Credit: Software Engineering at Google, by Fergus Henderson
Individuals and teams at Google are required to explicitly document their goals and to assess their progress towards these goals.
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Teams set quarterly and annual objectives, with measurable key results that show progress towards these objectives. This is done at every level of the company, going all the way up to defining goals for the whole company.
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Goals for individuals and small teams should align with the higher-level goals for the broader teams that they are part of and with the overall company goals.
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At the end of each quarter, progress towards the measurable key results is recorded and each objective is given a score from 0.0 (no progress) to 1.0 (100% completion).
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OKRs and OKR scores are normally made visible across Google (with occasional exceptions for especially sensitive information such as highly confidential projects), but they not used directly as input to an individual’s performance appraisal.
OKRs should be set high: the desired target overall average score is 65%, meaning that a team is encouraged to set as goals about 50% more tasks than they are likely to actually accomplish.
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If a team scores significantly higher than that, they are encouraged to set more ambitious OKRs for the next quarter.
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If a team scores significantly lower than that, they are encouraged to set more-conservative OKRs for the next quarter.
OKRs provide a key mechanism for communicating what each part of the company is working on, and for encouraging good performance from employees via social incentives.
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Employees know that their team will have a meeting where the OKRs will be scored, and have a natural drive to try to score well, even though OKRs have no direct impact on performance appraisals or compensation.
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Defining key results that are objective and measurable helps ensure that this human drive to perform well is channelled to doing things that have real concrete measurable impact on progress towards shared objectives.