Laura Iñiguez, Content Manager at Hirebook
Laura is a content and social media strategist with deep experience in Employee Engagement, People Management, and Culture. She works with Hirebook to bring their innovative best practices to life through content, videos, and webinars seen by thousands around the globe.
Pub: July 28 2021
Upd: June 21 2022
OKRs (Objectives and Key Results) are all about measurement of performance and meetreting objectives. They are a company’s best ally in the search for success. But if we set OKRs arbitrarily without specific Objectives and/or Key Results, we’d just end up with incomplete results and won’t be able to measure their impact on our organization.
Table of Contents:
- The Role of Key Results
- Anatomy of a Key Result
- OKR Grading
- Reviewing OKR Scoring
- Determining OKR Success
- How to Determine if your OKRs are Bad, Good or Great
The Role of Key Results
The OKR methodology is a powerful tool that helps us structure our goals. When setting OKRs, each Key Result should be measurable and have a target. Measuring outcomes is what truly matters and what will steer us towards victory. But it is still common to see people struggling to understand what good Key Results look like and why measuring outcomes is important.
The main role of Key Results is to help you specify what you want and mean by a determined Objective. For example, if you have an objective to “improve your health”, we can agree that “improving your health” means different things to different people. Here is where Key Results come in handy and allow you to specify what “improving your health” exactly means to you. KRs answer the question “what steps or actions do I need to complete in order to achieve my Objective?”.
To sum it up: KRs help you pinpoint what really matters.
Anatomy of a Key Result
A metric is what makes the Key Result “measurable”. Some usual metrics used for products or customer success include NPS (Net Promoter Score) or MAU (Monthly Active Users). SaaS companies focus more on MRR (Monthly Recurring Revenue and Churn Rate. Production companies mostly use operational metrics.
Setting the metric of a KR is where most people get somewhat confused. Make sure you’re able to track the metric you want before you assign it to a Key Result; if you don’t clarify this you won’t be able to see your progress accurately.
Most of the benefits that the OKR methodology offers, like better alignment across the organization and transparency, require that the OKRs themselves are clear and understandable. So, the Key Result Title basically englobes and communicates in a transparent way the result you want to achieve.
The Title also puts each value in perspective. For example, if your KR is to “get new customers”, the metric here is the amount of customers, but you can make your title more specific by adding a certain amount of new customers you want to get, or even challenge yourself or your team by setting a title like “double the amount of customers”.
- Start and Target Value
A Start Value is simply the value your metric has at the start of the determined time period you set to achieve each KR. A Target Value is the value that you want that metric to have at the end of that determined time period.
Establishing the right target value could be difficult if you don’t have a certain parameter yet. In that case, you just need to have sort of a “trial period” (like a couple of weeks) to collect that parameter. Maybe the data collected in that time won’t be specific enough, but it can only get more specific through time and prove to you how fast you and/or your team achieve those KRs.
Rick Klau, partner at Google Ventures, recommends scoring Key Results between 0.0 to 1.0, although that is not mandatory, and 0% to 100% or ‘A’ to ‘F’ as useful grading options. But in the end, you can score KRs using any format that works best for you and your organization.
To calculate a score, you have to divide the target set by the final result. Using the example above, if your team’s KR was to “get 100 customers” but they only got 50, their final score would be 0.5, but if they got 20, the score would be 0.2. Having this score we can assign a grade to the Key Result.
When grading a Key Result, having a score of 0.6 to 0.7 may feel like barely accomplishing it. If a team or single employee has that average score they’re probably just meeting what is asked of them and pushing themselves a little. But of course, what we want is to go above and beyond and get a score of 0.8 or higher! It’s important to know that a low score (0.2 - 0.4) doesn’t always mean that your employees are not working hard enough, a low score should be looked into and reviewed to see what is preventing your employees from scoring higher. Maybe the problem is not them, maybe the KR needs to be tweaked.
If your Key Results are not exactly measurable by numbers, but their targets are more date-focused like “print the new magazine issue by *date*” or “hire new IT analyst by *date*”, then the scoring of this KRS will most likely hit the 1.0 mark pretty often.
Reviewing OKR Scoring
If your employee or your team didn’t go so well on their KRs, don’t worry! The worst that could happen is finding out you need to adjust them and this is especially common when first introducing the OKR methodology into your organization.
Start by asking “what went wrong?”, “were there blockers we didn’t identify?”, “was there an unusual situation?”, “what could we have done differently?”, “what else can we do?”. There is no one right way to do OKRs, but you need to find out the best way to take advantage of them, and learning from failure is an opportunity to figure that out!
To make this OKR process faster, review teams’ and company wide OKRs every certain amount of time, like every quarter for example. Have your managers or every team’s head explain their grades and ask them what they plan to do differently to get closer to the target next quarter.
Determining OKR Success
To understand your OKR reporting and determine their success, Rick Klau suggests that one way to assess an entire OKR is to average the Key Results scores that belong to one Objective. This will tell you how well the KRs for an Objective were completed. But, it is possible that KRs scored great and still fail at the completion of the Objective.
Even though Key Results may be completed, the Objective should be reviewed. It can also happen that the KRs don’t affect the Objective, or the KRs didn’t impact as expected considering the time, money, and effort invested.
If your organization has an ongoing Objective across every month or quarter like “print the magazine by *date*”, you can try different KRs every time span to learn what tasks and activities are more effective to reach the goal. Remember that it’s ok to experiment!
How to Determine if Your OKRs are Bad, Good or Great
A good friend of mine – Michael Bungay Stanier, author of Three Essential Coaching Habits for the Time-Crunched Manager and The Coaching Habit: Say Less, Ask More and Change the Way You Lead Forever also wrote Do More Great Work: Stop the Busywork and Start the Work that Matters. In the latter book, he presents a number of great tools to help you figure out if the work you do is Bad, Good, or Great. While listening to him the other day, it dawned on me that these same tools are exactly the right tools to use to assess our OKRs (Objectives and Key Results).
I am going to paraphrase (and re-phrase) Michael’s great work for our purposes. My apologies to anyone who has read his work and is offended by the butcher-job I am about to do…
The essence of the story is this – for all of us, the work we do fits into three categories (you got it) Bad Work, Good Work, and Great Work. Now, you could easily make up your own definitions for these three categories, but here’s a starting point:
Bad Work is a waste of time, energy, and your life. It shows up as bureaucracy, interminable meetings, and outdated processes. Just stop doing this stuff!
Good Work is the familiar, useful, and productive work you do – and you likely do it well. Think of this as the “business as usual” stuff. Sometimes it is interesting, sometimes it is mundane but you recognize its necessity, and so are happy enough to do it. Good Work is vital and delivers next quarter’s returns.
Great Work is what we all want more of. This is work that is meaningful to you. It has an impact. It makes a difference. It inspires, stretches, and provokes. Great Work is the work that matters.
Well, our OKRs fit into those same three categories.
Wouldn’t it be great if we could categorize our OKRs into those three groups, and then see how much of your working life is spent on each type? You could then begin figuring out how to manage your mix until you got the right number of Bad, Good, and Great OKRs for you!
So Michael has developed a simple tool to assess the work you do – and we can steal that for categorizing our OKRs…
What you need to do…
Here’s the idea… on one axis is what you care about (from high to low) and on the other is what the organization (“they”) cares about, from high to low. Now with a pen/pencil/post-it-note® place your OKRs for this quarter into one of those four boxes.
How to interpret your OKR mix…
Bad Work lives in the bottom left square – "They don’t care / I don’t care". If the majority of your OKRs are there…you are probably very unhappy at work. Do whatever you can to get rid of those OKRs (Important note – those same OKRs may be the ideal ones for someone else… and they should have them, not you!).
The top right square – "They care / I care" is most often the top end of your Good Work, and, if you are lucky, Great Work. This is where happiness lives. Now, it is very unlikely that you will have all your OKRs up here, but if you do – WOW! You probably love your work!
Good Work lives in the other two squares. If you are typical, most of your OKRs will be in these two squares. The trick here is to make sure that the mix/number of OKRs in each square is good for you.
A little more on your OKR strategies… for those that are in the "They care / I don’t care" (bottom right) square – Embrace adequacy… “good enough” wins here. Anything more is taking time away from the Great Work that you could be doing.
The top left square is often Great Work or potential Great Work – "I care / They don’t care" – as well as some Good Work. Unfortunately, the organization is not interested in those Great Work OKRs. This is work you are thrilled about doing, but you are not getting the attention you think it deserves. Here you have two choices: sell the organization on this OKR and shift it to the “They care/I care” top right box, or 'let this work die a sad and lonely death' (Michael’s words).
Michael tells us that there is no “right mix” of Bad/Good and Great work, but typical ranges are 10-40% Bad Work, 40-80% Good Work, and 0 to 25% Great Work.
Track the mix quarter over quarter. If by the end of the year you have shifted the mix to where you want it, perfect! If not – try harder next quarter.
If you have a performance measurement system at work, you should even be able to see the performance you are achieving in each of these squares – and which category of OKR you make better progress on.
The OKR framework has proven to bring great benefits and results to thousands of companies across the globe. We hope our OKR Software helps you skyrocket your organization’s performance and achieve new levels of success!