Effective performance management is essential to growing and scaling your business. It allows you to tap into employees’ abilities, motivations, performance, and – of course – get the results you want.

“What gets measured gets done” – Peter Drucker

With the right performance management tools and processes, you can ensure your employees, resources, and systems are all aligned towards achieving collective business goals. This is exactly what OKR stands for.

What Is OKR in Simple Terms?

Objectives and Key Results (OKR) is a framework used to define measureable goals and track key results. It is designed to help businesses set ambitious and far-reaching goals, while staying on course in a fast-paced environment. 

One of the main advantages of OKRs is that they can be adapted by any company and implemented at multiple levels. There are three levels:

• Company level. OKRs at this level focus on broad metrics and represent the core business strategy. What does your company want to achieve and what is the ideal outcome? 

Example: 

Objective > Become the most visited online retailer in your city.

Key Result > Process 10,000 orders daily.

• Team level. At this stage, OKRs zoom in on group objectives that contribute towards achieving the company’s ultimate goal. What is a priority for your team and what is the desired result?

Example: 

Objective > Increase online retention rate.

Key Result > Decrease page load speed to 1 second.

• Individual level. At this level, OKRs focus on an individual’s key accountabilities and measurable goals that will ultimately add value to the individual and their role in achieving the company objectives. 

Example: 

Objective > Optimize SEO ranking for specific keyword.

Key Result > Receive 75% traffic on website through organic search.

What’s the Difference between an OKR and a KPI?

The main difference between an OKR and a KPI is that the former is a strategic framework, whereas the latter is a measurement that can exist within this framework. Additionally, OKRs are bold and ambitious goals that drive performance and define measurable steps towards an ultimate goal. As a result, OKRs are optimal for driving innovation, improving processes, and solving problems at a strategic level:

• Objective (big goal): Increase customer retention rate by 60% at the end of Q4.
• Key result (quantifiable outcome): Address customer queries within 24 hours and resolve them within 48 hours.

KPIs, on the other hand, are performance metrics that measure the success of an ongoing process or activity. They are most effective in identifying problems and monitoring performance at an operational level. Hence, they are less ambitious and much easier to achieve than OKRs. Here are some examples of KPIs:

• Business process KPI: Average time to complete task.
• Service level agreement KPI: Percentage of correspondence replied to on time.
• Efficiency KPI: Number of customer complaints.

Our Top 5 Tips for Creating and Implementing Great OKRs in Your Business

• Keep OKRs simple. Set objectives that are realistic for you and your team. Avoid having more than 3-5 objectives with 2-3 key results each at any given time. Otherwise, you risk spreading yourself too thin and losing focus.
• Write measurable key results. It’s important that you are able to measure your key results in order to know when you have accomplished your goal. Create key results that you can track and report on, either using a specific number or percentage.
• Promote transparent OKRs. Share your OKRs across all levels so that everyone knows what the goal is and understands the steps needed to get there. Publicising your OKRs will increase collaboration, accountability, and employee engagement.
• Align your goals. Make sure everyone understands the importance of the role they are playing by aligning and connecting each objective to the bigger picture. Schedule regular meetings with team members to discuss progress and ensure you’re on the right track.
• Celebrate small wins. Recognise and reward milestones as they come through. It’s crucial that you celebrate the hard work and effort put into the OKRs. This positive reinforcement will push team members to work even harder towards success.

Talk to our team about how you can set goals and targets within your business – email us on projects@commongoalconsulting.com.au or call our Director, Nikki Jenkinson, on 0472 545 584.

www.commongoalconsulting.com.au