OKR: How to Set Clear, Measurable Objectives and Key Results to Reach Your Business Goals, Faster

First, let's go over the basics of what OKRs are. The "objectives" part of OKR provides direction on what the goal is trying to achieve. In contrast, key results detail how to get to your objective. You can have ambitious objectives that may feel too lofty without an action plan. Your key results must be achievable, time-bound, specific, and measurable. They give you step-by-step guidelines on what actions will help you achieve your objective.

For example, suppose your objective is to "develop an effective employee onboarding process." You'll want three to five key results per objective that are specific and measurable and include time frames. Your key results could be:

● Reduce the failure rate of new hires after 60 days by 5% in the next quarter

● Improve the satisfaction score of onboarding employees by 20% in the next quarter

● Increase the percentage of new hire productivity after their first three months by 15%

Objectives are usually vague. Therefore, you need the key results to specify what it means to have an effective onboarding process and when you want to achieve the identified improvements. Key results provide a better idea of the actions you need to take and help you measure your progress towards the greater objective.

Don't forget initiatives

Although initiatives aren't part of the OKR acronym, they are a key component that needs explaining. Initiatives include the necessary action items for accomplishing your key result. They should be specific, comply with the time frame of the key results, and be manageable for the team handling the related tasks.

Someone can be held accountable for not completing the initiative to contribute toward the OKR. You might have initiatives like the following to improve new hire failure rates:

● Incorporate culture fit assessments in the interview process

● Have weekly check-ins during the first month for new hires to ask questions and share progress

● Keep track of key challenges and common confusions among new hires

The key characteristics of good OKRs

We've covered the basics of how objectives explain the concept and direction, while key results describe the required physical tasks. The main characteristics you want in your objectives and key results will directly affect your business' success.

Objectives must be:

Significant

You want your objective to be relevant to your business's overall vision. So, make sure to choose the right objectives that align with your business' core values and mission statement. It must be significant enough to generate a positive impact and align with the direction you want your business to grow. If the objective is not significant, it can be harder to motivate employees to be on board and attain company goals.

Concrete

Concrete objectives mean it's clear what your business is trying to achieve. Additionally, the reasons you want to achieve the objective must be specific and the nature of the objective achievable. It will be easier to break concrete objectives into key results and adjust the objective if needed.

Action-Oriented

Your objective must aim to accomplish something and provide a clear path to take action. A transition must occur when someone takes the objective from point A to point B. This transition makes it easier to identify the specific steps required when you develop key results and initiatives.

Inspirational

Objectives can be broad or ambitious. But, this doesn't mean they aren't inspirational enough to motivate everyone involved to see the big picture of what your business is trying to obtain. You want to have some long-lived objectives that grow organically alongside your business's core values.

Key results must be:

Specific

Always have a clear scope of what you need to accomplish, the time frame, and what items you're trying to measure. The more specific your key results are, the easier someone can hit the ground running towards setting up the initiatives they need for achievement.

Time-bound

Having a specific time frame associated with your key results helps you focus and provides milestone points to review the results. It allows you to stay on track towards hitting an objective and gives you a chance to promptly identify what is and isn't working.

Aggressive yet realistic

Since key results aren't meant to determine employee compensation, it's okay to have aggressive goals. However, make sure the steps towards achieving these goals are realistic, even if you're aiming high with your key results. The idea is to eventually hit a point where you can achieve these aggressive key results or evaluate how you can adjust your strategy towards success.

Measurable and verifiable

While the objective is action-orientated, the key results are more results-oriented. It must be clear what you are trying to achieve. There also has to be a way to quantify the results of the action taken, so typically, you want to associate a number with your key result. This makes scoring and evaluating results easier.

Why are good OKRs important?

Whether it's a company-wide objective or a smaller objective for the department team, getting into the practice of developing good OKRs comes with multiple long-term benefits.

Improves business focus

Good OKRs help your business focus on what matters and not lose sight of the big picture. Whatever key result you are working on needs to tie back to the main objective. Using this tool in your business will also help motivate employees to focus on what your business is trying to achieve. Many employees enjoy getting constant feedback and want to know how their work contributes to the big picture.

Helps you measure progress

Business goal-setting is only the beginning of accomplishing objectives. Since key results are designed to be measurable, it's easy to quantify progress towards business goals. This can be useful when reporting data on achievements to potential investors.

When you measure business objectives through the key results achieved, you can also compare results from previous efforts and identify how to improve moving forward.

Creates team alignment

Transparent goals chosen for the right reason make sure everyone in your business is aligned with the good intentions and inspiring results the objective is trying to achieve. If your department team creates an objective specific to your department, it must align with the overall business objectives.

OKRs are more than metrics; they're an opportunity to create a team-oriented culture where everyone collaborates towards the same overarching objective. They provide a space for conversation, feedback, and recognition among employees. This improves your company culture and brings everyone on board with the big picture.

Let's you stretch towards ambitious goals

When done right, OKRs provide a realistic framework to stretch towards achieving things you may not have thought possible for your business. Objectives can be ambitious, and key results force a company to aim high. This inspires everyone to try and obtain realistic results without fear of being reprimanded if they don't 100% achieve the goal.

It can also be a tool to inspire ambition among your employees. When leaders are personally accountable for their own objectives and key results, they set an example for the rest of the team on what attitude and approach to have when setting and meeting goals.

5 steps to implement OKRs in your business

When implementing OKRs in your business, here are five straightforward steps to take to successfully incorporate them into your culture and way of working.

Step 1: Introduce and explain OKRs

Before setting objectives and expecting anyone on your team to create key results, you have to introduce the concept to them. You can have a team meeting that explains the OKR framework, provides examples, and gives everyone a chance to ask questions.

This is also an opportunity to agree on what time frame your business wants for the OKRs. Some businesses use monthly OKRs, while others have a combination of three-month and 12-month OKRs.

Step 2: Create your OKRs

After everyone is on board with what an OKR is, it's time to create the overarching objective. You can present an objective your business has and encourage teams to develop their own objectives or have everyone working towards the main objective.

If your business is completely new to the concept, it might help to start with one or two objectives first. Make sure you are identifying three to five key results that align with each objective. Break down the key results into specific, measurable actions, and set clear expectations on who is accountable for which key result.

Step 3: Incorporate weightage for key results

Since key results are measurable, they should also be set up in a way where progress can be tracked on each key result. By allotting a weightage out of 100%, you can easily see how far each key result has progressed during check-ins. Once 100% is reached, the key result is considered completed.

You can set up weightage in different ways depending on the nature of the key results. For example, you can link a certain percentage to the specific initiatives associated with each key result.

So, once the task is complete, the key result is also completed by that percentage. You can also determine what level of accomplishment warrants what level of percentage. For example, if your key result is to improve lead conversions by 40% and you've improved it by 20% so far, this can be a 50% indicator of key result completion.

Step 4: Set up regular check-ins

Just because you've explained OKRs and set up the key results, it doesn't mean you don't think about your progress until the end of the time frame. Make sure to check in with your team to see how everyone is progressing and share ideas on how to get closer to achieving the OKRs. These can be bi-weekly meetings.

Also, encourage employees to do more regular self check-ins to see what they are doing well and identify where they might want support.

Step 5: Review and grade the OKRs

You'll want to review and grade all OKRs at the end of the time frame — whether that's monthly, three months, or 12 months. A standard grading system is placing it on a scale from 0 to 1. The number 1 indicates you achieved it. However, the goal is to get between 0.6 and 0.7, since OKRs are more about the process than the scores. Lower scores are simply an indicator of what you can do differently.

This review should also highlight which part of the process should be repeated and reflect on whether OKRs should be adjusted. For example, perhaps your target numbers for a key result aren't the right focus and need to be changed. For the best results, make the review process transparent for the entire business. You can do this by having a centralized location where everyone posts their results.

Understanding committed vs. aspirational key results

It's true. Your OKRs should be ambitious and "stretch goals." However, distinguishing between committed and aspirational OKRs can be beneficial. Having both types of key results can make it easier to feel a sense of accomplishment while not selling your business short in potential.

A committed OKR involves key results where you can score a perfect 1. They are foundational expectations that you or your team must achieve. In contrast, aspirational key results are the stretch goals your business aims to achieve. Most of the time, aspirational goals will remain on your OKR list until you accomplish them.

For example, a committed OKR might be to "Increase revenue from limited-edition flavor ice cream sales." Whereas an aspirational OKR is to "Become one of the top three ice-cream vendors in the state."

8 tips for successfully using OKRs

Here are a few specific tips on how to leverage the power of OKRs in your small business so you have a goal-setting and management style that produces quality results.

1. Utilize brainstorming sessions

To create a team atmosphere — and because two heads are usually better than one — set up a time to brainstorm ways to reach the result you want. Be specific when drawing out your action plan and the steps to meet your objective. The more specific you are during these brainstorming sessions, the clearer the expectations will be, and the easier it will be to achieve them.

2. Consider the time frame

Although objectives can be ambitious, you also need to consider the time frame you've put in place. A balance must exist that allows the objective to be simple enough to achieve it in the allotted time frame. Demotivating your employees because there's no way they can meet any of the objectives set is the last thing you want.

3. Allow employee independence

Although objectives should align throughout the business, you can still give your team members independence to create their own tasks and determine how they will reach an objective or define a key result. This independence provides a sense of autonomy and relays trust in your employee's abilities, motivating them to achieve goals.

4. Prioritize your OKRs

If you are at the stage where your business has multiple OKRs, such as overarching ones and specific team OKRs, make sure to prioritize. Identify which OKRs are top priority, so your employees aren't spreading themselves thin trying to achieve all of them. Prioritizing your OKRs can prevent burnout or discouragement when workers feel stressed.

5. Designate a directly responsible individual (DRI)

You should designate a DRI to the OKR to avoid situations where OKR progress falls through the gaps or employees blame each other for lack of progress. This individual will be responsible for regular check-ins and hold others accountable for specific roles in achieving the OKR.

You can also break it down further to designate someone to specific key results. Don't just list the team name, actually identify an individual.  

6. Score key results in a reflective way

By grading the success of your key results at the end of the determined time frame, you will have a better idea of the progress achieved. However, don't score solely on the measurements accomplished. It's also important to be reflective.

For example, let's say you had to add ten new accounts to your customer portfolio and managed to add eight. This can result in a good score. But, if five of the eight accounts aren't quality relationships or potential long-term clients, it could be better to focus on the characteristics of the three accounts that are quality. This reflective scoring process can help you set better goals and key results moving forward.

7. Have patience in the process

Like learning anything new or developing any habit, it takes time. Be patient with yourself and your team as everyone learns to utilize OKRs effectively. Don't expect anyone to be an expert after the first cycle. Stick with the process of developing OKRs until you feel comfortable and have a better idea of what objectives and key results make the most sense for your business.

8. Always recognize and celebrate

If you or your team reaches a milestone, recognize this achievement and celebrate the accomplishment. Positive reinforcement will ensure employees sustain their efforts and best practices when approaching OKRs. Reflecting on what all employees have accomplished and recognizing the positive aspects of someone's effort can encourage them to keep trying even if they didn't meet the key results 100%.

Encouraging everyone in your business to share their OKRs and developing a support system towards achieving them is important, too. This transparency can also create inspiration or act as a platform for feedback and suggestions on improving.  

6 common OKR mistakes to avoid

Since setting objectives and key results can seem more like an art than a science sometimes, here are six common mistakes you should try and avoid for the best OKRs.

1. Don't overthink it

This applies to when you are setting up your OKRs and when you are scoring them. You don't want to take too long deciding on what OKRs to use. It's an experimental process that can shift and grow, and failure is acceptable as long as you learn from it.

When it comes to scoring, try not to be philosophical. You should answer a straightforward yes or no around whether the OKR was achieved or provide a quantifiable result. For example, "I completed 60% of the key result." If you can't give a straight answer, then perhaps your OKR needs to be re-written.

2. Don't be hard on yourself

It's unrealistic to expect you will hit all your OKRs all the time. Additionally, they are designed to be ambitious and should be seen more as stretch goals. The process of how you achieve them and what you learn from the experience can be far more valuable than a perfect score. Conversely, if you complete all OKRs easily, you might not be pushing yourself far enough.

3. Don't use OKRs for compensation

It would be best if you used OKRs as a tool to keep everyone in the company aligned and inspired to move towards the same greater goal. It's a better motivation to use this goal system to track business progress and determine if objectives are met — not to tie it to bonuses or promotions. This way, you can send the message that it's okay to take risks, and it's okay to fail as your team strives for ambitious objectives.

4. Don't confuse results with initiatives

Results are about the outcome you want to achieve and are more complicated than an initiative. When writing your key results, focus on the measurable outcomes you want. Initiatives are more straightforward and represent specific tasks you can do and check off a list.

For example, "Increase traffic to health-related content" is a result. On the other hand, the initiative associated with this key result would be "Write five blog posts about healthy living."

5. Don't write low-value committed OKRs

Suppose your business has a combination of committed and aspirational OKRs. In that case, you still want to make sure your committed OKRs have value. OKRs should have meaning and tangible benefits. Without these characteristics, it's easy for employees to think, "Who cares?" and not feel motivated to accomplish goals. Worse, upper management might fail to notice employees’ achievements when the employees do not complete initiatives.

6. Don't forget to track progress

We can't emphasize this point enough. Check-ins and tracking progress are key components of successfully achieving OKRs. The entire model makes it easy for team leaders to check in and offer support. It also helps keep team members accountable and reminds them of their goals.

This is especially useful if your business is new to OKRs and everyone is still getting into the habit of regularly tracking their progress. One way to make it easy to identify progress across your entire business is to have everyone's OKRs posted publicly, including updates on progress.

Examples of setting business-wide objectives

Establishing business-wide OKRs that filter down into specific OKRs for different teams can allow for broader business-wide OKRs. The goal is to provide a statement about the direction you want each team to take. Here are three examples of business-wide objectives and the aligned objectives different teams can set up.

1. Revenue-related OKR

Business-wide objective: Increase business revenue

● Customer service team: Improve customer retention

● Sales team: Increase monthly sales revenue

● Product team: Upgrade product features quarterly

● Marketing team: Improve return on investment of marketing costs

2. Costs-related OKR

Business-wide objective: Reduce business operating costs

● Marketing team: Reduce marketing costs

● Administration team: Improve payment process to decrease late payment fees

● Human resources team: Restructure company to reduce labor costs

3. Market share-related OKR

Business-wide objective: Increase business market share

● Marketing team: Enhance brand awareness

● Sales team: Increase the average deal amounts

● Product team: Improve customer experience by adding new features

10 additional examples of OKRs

To help you further gain a better idea of what OKRs are, here are ten specific examples you might consider for various departments in your small business. Under each OKR category below, there is an objective and two to three key results for the identified objective.

1. Business-wide culture OKR

Objective: Establish a more goal-orientated company culture

Key Results:

● Have every team in the company set at least one OKR by the next cycle

● Ensure 80% of key results are up to date every two weeks

● Achieve 70% of objectives set each cycle

2. Employee engagement OKR

Objective: Improve employee engagement within the business

Key Results:

● Increase employee participation in annual retreats from 65% to 85%

● Improve online employee ratings from 3.5 to 4.5 this year

● Increase the employee satisfaction score this quarter from 65% to 90%

3. Sales pipeline OKR

Objective: Build a sustainable and healthy sales pipeline

Key Results:

● Increase total qualified leads to 75% this quarter

● Establish a 23% increase of B2B deals in the next three months

● Achieve a monthly pipeline of $5,000

4. Customer support OKR

Objective: Establish a world-class customer support experience

Key Results:

● Reduce first time response period to under four hours this quarter

● Reduce average time to resolve an issue by 10% this quarter

● Establish a customer satisfaction score of at least 90% this quarter

5. Engineering OKR

Objective: Improve time of deploying updates for bug fixes

Key Results:

● Reduce client complaints by 50% this quarter

● Reduce the time to fix bugs from two months to one month

6. HR diversity-related OKR

Objective: Improve diversity and inclusion within the business

Key Results:

● Improve annual employee satisfaction survey scores among women and people of color by 50%

● Increase diversity representation among leadership roles by 20% by the end of the year

● Achieve 100% completion rate of diversity and inclusion training among new hires within the first month of onboarding

7. HR health-related OKR

Objective: Encourage work-life balance as a priority among all employees

Key Results:

● Reduce overtime by four hours this quarter

● Improve work-life balance survey score to 0.8 by the end of the year

● Sign up 100% of employees to a wellness program in the next three months

8. Finance OKRs

Objective: Ensure budgets are cost-effective across all business departments

Key Results:

● Increase net profit by 40% this year

● Reduce operating costs by 20% this year

9. Accounting OKR

Objective: Have a reliable and efficient bookkeeping system

Key Results:

● Finalize all books within five days

● Ensure customers pay their invoices within 20 days

● Pay all accounts payable within two weeks

10. Marketing OKR

Objective: Strengthen the business SEO ranking

Key Results:

● Improve domain ranking from 60 to 80 this quarter

● Increase traffic to the website by 30% in the next two months

● Improve visibility of indexed keywords by 50% this quarter

Establishing OKRs inspires improvement

Regardless of your size, establishing OKRs is a powerful tool to help your business grow and achieve meaningful goals. It's also a great way to keep employees accountable for their input by providing clear steps to set goals and measure progress.

Remember, you don't want to hinder creativity or add pressure by tying OKRs to compensations. Your goal is to experiment, learn, and improve.

Let Smith.ai help you reach you OKRs

Smith.ai offers many services that can allow you to focus on setting OKRs and mentoring your employees to succeed. Without meaningful OKRs, there is no path for your business to grow. Of course, every part of running a business is essential, but it can be hard to balance daily tasks with working toward your goals.

This is where Smith.ai comes in. We can handle some of the little things that your business needs to function every day. For example, we can handle SMS text answering, virtual receptionists, and a live-staffed website chat service to take care of all your customers’ needs. Plus, Smith.ai was recognized by Clutch as a top sales outsourcing provider.

We also book appointments, screen and intake leads, and help your team with our sales development service. We’re here to give your business much-needed support so that you and your employees can focus on the other tasks and services that will help your team establish and accomplish OKRs.

We’ve designed these and other services to help business owners like you, so set up a 30-minute consultation to discuss how Smith.ai can assist. You can also send us an email at hello@smith.ai or call us at (650) 727-6484 to see how our virtual receptionists can help you out. Our team is ready to answer pricing questions and get your business optimized.