OKR

OKR is an acronym for Objectives & Key Results. It’s a goal-setting methodology based on writing down the goals, prioritizing them, and defining the expected outcome of each goal in a short and specific manner. This ensures that those working on them can understand and easily remember them. This strategy was developed and implemented in the form of Intel in the 1970s.

An OKR goal addresses one thing for a given period. Goals should be short and inspiring. At the company-wide level, several goals can be adopted (the fewer, the better). OKRs don’t describe everything a company or team does. Furthermore, it’s also important to set KPIs.
Key results are a set of metrics that help assess progress toward achieving a goal. Each goal should be assigned 2 to 5 points (outcomes). Results can (and should) be reviewed regularly.

Goal Example: Improve customer satisfaction with the software produced by the company.
Key Results Example:

  • Measured by the number of critical bugs related to software quality reported by the customer during UAT (user acceptance testing). KPI: The percentage of critical bugs is less than 20%
  • Measured by the number (as low as possible) of free MDs (man days) awarded to the customer as part of the company’s bug fixes. KPI: The percentage of free MDs is less than 1.5% of the project value
  • Measured by the number of positive responses to the satisfaction questionnaire conducted during regular meetings with the customer (once per month). KPI: The average satisfaction rating is 4 out of 5 points

Note: Key results should be measured regularly and frequently, so they shouldn’t lag behind the established goal, e.g., “measured by the NPS score conducted after software implementation.”
The actions we take to achieve the goal are not considered key results/outcomes. For the above goal, an action that is not a KR would be, for example: Implementing an NPS – a customer satisfaction rating system.

Step 1:
Set goals at the company/organization level

The board, management team, or other individuals responsible for setting goals at the organizational level should set 3-4 OKRs that they want to achieve within a year.

Step 2:
Set Related Goals at the Department/Unit Level
Each part of the company/organization sets goals that align with the overall goals it can achieve within a quarter. Quarterly goals (those shorter than a year) help employees understand the overall goals.
Step 3:
Set Team Goals

As above, the team should collaboratively set goals for itself, quarterly. The goals should align with departmental and organizational goals.

Step 4:
Regular monitoring of KR, goals, and KPIs

Monitor goal achievement at least once a month.

Other tools  in the area of
Setting goals

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SMART

SMART is the most popular methodology for setting effective goals (which should be “smart,” meaning they meet all five assumptions behind this acronym). Are your goals and those of your team smart? Do you have any defined goals at all?

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Goal Cascading

This section of the Toolbox delves deeper into the topic of goal cascading in organizations and provides an example of how to define team and individual goals that align with organizational goals. How does goal cascading impact employees?

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