OKR guide for NZ employers: Examples and best practices

Objectives and Key Results (OKRs) are one of the best ways to set goals in your business. We’re not just talking about ‘busy work,’ either. Whether you’re a startup owner looking to grow or a Small to Medium Enterprise (SME), OKRs help your employees buy into your overall mission, improving productivity and morale.

In this guide, we’ll walk you through what OKRs are, the importance of goal setting and how you can implement them. When combined with key performance indicators (KPIs), OKRs can help you take your business to the next level, while also helping your team to enjoy their professional development. It’s a win-win!

Our guide includes: 

• How OKRs work
• Why they help businesses
• Our advice for setting them effectively
• Common mistakes

What are OKRs?

OKRs is a goal setting framework. Coined by John Doerr in his book Measure What Matters, OKRs shift the focus away from the individual and bring in the whole team. This gives employees a tangible sense of achievement, fostering better buy-in. 

They’re also easy to tie to your overall mission, as no employee ends up siloed. Instead, in order to achieve the objectives set out as a result of the OKR process, they need to work together.

Why is goal-setting important?

Goal-setting has been repeatedly proven to help improve your workforce’s focus, alignment and accountability. Without goal setting, employees can easily float along, looking busy without actually adding value to your business. 

Goal setting gives them targets to work towards, while also providing the employer with visibility across what’s being done to achieve those goals.

OKRs vs. KPIs

OKRs and KPIs are different ways of tracking and measuring performance in the workplace. Here’s how they stack up against each other.

Key Performance Indicators (KPIs)

Key performance indicators (KPIs) are metrics that measure current performance. Some KPIs you might come across include retention rate, cost-per-hire and average employee tenure.

KPIs can be altered to suit the role of each employee. They’re individual targets, unlike OKRs, which are more-team orientated.

Objectives and Key Results (OKRs)

OKRs, unlike KPIs, aren’t metric-based. Instead, they’re a framework that’s designed to align the performance of a team within your business, or your overall workforce. 

There are three parts to OKRs:

• Objectives: The aspirations or goals of your business
• Key Results: The metrics involved in measuring progress
• Initiatives: What it’ll take to get there

Unlike KPIs, which are strictly number-based, OKRs provide the roadmap to reaching your business goals. 

Are KPIs better than OKRs?

KPIs and OKRs are used in different scenarios. KPIs are better for continually tracking performance but don’t typically drive real change on their own. Setting a KPI like retention rate is great but that doesn’t provide a way of improving retention rate.

OKRs, on the other hand, can help drive real change within your business. Taking the same example of increasing retention rate, an OKR might look like:

• Objective: Improve staff retention rate
• Key Result: Increase staff retention rate by 10% over the next 12 months
• Initiatives: More frequent professional development, regular performance reviews, weekly 1:1s

How KPIs can help track progress of OKRs

Setting KPIs can help you and your team track the progress of OKRs. As shown in the example above, you can tie KPIs in as part of the OKR process, so you have metrics that help you identify how progress towards your goal is going.

Using the example above, the KPI of retention rate ties in as the “Key Result” part of the OKR. On its own the retention rate KPI isn’t enough to provide a pathway to increasing it. However, the OKR gives the KPI a framework and a method to be achieved. 

The issue with using only KPIs

KPIs, when used on their own, don’t provide the structure of an OKR. They can lead to a focus on the number, rather than the process. 

For example, there are ways of improving retention rate that take a broad approach, such as inflating salaries beyond market rate or pushing out people during the probationary period if you think they’re a flight risk. However, this can harm your business.

Not ‘either/or’, but both

Tying KPIs and OKRs together can help you achieve your goals, without the risk of getting obsessed with the metric like in the example above. 

By developing a sustainable roadmap to achieving your goals, as set out in the OKR process, you can still meet your key metrics in a way that makes sense for your business.

How to write your own OKRs

Looking to write your own OKRs? Here’s how you can bring them to life:

1. Work out what your priorities are. These will be based on your current business strategy.
2. Form your Objective based on the priorities you’ve listed above. What does your business need to change right now to thrive?
3. Map out your Key Results. Try and keep the list as short as possible, rather than trying to solve everything at once.
4. Plan out your Initiatives by tying these to each key result. This will help you identify the key actions that’ll actually move the needle.

OKR examples and tips

Looking for help mapping out OKRs? We’ve put together a few examples based on the HR, sales, customer service and operations industries.

Industry	Example of good Objectives	Examples of good Key Results
HR	Decrease cost-per-hire	Reduce cost-per-hire by $5,000 over the next six months
Sales	Increase number of enterprise-level sales	Bring on three new enterprise customers in this financial year
Customer service	Improve customer satisfaction level	Improve customer satisfaction level by 15% in the next quarter
Operations	Improve workforce understanding of processes and policies	Reduce number of compliance errors by 25% in the next six months

Common OKR mistakes to avoid

While OKRs can help your business grow, there are a few common mistakes that you may run into when going through the framework. These include:

Overloading goals

Try and minimise the number of objectives you’re setting. Too many and you’re setting the team up to fail.

Poor measurement

Your Key Results need to be directly tied to your objectives or you and your team may lose sight of what you’re working towards.

Lack of alignment

If your OKRs don’t move the needle then they may end up being busy work. Everyone needs to be on the same page and working towards the right goals.

Pre-implementation assessment

Before setting OKRs, you need to understand how they can integrate within your business’ processes and systems. You’ll want to outline who is leading the development of the OKRs, who is involved and what happens if the OKR is not achieved.

You’ll also need to ensure everyone understands what an OKR is and their purpose. 

Stakeholder buy-in strategy

Getting buy-in from everyone in your business can make the difference between successfully bringing in OKRs and the framework getting forgotten. 

Having a session where you introduce the OKR framework and why your company is using them is an effective way to get everyone aligned.

Pilot program design

A pilot program can help you test your business’ readiness for the OKR framework and iron out any kinks in your implementation. Feedback from this team can then help you refine your rollout, including providing extra education on different parts of the process where necessary.

During this time, you should also look to develop OKR documentation, which outlines:

• Why you’re bringing in OKRs
• How OKRs can help bring everyone into alignment on strategic business goals
• A roadmap for writing OKRs, for those who haven’t used them before
• Who to contact about OKR-related questions 

This documentation, like the rest of your workplace’s policies and procedures, should be made available to everyone through your document-sharing platform of choice.

Employee engagement strategies

Developing OKRs is one thing but getting your staff motivated to achieve the objectives set is another.  You can keep employees moving in the same direction by:

• Encouraging your employees to set their own OKRs
• Regularly communicating to the wider business about the progress of the OKRs
• Use OKRs as part of the feedback process (eg. 1:1s and performance reviews)
• Make sure both you and your employees are talking about the OKRs on a consistent basis, rather than letting them fade into the background

OKR cadence: quarterly vs. annual planning

There are a couple of different ways you can use OKRs: setting them quarterly or setting them annually (or both). 

Setting quarterly OKRs helps if your business requires agility and speed, especially if your direction is often determined by market conditions. However, shorter-term OKRs don’t always allow for radical transformation.

Annual OKRs, meanwhile, are longer-term, high-level roadmaps, which can be useful if your business needs to shift its overall direction. For example, if you’re moving from a B2C to a B2B model, a quarterly OKR may not allow enough time for this shift to properly occur. An annual OKR, on the other hand, provides enough runway for such a large transformation.

Planning around your OKRs should also be tied to your industry’s cycles. This’ll depend on your key dates, whether those are Financial Years, sprints or quarters. 

Ultimately, it’s up to you and your business needs as and when you set OKRs, but using a combination of quarterly and annual OKRs can help you make both short and long-term business improvements. 

Example: Quarterly OKR calendar 

Setting up an OKR calendar? Here’s an example of a way to set and track a quarterly OKR:

1st week of the quarter: Hold an OKR setting session and set Objectives, Key Results and Initiatives

Weekly: Hold 1:1 sessions to track how each employee’s going with their Initiatives

Fortnightly: Circulate Key Result updates to the wider business

Monthly: Hold team-wide OKR review sessions, with time to adjust Initiatives if necessary

Example: Annual OKR calendar

If you’ve set an annual OKR to achieve a longer-term goal, you can use the framework above — with a couple of adjustments. 

1st week of the year: Hold an OKR setting session, and set Objectives, Key Results and Initiatives

Weekly: Hold 1:1 sessions to track how each employee’s going with their Initiatives

Fortnightly/monthly: Circulate Key Result updates to the wider business

Monthly: Hold team-wide OKR review sessions, with time to adjust Initiatives if necessary

Each quarter: Hold business-wide OKR review sessions, including feedback from leadership, to ensure the OKR is still relevant 

OKR scoring and grading systems

Scoring and grading your OKRs can give a high-level understanding whether your goals have been achieved or you’ve missed the mark. Here are some different methods of scoring and grading.

0.0 to 1.0 scoring method

The most definitive way of scoring your OKRs is from 0.0 to 1.0 for each Key Result. This looks like:

• 0.0 to 0.3 – Limited progress was made, with a lot more to be done
• 0.4 to 0.6 – Moderate progress was made but the goal wasn’t fully achieved
• 0.7 to 0.9 – Strong progress was made and the goal is within reach
• 1.0 – The goal was fully achieved

You can then calculate the average progress across all Key Results by adding up the scores for each Key Result, and dividing by the number of Key Results set. 

Colour-coded systems

Alternatively, you may want to grade using a colour-coded system. This may look like:

Red (failure to progress): 0.0 to 0.3

Yellow (some progress made): 0.4 to 0.6

Green (strong progress): 0.7 to 1.0

Qualitative vs. quantitative measures

By tying both qualitative and quantitative measures together, you can form a complete picture of the effectiveness of an OKR and the progress made towards achieving it. 

For example, if you’ve been looking to improve employee satisfaction, then you can qualitatively measure the progress by interviewing employees and getting a sense of their buy-in. Meanwhile, quantitative measures might look like employee satisfaction ratings and measuring absenteeism. 

Together, these approaches give you a more rounded view of the work you and your team have been putting in, helping you better understand what impact your OKR has made on the business.

Achieving ambitious OKRs with Employment Hero

Setting OKRs can help move your business forward and improve employee engagement. If you’re using Employment Hero’s Goals module, then anyone in the company can view their colleagues’ OKRs, as well as the company-wide goals. This improves the visibility of the team OKRs for individual employees, as the goals and vision for the company are easily communicated. 

Ready to see how you can unlock your team’s potential with OKRs?