wide business OKRs first. That way, smaller-scale team objectives will fall in step with the organization’s highest-priority initiatives and projects.

On a related note, make sure your wording is always clear. When it comes to implementing OKRs, the last thing you want is for avoidable misunderstandings to hinder growth.

That’s not all you can do in terms of transparent communication. More than sharing one-directional information, listening to employees and fostering a feedback culture is one of the cornerstones of successful OKRs. We’ve explored how OKRs can sustain engagement, but the relationship goes both ways.
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6. Track progress, focus on the outcome & celebrate success

A surefire approach to keeping your OKRs in shape is to monitor progress and recognize every accomplishment. Praising your team for their achievements — no matter how big or small — is an excellent way to engage people and help them understand the great impact measuring OKRs can have.

Remember, objectives don’t have to be fully completed to be celebrated. If teams always achieve 100% of their bold objectives, there’s room to think bigger.

We recommend scheduling regular OKR check-ins to discuss roadblocks, find solutions, and align expectations. You can also use this time as an opportunity to recognize employee progress and communicate how valuable their work is to the team. These kinds of conversations go a long way.
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7. Know when it's time to readjust & don't beat yourself up

If you’ve set the right OKRs in a sweet spot between challenging the status quo and a “pie in the sky,” hitting 80% of your target should more than validate your efforts and courage. Be proud of yourself and your team.

Yet, things can change unexpectedly. We all take missteps at some point in our professional lives, and as much as we should use mistakes as opportunities to learn and evolve, they usually don’t feel good. However, challenges don’t mean that it’s time to abandon your OKRs.

Keep your chin up and reassess your situation. Be conscious of what you can do and make peace with what you can’t control. Make the necessary adjustments to your key results — you may need to decrease targets, break key results down into smaller parts, or extend timeframes. Then, focus on moving forward. Well-structured OKRs will help you bounce back.
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Leapsome helps businesses harness the power of OKRs

All in all, understanding and implementing OKRs isn’t easy, but it is worth it. Having an OKR tool set up to establish and track company, team, and individual OKRs is essential if you want to build a transparent company culture and foster alignment across all levels of your organization. In addition, when teams are intentional and ambitious about the objectives they set, OKRs can have a big impact on employee engagement, satisfaction, and growth.

Leapsome Goals empowers users to go beyond simply setting goals and calling it a day. Our platform keeps your objectives front and center, providing you with progress updates, visual dashboards, and check-in reminders. Even better, our Goals module connects with our other tools, so your OKR guidelines won’t live in a silo — you’ll be able to integrate them into your feedback conversations, meetings, and performance reviews.

At Leapsome, we’re passionate about ensuring your ambitious objectives don’t get deprioritized or forgotten. Instead, we help you make them a fundamental part of your everyday workflows.
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🤝 Leapsome is your ideal OKR partner

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