In this 6-minute video, learn how to score your OKRs (Objectives and Key Results). We will break down how to evaluate the performance of your OKRs with your team, along with other tips for success.
Hi, everyone. I’m Erica Olsen from OnStrategy. Thanks for tuning in to our whiteboard series on OKRs That Work. We’re going to talk about OKR scoring today.
In our past videos, we’ve talked about how to create your OKRs, the process to develop and manage them, tools to use, and now scoring. To recap, OKR stands for objectives, or what you want to achieve, and key results, or how? OKRs are a methodology for goal setting and managing performance against those goals on a continuous, regular basis.
The standard approach for OKR management is quarterly, so that at the end of each quarter, you evaluate how you did against your OKRs, and then what your new or your recast OKRs might be for the next quarter.
To remind ourselves, when we say OKRs, we’re talking about a stack, a single objective, and a handful, three to five key results or deliverables of how you’re going to achieve that objective.
When we talk about scoring, we’re really talking about evaluating our performance. The OnStrategy team prefers to say evaluating performance as opposed to scoring because it feels a little punitive. So, let’s talk about performance and evaluating how we did, and how we did against our commitments.
As usual, there’s a couple of different ways to do this. We have chosen a slightly simplified way for performance evaluation, using simple red, green, yellow stoplights, just because people appreciate that, and it makes sense, and it’s simpler.
At the end of the day, you’re evaluating your performance. Where are you against where you said you would be? So, where are you against where you said you would be on a quarterly, monthly, or annual basis. So, you’re red if you’re less than 20% away from your target, or 20% from your target, and we’ll be more specific in a minute. If you’re within 20% of your target, you’re yellow. And if you’re within 10%, or you achieved it, it’s green.
So, let’s talk about that. Let’s pick the first one here: Diversify by expanding into three new markets. You can see that I have this marked as yellow. Why? Well, there’s two ways to evaluate the performance of an objective. One way is the average performance of your key results or your hows, your deliverables. The other option is the achievement against the actual metric, and that’s what this example is.
In the first case, I didn’t quite achieve my first KR. I did launch one custom offering, so I’m green. And I didn’t acquire three new accounts; I only acquired one so I’m way far away from that goal, so I’m red. The average performance of these three KRs then in the middle, and so this whole objective is yellow.
Now, I think that it makes sense to evaluate this objective based on the KRs because expanding into three new markets is a little bit hard to quantifiably have a specific metric that you could pull out of a system, for example.
Conversely, this objective is about growing revenue from new markets between 0% and 10%. For the quarter, I wanted to grow it by 2%. I achieved my two KRs, I hired two new associates, I launched an outbound sales campaign, but you know what, I only grew my revenue by 1%. In this case, I’m going to use this type of evaluation, and I’m going to give myself a red, because I’m way far away from the achievement of 2%, or the target of 2%.
Using past performance to help create new KRs
So, what’s important about that is, while these KRs are important, I actually really care mostly about growing the revenue from the new markets. So, when I go back to planning my KRs for the next quarter, I’m going to think harder about what it’s really going to take to grow revenue from those markets and make sure my KRs are more closely tied to the how I’m going to achieve that.
Another possibility is, in this case, same deal, I want to increase my pipeline by 5%. Let’s say I increased it by 6%. I totally achieved that metric, but I didn’t accomplish my two KRs. I’m giving myself a green because again, I care about the pipeline growth, and yes, these are important, and these are really good hows, but I achieved my objective of growth, and that’s what really matters.
Where do you want to be by when?
A couple of tips related to this is, but where do you want to be by when? So, this is a great example. This objective is an annual objective, growing from 0% to 10% in new markets, and the quarterly target is 2%. We need apples-to-apples the timeframe and the target need to be in harmony, either expressed in the statement, or in this case in parentheses, because I want a long-term, annual view, but I want a quarterly commitment. So, where do you want to be by when? Super important.
You know, this work informs individual performance evaluations, but it’s not the only thing. So that’s a really important piece, because you are hoping that some of these KRs and objectives are aspirational and some are committed. It’s important to be clear which is which.
Don’t be a sandbagger
And that really speaks to this last piece here, which is if everything is green, you’re kind of sandbagging. You need to make sure that you’re stretching a little, and you’re also committing. It’s kind of a nice thing to think about maybe achieving two-thirds or three-quarters of your OKRs, and that stands for your team too, of course. Back over here too, you know, this is really about self-evaluation, did I launch one custom offering? You know, the quality of that is your own evaluation. So that’s kind of the idea behind this, versus in some cases, this is more quantifiable growth, yes, no. But self-evaluation is definitely the name of the game, particularly when your key results are deliverables.
Don’t overthink it!
And don’t over plan. The notion of this is to make commitments to a certain time period. Think about how those actually worked, and then plan the next time frame.