OKRs (Objectives and Key Results) is a performance management framework designed to encourage companies to set, communicate and monitor broad organizational goals and results. The framework is meant to be transparent and to align business, team and individual objectives in a hierarchal, measurable way.
OKRS are broken into two components, objectives and key results. An average of 3-5 goals are identified with an additional 3-5 related, quantifiable action items or KPIs. The objective defines what the employee wants to achieve and the key results outline how the employee is going to go about achieving the goal within a specific time frame. Each overarching objective should be achievable but challenging, sometimes referred to as a moonshot, to keep teams motivated. OKRs are usually reviewed and revaluated on a specified periodic basis.
An important purpose of implementing OKRs is to ensure that all employees are aware of organizational goals and everyone is working together to achieve them. When a workplace uses OKRs, employees are encouraged to set goals very high and must document progress toward the successful completion of key results with supporting data. Performance management software can measure and track employees' progress toward their goals in real time. A key aspect of the software is that it allows all employees to see the goals of everyone else in the organization.
Benefits of OKRs
Once successfully implemented, OKRs can provide benefits such as:
- Simplicity and a decreased need for additional resources, time and maintenance.
- Priorities, expectations and goals are always transparent to employees.
- Organizational and personal focus, motivation and productivity are often increased.
- Individual employees can identify their role within long term goals.
History of OKRs
Andy Grove, former CEO of Intel, conceptualized the idea of OKRs to help his employees structure their work efforts and zero in on specific action items that would help improve business performance. Grove explained the concept as a way to answer two questions, "Where do I want to go?" and "How do I pace myself to see if I'm getting there?"
It is thought by some that OKRs are simply a more agile version of Peter Drucker's Management by Objectives (MBO) process, which requires objectives to be SMART (specific, measurable, achievable, realistic and time-bound). An important difference, however, is that objectives for OKRs are required to be very aggressive, and 100% completion of key results is not as important as making progress towards completion.
Today, many companies, including Google, LinkedIn, Uber and Wells Fargo, have applied OKRs to their business. OKRs should evolve as companies do. When Google was a young company co-founders Larry Page and Sergey Brin set quarterly OKR goals. The company later added annual goals so every employee, from engineers to the CEO, was working simultaneously on goals for short- and long-term expectations. Now CEO of Alphabet, Page requires its subsidiaries, including Google, to use OKRs. Adopting an OKR variant, Sundar Pichai, who now heads Google, permits employees to concentrate on one goal at a time.