Objectives and Key Results may seem simple, but the framework is more complicated in practice than you think. One of the biggest struggles for newcomers to OKRs is the breakdown and alignment process — taking the yearly company Objectives and expanding them into Objectives for dedicated teams and timeframes.
To remedy that, Oboard and our partners – OKR consulting company executeOn — worked together and designed the dedicated OKR alignment guide. In this article, we will share with you the following:
- The Basics of OKR Planning
- The three ways to structure OKRs
- How to break down Yearly OKRs into Quarterly OKRs
- How to align Department OKRs with Company OKRs
- How to use OKR Board for JIRA to do OKR Alignment
We will be using somewhat abstract OKR examples here to illustrate the OKR structure better and make it easier to comprehend. If you are more interested in real-life examples of OKRs for different departments — check out other articles in the OKR Examples series.
What is OKR Planning and How It Works
OKR Planning is the earliest part of the OKR framework and involves setting your Objectives and Key Results at every timeframe and level of your company.
What Are OKR Timeframes
OKRs are time-limited by nature — you define how long it would take to achieve your goal as a part of creating the Objective. The most common OKR timeframe on the Company level is yearly since many organizations plan for one year. However, they can be more long-term, reaching into three- or five-year plans.
With that in mind, yearly OKR planning is relatively high-level and difficult to correlate with the everyday workflow. So a second OKR timeframe is introduced — quarterly. This is an OKR timeframe that is quite often used on Team or Department levels. It allows people to break their yearly OKRs into manageable tasks they can focus on without becoming overwhelmed.
What Are OKR Levels
Not every Objective is relevant to every worker, so it makes sense to separate them and once again let them focus only on essential tasks. That is how we define OKR levels. For example:
- Company OKRs impact everyone in the organization.
- Department* OKRs involve only one unit in your company. For example, Marketing or Sales.
- Personal OKRs of particular employees that they are responsible for.
In most cases, an organization will have Company OKRs that align the entire business toward a common direction. Department and Individual OKRs may not even be necessary, depending on your business context and organizational structure. Generally, you should minimize the number of OKR levels, which will reduce the amount of maintenance and empower your teams to work as directly as possible toward shared company OKRs.
There is also the matter of the company culture. For example, if Company OKRs require tight collaboration across different business teams, you could design lower-level OKRs for these virtual cross-functional Chapters.
*When we say Department, we mean a lower structural level in the company organization. In practice, this could also be a team or a chapter, depending on the company’s structure.
How to Write Yearly OKRs
There isn’t a designated checklist for OKR planning — the framework is flexible, and every company can finetune it to its own needs. However, here’s the general workflow your process should be based on:
- The C-level executives discuss the company’s Vision and Mission statements.
- The Vision describes the company’s future state and should act as a guideline for the corporate culture, market positioning, and branding.
- The Mission describes the company’s business, whom it serves, what it does, its objectives, and its approach to reaching those objectives.
- With Vision and Mission in place, the executives use them to define up to three Objectives the company is setting out to achieve in the next year.
- For each Objective, the executives define a set of one to five Key Results that determine the completion of the Objective.
In the end, you should have a set of yearly OKRs, from which the company might define OKRs for smaller timeframes* and lower levels. The process of designing OKRs for smaller timeframes is known as OKR breakdown. The process of designing OKRs for lower organizational levels is called OKR alignment. We will show you how to do both.
*Companies with flat organizational structures do not need quarterly OKRs, as teams can easily take to long-term objectives. We will talk about the organizational structures in the next section.
The Three Ways to Structure OKRs
When Andrew Grove introduced OKRs in Intel in the 1970s, and even when John Doerr brought them to Google in 1999, there was only one way to align and break down OKRs. However, as the framework kept spreading across Silicon Valley and eventually the entire world, it kept evolving — and these days, we recognize three primary methodologies: Classic, Roadmap, and Flat.
Classic OKR Alignment Model
Classic OKRs are defined by quarterly meetings, where yearly Company OKRs are broken down into quarterly Company OKRs, which are then used as a base for aligning the Department OKRs.
NOTE: We will use OKR Board for Jira to illustrate the examples from this point. It is an Editor’s pick app for Jira on the Atlassian marketplace and lets you set, manage, and report OKRs directly in Jira.
This is the default OKR structure that has been proven to work. It is relatively flexible, allowing for constant check-ins and course corrections, and it provides Departments with enough guidance to keep them aligned.
That said, it is not for everyone. The overall complexity may be unnecessary in companies with a flat structure; meanwhile, flexibility creates a lot of busy work. So while this structure suits most companies, people have come up with two other equally valid ways to structure OKRs.
Roadmap OKR Alignment Model
Companies that follow Roadmap OKRs do not prioritize flexibility and instead break down yearly OKRs into quarterly OKRs for each quarter simultaneously. As in the example above, it sometimes might make quarterly Objectives unnecessary — since they repeat quarter-to-quarter — and focus shifts entirely to Key Results.
You may notice that the Department OKRs are still defined only for the next quarter. That’s because Departments in such companies still tend to run on a quarterly cadence. However, that is not always the case — we’ve had a few customers who managed to make roadmap OKRs work for Departments too.
The roadmap OKRs are popular in financial companies, retail, and other industries where the quarter-to-quarter workflow is easily predictable. It reduces the required OKR management since the goals are known in advance, but planning that far ahead might also reduce the organization’s ability to respond to a crisis.
Flat OKR Alignment Model
Companies that follow the Flat OKR structure combine the breakdown and alignment processes. Their OKR structure does not feature quarterly Company OKRs — instead, each unit sets its own quarterly OKRs based on the yearly Company Objectives.
Flat OKRs make each Department much more independent in how they will contribute to the Company OKRs, simplifying the OKR structure and improving cooperation. However, at the same time, it requires you to trust your Departments to break down and align their OKRs properly — and that requires experience on their behalf.
Flat OKRs are uncommon — you are more likely to find them in start-ups or organizations where OKRs are implemented in only several departments instead of company-wide. And yet they have their benefits and are no less valid than any other OKR structure.
OKR Alignment Model Comparison
All three models are equally viable and can be used if your management style supports it. That said, each of them have their own strengths and weaknesses, and you should understand them before choosing your method.
| Classic | Roadmap | Flat | |
| Flexibility | Low | Low | High |
| Alignment | Easy | Hard | Hard |
| Team autonomy | Low | High | High |
| Overhead | Moderate | Low | Low |
In short:
- Choose Classic OKRs for flexibility and strong alignment with traditional management structure.
- Opt for Roadmap OKRs in predictable environments where long-term planning is feasible.
- Select Flat OKRs for independent departments in agile, less hierarchical organizations.
What Happens When Your OKR Structure is Wrong
Before we advance, let’s talk about why we are doing it in the first place. If we do not bother with OKR breakdown and alignment, we risk introducing three problems to the company workflow.
- Misaligned Priorities. Without direction, teams may unknowingly prioritize tasks and projects that do not directly contribute to the company’s strategic goals. As an example, a company is launching an ambitious high-risk product, and the entire Marketing team is focused entirely on it — neglecting its efforts to promote the existing products that are already proven to be profitable.
- Lack of Transparency. Without the bigger picture, teams can have a poor understanding of how exactly their efforts contribute to the Company Objectives. Because of it, collaboration and coordination between teams can slow down, leading to inefficiencies and missed opportunities. For example, DevOps could see a server upgrade as a low-priority task, while Sales and Marketing could see poor server infrastructure as a bottleneck for their entire sales funnel.
- Goal Drift. Without regular check-ins, teams may inadvertently veer away from the Company Objectives. For example, Development could take improving the code base so seriously that the new highly requested features take years to develop.
In summary, lack of alignment during the OKR breakdown stage makes people and teams not fully understand how their work connects to the broader organizational goals. This can lead to a lack of clarity, reduced motivation, and a disconnect from the company’s Mission.
How to Break Down Yearly OKRs into Quarterly OKRs
NOTE: For this example, we are going to assume that the company is using the Classic OKR Structure — and yet the same principles should apply to any other.
OKR breakdown, when stripped to its basics, has only one guideline. Every quarterly OKR should contribute to at least one yearly OKR. This contribution may be direct — as in, achieving a part of the yearly Key Result — or a secondary endeavor that indirectly assists or sets up the desired Key Result.
Here’s an example. These are the yearly OKRs for 2023 of a SaaS B2B company.
- [O] Secure Series B funding > 60M EUR
- [KR1] Projected revenue > 10M EUR
- [KR2] Sell 20 CRM Solutions
- [KR3] Sell 10 HR Solutions
- [KR4] Build a new Procurement Solution that has an average rating of 4.9+
Projected revenue, CRM sales, and HR solution sales seem straightforward, but the final KR on that list is interesting. While making money and selling existing solutions is already possible and can be achieved at any point in the year, the new Procurement Solution can only reach an average rating of over 4.9 after developing and deploying the Procurement Solution. And it doesn’t exist yet.
So when the Executive team breaks the yearly OKRs down into quarterly OKRs, they need to account for this. Here are two Q1 2023 OKRs they came up with:
- [O1] Start sales traction
- [KR1] Projected revenue > 1M EUR
- [KR2] Sell 3 CRM Solutions
- [KR3] Sell 1 HR Solutions
- [O2]: Strengthen the operational basis of the company
- [KR1] Hire >80% of critical priority positions
- [KR2] Build a competent and independent Procurement Product team
This Objective directly contributes to the first three yearly Key Results — as evidenced by the checkmark at the top. This means that as the company accomplishes it, it also moves towards its yearly KRs — and OKR Board for Jira will reflect it by automatically calculating the score.
ON OKR SCORING: The yearly Objective completion score in the example above is zero. However, let’s assume that the company made significant progress towards the KRs, and…
By completing 61% of its first quarter OKRs, the company has completed 10% of its yearly OKRs. The exact completion score will depend on the OKR types and OKR weights — we are working on an article on how to use them.
The second Objective is even more interesting:
Strengthening the operational basis doesn’t directly contribute to the yearly KRs. Instead, it allows the development of the Procurement Solution while assisting the first three KRs by increasing the company’s workforce. That’s why, while being counted as a child Objective, it doesn’t directly contribute to the yearly Objective’s grade.
And while the first Objective can be easily cloned into Q2, Q3, or Q4 — possibly with adjusted values to account for seasonal changes and other market fluctuations — the second one will transition into the next step. So, for example, here’s how it may look like in Q3:
- [O] Successfully launch Procurement solution
- [KR1] Procurement solution version 1.0 release by the end of August 2023
- [KR2] Sell 3 Procurement solutions
- [KR3] Average marketplace rating is higher than 4.5
Once again, only KR3 here contributes directly to the yearly goal. However, it only becomes possible after the completion of KR1 and KR2. So while the first two may not directly contribute to the quarterly or yearly Objectives, they are still necessary for their completion.
To summarize. You need to properly understand the entire business process in your company before you set your OKRs. Otherwise, you might miss or undervalue the processes that do not directly contribute to your goals but are still required for their completion — and that would, in turn, lead to misalignment, lack of transparency, and goal drift.
However, there is more to the OKR breakdown. Your departments or teams must also define their own OKRs and tasks to drive company-level objectives.
How to Break Down Company OKRs for Departments
Departments are the structural units of your business, and all of them should work together to achieve the overall Company Objectives. That said, each department will contribute to it uniquely — and you should account for that when discussing their OKRs.
Communicate company-wide OKRs to departments or teams. Let departments and teams think about how they can contribute and what they should do to achieve company objectives. A great way of doing this is to have all dependent teams together for the OKR workshop, where they define OKRs and coordinate any dependencies between each other.
Let’s go back to our example from the previous section for Q1’2023. Also, let’s assume that we are still following the Classic OKR Structure — but the same principles apply elsewhere.
- [O1] Start sales traction
- [KR1] Projected revenue > 1M EUR
- [KR2] Sell 3 CRM Solutions
- [KR3] Sell 1 HR Solutions
When presented with it, the CRM Product Development team and the Sales team had a dedicated meeting and came up with the following OKRs for Q1:
- [O1-CRM] Improve the CRM Solution
- [KR1] Reduce maintenance cost by 20%
- [KR2] Release the Customer Interaction History module
- [KR3] Release a mobile version of CRM for iOS
If you look at the CRM Objective without context, you’d think that the CRM team doesn’t do much to contribute towards the yearly Objectives — as evidenced by the lack of the checkmark.
However, the new features and the mobile version of the CRM are selling points for the CRM Solution — and the sales team uses the CRM KRs to springboard their own and directly contribute towards KR1 and KR2:
- [O1-SAL] Start sales traction for the CRM Solution
- [KR1] Sell 3 CRM solutions
- [KR2] Amend the sales pitch and campaign, promoting new CRM features
Thus, the two departments align and directly support each other toward achieving the Company Objectives.
How OKR Board for Jira helps with OKR Structure
OKRs can grow exponentially, and as your company adds new Departments and timeframes, it might be challenging to understand how all those different Objectives and Key Results relate to each other. That’s why OKR Board for Jira comes with an Alignment View — a way to directly represent every OKR on the Board and its relationship with others.
For example, here’s everything we’ve created during our example OKR planning process:
This one has a lot to take in. After all, it is a bird’s eye view showing multiple OKR levels and timeframes. And that’s how we can also break it into more sizable chunks — just like OKRs.
For example, we can focus on only one timeframe:
And then, we can zero in on the target even further by selecting only one Department:
With Alignment View, you can always see what each department is working on and then check how it connects to the overall company goals in a single flip of a switch.
We also offer additional options for companies with a more complicated internal structure — for example, you can set up different Departments in different workspaces. However, they are a bit out of scope for this article — if you’d like to hear more about them, book a demo, and we’ll be happy to showcase those features in action!
Conclusion
OKR Breakdown may seem simple, but it is a complicated and rather ungrateful process. It might take a while for you to define Vision and Mission and even longer to come up with correct OKRs for lower levels and timeframes.
That said, it is more than worth the inconvenience. For example, once Vista.com implemented OKRs with OKR Board for Jira, they found their business processes more transparent and streamlined, achieving higher goals. Check out our case study with Vista to learn more about their success story.
With this article and its examples, you should grasp the basic concepts of the OKR breakdown process and the value that a proper OKR structure brings to your team. If you want to learn more about OKR alignment, consider signing up for OKR consulting and coaching — or install a 30-day free trial of OKR Board for Jira and practice your skills on your own!
