A business needs guidance and purpose to grow. Particular business objectives need to be defined for your employees to have a clear path. If you are looking to grow your business, maintain focus within the organization, and enhance team collaboration, you need to start incorporating OKRs or “Objectives and Key Results” into your operations. 

Tech firms like Google and Intel popularized the OKR framework to the extent that now businesses of all sizes use OKRs to help them achieve their goals. Let’s figure out what OKRs are and why your organization may benefit from using this framework. 

What is an OKR?

An OKR or Objective and Key Results are a management tool that allows organizations to create strategies by which they can reach broad goals by fulfilling specific tasks. It was first used in 1954 by Peter Drucker, who introduced this framework in his “Management by Objective” methodology. The OKR strategy is a pyramid where the main objective is at the top, and the key results are at the bottom.

The objective is the primary company-wide goal that needs to be achieved. This is followed by specific goals that all contribute towards achieving this goal. These are essential aspects of your business growth as they allow your organization to be aligned and focus on a specific purpose. 

In addition, using an OKR strategy can help give your employees direction, making them aware of their contribution. For managers, it simplifies delegating tasks and prioritizing them based on their impact on the final objective.

OKRs vs. KPIs

If you work in an organization, there’s a strong possibility that you have heard the term KPI or Key Performance Indicators. This is another tool used by management to assess goals. The main difference between the two is that KPIs measure the results of the tasks after they have been performed. Whereas OKRs manage the functions set to be completed by the employees. 

The OKRs set goals that employees need to achieve to grow the organization. You can use both of these tools to keep track of your employees’ performance and company growth at all times.

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How to establish effective OKRs

Making OKRs is not an easy task, and you cannot expect to get effective results if the OKRs are not made properly. However, here are a few tips that you can use to improve the effectiveness of your OKRs.

1. Use OKRs as a communication tool

OKRs promote communication between employees and managers. When an employee is working for a considerable amount of time, they tend to start working in silos which can be troublesome for communication. Using OKR software can create a framework that allows for effective communication, where the manager can give feedback on the employee’s work and make the processes within the organization much more transparent.

2. Set a reasonable number of OKRs

Do not overwhelm your employees with a large number of OKRs. OKRs should only include the North Star goal and the specific tasks meant to take you towards fulfilling that goal. Too many OKRs defeat the framework’s purpose and look more like a task list than an OKR. Experts advise that an organization should have 2 to 3 OKRs. 

Anything more than three can make the framework ineffective. On the other hand, only having one OKR can be seen as too much focus, resulting in the team going into tunnel vision. Your team can accomplish a lot more than just one OKR.

3. Set an actionable time frame

Fulfilling an OKR cannot be an indefinite task that has no deadline. Managers need to have fixed deadlines to complete the main objective as efficiently as possible. Experts believe that having two-week deadlines is the best. This allows employees to work on their tasks without pressuring them to rush their work. Other duties will pop up while you are working towards fulfilling your objective, which is why two weeks is a reasonable amount of time to complete the goal.

4. Make your tasks achievable

OKRs are broad objectives that need to be fulfilled, and although not all goals are reachable, it is essential to note that 60% to 70% of goals should be achievable. This improves employee motivation and pushes them towards completing tasks. However, if your employees complete 100% of their tasks, the simple fact is that their assignments are not ambitious enough.

Example of OKRs

Several companies use OKRs to improve their performance and company growth. Let’s take the example of Uber and see how they have written down their OKRs.

  • Objective: Increase the number of drivers in the system
    • Key result: Increase driver base by 20% in each region
    • Key result: Increase average driving session to 26 hours per week in active regions
  • Objective: Increase drivers geographic coverage
    • Key result: Increase coverage to 100% for SF
    • Key result: Increase coverage by 75% for active cities
    • Key result: Decrease pickup time to less  than 10 minutes during peak hours in any coverage area
  • Objective: Increase driver happiness
    • Key result: Define driver happiness score and measure it
    • Key result: Increase driver happiness score to 75th percentile

How can planning software help you successfully use OKRs?

The world is moving towards automation, and it’s time to invest in solutions and processes that simplify operations and make it easy to achieve goals. Some very effective software solutions help you create OKRs and efficiently track their performance. 

These OKR tools allow organizations to fast track towards goal completion. That’s because you can use them to set, communicate, track and measure results within your business. The right OKR software:

  • Gives your teams and team leads the ability to create, classify, and prioritize goals
  • Offers check-in and update abilities for all users
  • Makes it easy to provide feedback and recognize exceptional contributors
  • facilitates reporting and tracking to measure productivity

So if you want to improve your OKRs and get the most out of your employees, consider using OKR or business planning software to achieve your broad organization goals. This is your chance to make it easy to communicate and facilitate goal attainment on your own terms. 

AvatarJT Ripton

JT Ripton is a business consultant and a freelance writer out of Tampa. JT has written for companies like T-Mobile and others. You can follow him on Twitter @JTRipton.