OKR Grading Explained

There are many aspects of Objectives and Key Results (OKRs) that are the key drivers behind why the framework works so well. The one that we are focusing on here is the level of difficulty and specifically, OKR score or grade.

If a goal is essentially a future desired level of success, the level of difficulty you set is a product of both your ambition and how comfortable you are with missing a target, and potential consequences of missing.
Forget the framework used for a moment, the science of goal setting is very clear about why setting hard goals matters. Hard goals:
  • Increase our focus towards the activities that matter the most and away from those that don’t matter and are irrelevant
  • Increase our levels of effort – we lean in to hard goals
  • Prolong effort – hard goals make us apply effort for a longer period of time
  • Inspire learning, development, collaboration and innovation

This offers clear advantages over goals that are easy or easier. They have been shown to offer little in the way of value.

Frameworks like BSC, SMART and KPIs offer no clear guidance on how to set goal targets and define success. So when OKRs came along and offered very clear guidance on how targets should be set and success measured, you suddenly had science-backed goal setting best-practices baked in.

OKR Grading Basics

There are 3 types of target you can set at a Key Result level as part of OKR.

Business-as-usual

The business-as-usual target one that you’d expect to hit 100%. Anything other than 100% would be considered failure. Given when we went through earlier about goals being hard, these are the exception not the rule. However, some coaches feel that in the early days of OKRs having targets reached makes adoption easier and not achieving 100% less demoralising. Another view of this would be that if you’ve educated your teams well enough, graded OKRs well, and not achieving 100% is safe, low-balling targets is not a problem and not useful.

Hard / Stretch / Commitment Goal - Default

Part of the OKR planning process is to agree what a hard stretch target would be. Hard goals are sometimes called a stretch or committed goal as well. Achieving 100% of the target would be amazing and 70% would be good.Rs having targets reached makes adoption easier and not achieving 100% less demoralising. Another view of this would be that if you’ve educated your teams well enough, graded OKRs well, and not achieving 100% is safe, low-balling targets is not a problem and not useful.
The engine room of OKR are conversation and debates around what your Objective should be, what you should measure, and what ‘good’ and ‘amazing’ would look like.

Moonshot / BHAG / Aspirational Goal

It’s been shown that what are considered ‘visionary’ companies often also set highly aspirational, Big Hairy Audacious Goals, or Moonshots. They are set to inspire greatness, new ways of doing things, new approaches to problems and genuine innovation. You need to choose when and where to set them obviously, but their value is clear. Calibrating the success of a moon-shot is harder but 30% to 100% for many would be seen as great result.

OKR Metrics

Ambition & Success Measured

The score or grade of your Objective comes from the difficulty of your Key Results by way of a simple average across all of the Key Results. When planning your OKRs, one way of viewing the average score is your level of ambition.

Objective – Average Grade – 0.56

  • Key Result 1 – Grade 0.7
  • Key Result 2 – Grade 0.7
  • Key Result 3 – Grade 0.3

When you’re grading your achievement at the end of your planning period, your score is a measure of your achievement relative to that ambition. This is why calibrating what success looks like is so important and 100% is unlikely to be the answer. This is unlike the type of goals most people have set before as KPIs and SMART both don’t have this concept as a central pillar.

Are You Ambitious Enough? Are You Achieving Enough?

If you get to the end of a quarter and you’ve got a 95% score one concern might be that you’re not being ambitious enough. Google as an example would see the right balance of ambition and success being a final grade of 0.6 to 0.7 or 60% to 70%. And of course scoring lower might mean that your teams are not achieving enough. It’s a fine balancing act that again highlights the importance of good planning conversations.

ZOKRI allows you to grade your OKRs using BAU, Hard and Moon Shots, and like Google even apply weights to individual Key Results.