Aligning Your Business with OKR Goal Setting
Adopting OKR goal setting can help organizations achieve better alignment between individuals, teams, departments, and throughout the entire business.
The process begins with the company setting its top three or four objectives for the year and defining key results for each of those objectives.
Once these OKR goals have been documented and shared by organizational leaders, every department, team, or working group can establish its own OKR goals that align with those of the organization.
Finally, individual employees can establish OKR goals for themselves that align with the objectives and key results of their department or team.
This process of implementing OKR goal setting helps align the efforts and focus of the entire organization towards achieving the objectives and results that matter most for the overall success of the business.
OKR Goal Setting Best Practices
Choose Challenging Objectives
According to John Doerr, Objectives should never be business-as-usual. They need to be challenging, with a real possibility of failure. Some proponents of OKR believe that Objectives should essentially be impossible, with the idea that striving for the unattainable pushes teams and individuals to stretch further and accomplish more than they would have otherwise.
Objectives should also be limited in number, with each team or individual pursuing no more than a handful of Objectives at any one time.
Key Results Must be Measurable
Key Results are used to quantify outcomes in OKR goal setting. To allow this, Key Results have to be objective and measurable. Every Key Result you identify should have a number attached to it, and you must be able to reliably quantify that metric to know whether the Key Result was/is being achieved.
Target 70% Success for Key Results
On average, teams using OKR goal-setting should aim to accomplish 70% of their Key Results during each quarterly reporting period or goal-setting cycle. If a team accomplishes 100% of its Key Results, this is taken to mean that the Objective wasn’t difficult enough and the Key Results were too easy to accomplish.
A 70% success rate on Key Results is considered the “sweet spot”, indicating that the objective was realistic enough for teams to make progress but too aspirational to be fully completed.
Implement OKR Transparency
For organizations implementing OKR goal-setting at the company, department, and individual levels, increasing the transparency of OKR goals can facilitate better communication and collaboration between departments.
When John Doerr worked at Intel, each employee had their own OKR goals posted outside their office, so everyone always knew what everyone else was working on.
Decouple OKR from Compensation and Bonuses
OKR goal-setting is meant to encourage risk-taking and motivate employees to strive for ambitious targets, but when OKRs are tied to compensation and bonuses, employees are incentivized to set easier targets that make it more likely they will earn their full compensation.
Acknowledging this, proponents of OKR goal-setting recommend that employee compensation should never depend on Objectives and Key Results.