How to set OKRs for better performance management

By Kayleigh Tanner

OKRs, or Objectives and Key Results, is a goal-setting system used by organizations like Google, Spotify and Twitter, to set measurable goals within the performance management process.

Instead of setting completely disparate goals for each employee, OKRs help employees work towards a common goal or "result" through individual objectives. 

In this post, we’ll take a look at what OKRs are for, when you might use them and how to set OKRs for effective employee performance management.

What are OKRs for?

Put simply, OKRs are a way for employees to get aligned with their wider team and organization with their own objectives.

Traditionally, workplace goals might be something like “Improve presentation skills” or “Become a better communicator.” While these are important, they don’t provide any way of measuring success. OKRs aren’t just about working towards a goal - they show what success looks like.

The basic structure of an OKR is:

I will [objective] as measured by [key results].

Essentially, this means “where do I want to go?” and “how do I know when I’m there?”.

A real-life example of this might be:

Objective: I will improve customer retention by X% 

Key Results:

  • Improve customer feedback from X to Y

  • Increase repeat custom from X to Y

  • Reduce churn from X% to Y%

  • Increase customer referrals from X to Y

All key results should contain a number. This keeps the result measurable and gives the employee something to aim for.

OKRs also shift the focus from outputs to outcomes. For example, under a traditional goal-setting system, a marketing manager may be expected to create six ebooks a year to increase leads.

With OKRs, their key result may be to increase leads by 20% in a year, which may be achieved with a single great ebook. This can help shift from “working hard” to “working smart.”

What are the benefits of OKRs?

Some of the key benefits of OKRs for performance management include:

  • More focused performance improvements. Instead of improving in 10 areas by 5% each, employees know exactly which skill they need to focus on, meaning they can instead improve in one desired area by 50%.
     

  • Better strategic alignment. If an entire team’s goals are aligned, this will ultimately be better for the organization than taking a scattergun approach. OKRs ensure that everyone is progressing in the same direction for better strategic results.
     

  • More engaged employees. People like having goals to work towards, and putting numbers against those goals means that they have something concrete to work towards. Once they have achieved the key results listed in their OKRs, they will benefit from a sense of accomplishment and feel motivated to set their next set of goals.
     

  • A more cohesive company culture. OKRs make the goal-setting process more transparent and focused.

How do I record and track OKRs?

How many times have you set goals as part of your annual appraisal and then never revisited them? Unfortunately, this is the case in many, many organizations.

OKRs actually work best when they’re shorter-term goals - perhaps quarterly. They should then be revisited in every performance conversation, so you can find out how employees are progressing towards their goals.

Performance management systems like Totara Perform span the full spectrum from traditional performance management to new practices. In Totara Perform, you can add OKRs and refer back to them every time you discuss an employee’s performance. You can set your own schedule, whether your OKRs last for a month, a quarter or for a whole project.

Setting OKRs in a dedicated system—rather than using paper-based performance management tools or noting them down in Word documents—ensures that they remain front of mind and become a useful tool for managing performance.

Interested In Totara Perform? 

Schedule a personalized demo to see how Totara Perform helps you enhance workforce productivity, align your organization and tailor agile or traditional processes to meet your unique needs.

                                                Book Your Demo