OKRs Explained: What They Are & Why They Matter for Business Success

Setting goals for your organization and its people seems like it should be simple. Just figure out what needs doing, and who’s responsible for it. In reality, setting effective goals for an entire business gets complicated very quickly. One method may offer a solution, but what do OKRs stand for, and how do they actually work?

• What do OKRs stand for?
• Why are OKRs important for HR and L&D?
• How to set effective OKRs
• Common challenges when implementing OKRs
• Maximizing OKRs with performance management software
• Free OKR eBook

OKRs are a system for goal-setting which achieves alignment by connecting employee projects to relevant organizational objectives, which is actually a short definition. While there are a few different techniques companies use to set goals, OKRs have steadily grown in popularity over the years.

In this article, we’ll start with key definitions and a basic framework. We’ll also look at the various benefits, challenges and best practices for implementing them in your business. That said, the first thing we’ll do is answer the initial question set out by our title.

What do OKRs stand for?

When we discuss goal-setting on this blog, we’ll usually mention OKRs and SMART Goals together. But today, it’s time for OKRs to hog the spotlight for a bit. So, what does OKR stand for?

It’s short for Objectives and Key Results. There, go home, that’s all we have to say. Well, not really, but that name does effectively sum up what they are and how they work in a simple sense.

Objectives are usually top-level organizational goals selected to help achieve growth, like capitalizing on specific markets, or surpassing competitors in brand recognition. Key results are the specific projects feeding into those objectives.

OKRs were invented in the 1970s by a man named Andy Grove, who rose to prominence in the early days of Intel. One of Grove’s students in his time as a lecturer was John Doerr, who would go on to introduce the concept to companies like Google. From there, the momentum of their popularity kept growing.

We’ve answered this article’s titular question in the literal sense, but what do OKRs stand for more broadly as an approach to people management?

Why are OKRs important for HR and L&D?

There are plenty of people talking about OKRs, but the underlying logic of why they’re an effective tool is actually very simple. So, what do OKRs stand for as an element of modern workplace cultures?

Improved alignment

OKRs improve performance alignment by making your organization more transparent. Ground-level employees see how their work contributes to the company’s vision, while different teams and departments can see each other’s rates of progress.

Alignment is also about making sure projects actually serve business objectives, and that none are working against each other. With objectives and all their respective key results laid out, it’s easier to see how everything fits together. OKRs improve performance alignment by enabling more effective collaboration across the business.

Focused learning and development

Employee learning and development is essential for effective people management practices. While you might think OKRs are strictly a productivity-enhancing tool, not all company objectives directly concern profits.

Say you set an objective to have your dev team trained to work with new software by the end of Q3. Possible key results would include HR’s recruitment campaign as well as… you guessed it, learning and development!

Regular OKR updates show the rate of progress for people completing this software training, allowing you to adjust objective timelines or improve L&D delivery as necessary.

Businesses swear by them

We weren’t kidding when we said OKRs have grown in popularity. According to OKR International’s State of Industry Report:

• 90% of organizations used these frameworks in 2024.
  
• 97% of respondents believe the right work culture is essential to catalyze OKR success.
  
• 55% cite poor leadership as the main barrier to successful implementation.

The lesson here is that, if you want OKRs to work, you need a culture of accountability for everyone in your business, from employees to managers and senior leaders.

How to set effective OKRs

If you’re not sure how to set OKRs that will get results, this is the section for you. We’ve got a few tips to help you get the most out of this goal-tracking system. After all, what are OKRs and KPIs like them worth if they don’t go anywhere?

Best practices

If you want to use OKRs for performance management, it’s important to build the right habits and policies into your work culture. Here are a few tips to help you get started:

• Only set clear and attainable objectives: Objectives need to be unambiguous and specific. While they don’t necessarily need to be numerical targets, the endpoints of goals should be both obvious and realistic.
  
• Key results should be measurable: A key result should include a quantifiable KPI metric with a strong connection to your objective. If your goal is to improve your brand’s reputation with customers, key results for your survey team could include the number of surveys conducted, or the average customer rating each week.
  
• Simplify your framework: Don’t crowd objectives with too many key results, as it can muddy your aims and limit impact visibility. Similarly, be careful about weighting key results by priority and make sure all key results are important.
  
• Use a regular cadence: Occasional goal-tracking mandates ad-hoc progress updates by leaving people in the dark. Modern OKR tools allow for quick updates, preventing a regular cadence from being disruptive.

Common mistakes

Managing OKRs might seem complicated, but it’s fairly straightforward as long as you mind these common pitfalls:

• Unrealistic expectations: While it’s important to aim high, be mindful of the targets you set for key result updates. Setting expectations employees can’t meet will only end up demoralizing your workforce.
  
• Underestimating OKR adoption needs: OKRs only work when everyone involved takes part. If people aren’t following their cadence for updates, then the whole system becomes unreliable.
  
• Not using software: Some businesses still rely on manual spreadsheets and other documents to track goals. Not only does this leave room for error, it also takes a long time. Modern software streamlines OKR management, as we discuss further in.

Common challenges when implementing OKRs

Even if you do everything right, there can still be bumps in the road. Here are some of the challenges you’ll encounter when establishing OKRs:

• Lack of alignment: Sometimes, employee projects and company objectives don’t mesh. For example, if you’re trying to promote your brand as green, getting sponsored by a fossil fuel company would be counterintuitive. Review objectives and key results regularly to make sure they’re compatible.
  
• Progress tracking: People need to update their goals not just regularly, but consistently. WIthout a clear schedule and reliable reminders, it’s easy for OKRs to turn into a confusing mess.
  
• Key results confusion: It can be tempting to throw everything you can think of at an objective. After all, the more people collaborate, the faster it gets done. However, too many can cause progress metrics to become convoluted.

Maximizing OKRs with performance management software

Modern businesses have embraced performance management software as a means to deliver more effective management for goals and OKRs. Solutions like our own Perform365 offer tools to streamline the minutiae of company-wide goal-tracking. The market for OKR software is even competitive enough that Microsoft Viva Goals will be shutting down by the end of this year.

To finish up, let’s look at how performance management software can deliver more comprehensive OKR management for your organization:

• Aligning individual and team OKRs: Modern OKR software makes it easy to ensure you’re all working towards the same goals with the same priorities. If your whole marketing team is waiting on one person’s report before they launch a campaign, for example, that one person is unintentionally holding everyone else up.
  
• Real-time progress monitoring: Streamlining and automated admin take the busywork out of submitting or reviewing OKR updates. This makes a regular cadence more attainable, which means you have a moving picture of progress instead of static, outdated figures.
  
• Automated reporting and leadership insights: Automated goal-tracking reports highlight performance trends to help managers and team leaders to manage people and projects in a much more timely way.

Whether it’s delivering OKRs in Microsoft Teams for flow-of-work updates, or sustaining a stream of weekly, cross-department progress reports, modern performance management software like ours stands to seriously enhance your OKRs.

OKRs unite your people

One last time, what do OKRs stand for?

They stand for increased collaboration and accountability. They enable business success by making our efforts visible, and sustaining clear, timely communication between different people, teams and departments.

Using performance management software to structure OKRs makes life easier for both HR and your L&D admins. Processes that previously took countless hours of manual busywork can be completed in a few clicks, freeing up both parties to focus on the human elements of their jobs.