The acronym OKR stands for Objectives and Key Results and is an excellent tool for all sizes of organizations to set, track & achieve their goals. OKRs can be set at various levels depending on the organization’s vision and business plan. The process usually involves setting bold and aspirational annual goals broken down into workable quarterly goals. Appropriate key results or are then measured for each objective – this measurement can either be qualitative or quantitative.
The different OKR levels:
While setting up your OKR system, it is essential to decide at which level you want to create your OKRs. There are four primary levels for you to choose from.
- Company OKRs
- Department OKRs
- Team OKRs
- Individual OKRs
To set up OKRs effectively, achieve your most important goals, and ensure that the necessary results are completed quickly, you will likely need to use a combination of these levels. This article deals with choosing a combination of OKR levels that work best for you.
1. Company OKRs
Also called corporate OKRs, this is a basic level of setting OKRs. Hierarchically, this level represents the highest level of OKRs in the organization. The objectives at this level reflect the long-term vision and strategy of the company.
Objectives at this level include revenue growth, expansion of the product line by launching new products, expanding into new markets, becoming an ’employer of choice’ etc. Key results must be determined to keep track of the progress and achievement of these objectives.
For example, if the main objective is ‘to become an ’employer of choice’ concerning work culture,’ all key results must contribute to that primary goal.
Key results under this objective could be:
- to increase positive employer reviews online from 65% to 80%
- to increase applications from the Top 5 institutes to the internship program by 50%
- to increase coverage in the local press and leading publications.
The critical results defined at the company level OKRs flow to the levels below, typically to the department level. This top-down flow allows departments to focus activities and resources on the goals critical to the growth and success of the company. The essential consequences at the corporate level sometimes become objectives at the department level.
2. Department OKRs
Department-level OKRs usually flow from company-level OKRs. However, not all company OKRs may relate to all departments. OKRs assigned or adopted by a department should not only be critical to the company but also relate to departmental goals and objectives in terms of importance and urgency.
Considering the company’s goal of attracting top talent by becoming an employer of choice, specific departments may choose to offer a hybrid-working system to their teams.
Here, the key results would be first to identify which roles could successfully work in a hybrid model without affecting the overall efficiency and culture of the organization. Next is to prepare detailed job descriptions and personas that match these roles. Other KRAs (Key Result Areas) would be to identify the support that those working from home would need, prepare the budgets to implement and support this hybrid setup, etc.
Introducing a hybrid-work system can only be implemented by some departments. This objective might apply to the customer-services department. Creating a hybrid work environment attracts talent who might not have otherwise considered the company as an employer. Thus improving the chances of being considered an ’employer of choice’.
3. Team OKRs
The team level is next in line. Here, OKRs can be set for a particular team. Depending on the type of critical results, cross-functional teams can also be set up to achieve them.
For example, let’s consider the previous example of setting up a hybrid work process. It may be the objective of the customer services department, but HR could also become involved in consulting on company policy, attendance monitoring, or other rules and regulations. IT may also be needed to advise on infrastructure requirements etc.
But, the involvement of the entire HR department or IT department may be optional. One person from each department may be assigned to form a cross-functional team that works together to achieve the final key result.
Each person on the team is assigned clear responsibilities on the expected individual or team contribution to the overall objective.
OKRs can also be assigned to specific teams within departments. Suppose the overall goal is to improve work culture. In that case, teams within a department may be tasked with conducting one-on-one interviews with team members to understand better what motivates them, increasing positive feedback in anonymous surveys to 80%, etc. Similar initiatives undertaken in every team will lead to overall positivity and cascade effect on the organization’s work culture.
4. Individual OKRs
Also referred to as personal OKRs, this is the last of the OKR levels. These OKRs are usually derived from department OKRs or team OKRs. As the name suggests, they are assigned to individuals within the department or team. There is a difference between personal OKRs and team OKRs.
For example, individual responsibilities assigned to individuals in a cross-functional team may be considered personal OKRs. Another example is an HR team member being asked to take charge of CSR initiatives. This ties in with the overall company OKR of being an ’employer of choice’. Here, key results could include choosing CSR initiatives that align with the company’s mission and vision and planning activities toward achieving the CSR initiative.
How to choose OKR levels?
What combination to choose while setting your OKRs will depend on factors like where you are in the OKR journey, the size of your organization, and your organization’s primary goals or objectives.
Company OKRs are almost always in the mix. But other levels may or may not be included.
Choosing only company-level OKRs:
A company just wetting its feet with the OKR system may only want to begin with a few corporate OKRs. This may also apply to small companies with less than 20 employees. In this case, the commitment of the company to OKRs is clear. Individuals may be in charge of key results, but all effort is directly related to achieving company OKRs.
Combining company and department-level OKRs:
A company may also decide to stop at the department level. This means OKRs are not assigned to individuals or teams in their capacities. However, to bring accountability in the process, specific vital results may be assigned to managers or heads of departments (HoDs). Here, the manager or HoD to whom the key results are assigned does not take them further into personal OKRs. They contribute towards the department achieving its OKRs.
Combining company-level and personal OKRs:
This is another possible combination. It can be done without involving departments or teams because the individuals chosen in this instance are high-placed officials within the organization.
For example, it may involve the CEO and the key people reporting to them. Viz. the Chief Finance Officer (CFO), Chief Marketing Officer (CMO), and Chief HR Officer (CHRO). The OKRs from these chief individuals may then be passed down to their directors, managers, and HoDs.
It works well because there is complete clarity on who is in charge of achieving the critical results required. However, challenges arise when a key person leaves the organization or is replaced. To avoid issues with this transition, many companies prefer to assign department OKRs rather than only individual OKRs.
The combining company, department, and individual OKRs:
This is a rarer combination but is used by a few companies. Assigning OKRs at the department and individual levels may become complicated, especially when reviewing the process. Although it might make sense to use only two levels and involve the third as needed.
If you follow this process, ensure extremely clear guidelines while assigning the OKRs, especially while defining accountability and responsibility for each OKR.
Choosing cross-functional OKRs:
Sometimes, achieving an objective or an ambitious goal may require the involvement of more than one team. A cross-functional team may then be specially put together for the purpose. This team is not a ‘forever team.’ It is put together to achieve a specific objective, and all team members return to their regular roles once the objective is achieved. Individual OKRs may also be involved.
The best part about this process is that it is flexible. If one approach needs to be revised for you in the way that best serves your needs, you can re-evaluate and change the formula. Also, it is widely accepted that OKRs can be less than 100% achievable. If they are, consider that they may need to be more challenging. A 60%-70% success rate is considered excellent.
In our experience, each organisation has its own cultural needs and will require a combination of different levels of OKRs. However, very few organisations actually need all levels of OKRs irrespective of how large they are. Thus, feel free to experiment with the best combination of OKRs for your organization.