OKR vs KPI- What’s the Difference? with Examples

Published On: January 17, 2022|Categories: Objective and Key Results|

OKR vs KPI- What’s the Difference? with Examples

Published On: January 17, 2022|
Difference between okr vs kpi

While we speak about OKRs vs KPI, we come across a lot of acronyms like KPI, Metrics, and Key results. But most of us get confused with all three as they are not the same and comparing them will be an apple to orange comparison. Also, we know these metrics and KPIs are necessary but they are too many to focus on and deliver results.
We don’t get enough references too to understand it in detail. And it is a fact that all three are different and distinct in their way.

We come across a lot of acronyms like KPI, Metrics, and Key results. But most of us get confused with all three as they are not the same and comparing them will be an apple to orange comparison. Also, we know these metrics and KPIs are necessary but they are too many to focus on and deliver results.
We don’t get enough references too to understand it in detail. And it is a fact that all three are different and distinct in their way.

What are KPI Examples and Components?

Key Performance Indicators (KPIs) are the key metrics most organizations follow. Individual and departmental KPI can be defined and be measured by a granular level. KPIs work well in all the scenarios be it a product, process, or quality. They measure and provide real-time data. The origin of KPIs was not tracked and they are unknown but today it has helped to measure an organization’s output.
The data captured in KPI are very valuable and they motivate and drive the team to achieve the set KPIs. But we tend to follow the set KPI without analysis and often wonder why we are unable to achieve it. Every KPI is to be customized to the team and organizations, we cannot adapt what is already predefined. KPIs aim to link with the organization’s objective and cover both the topline and bottom line.
Qualitative KPIs seldom work and it is highly essential to have them qualitative. This helps organizations to measure a few KPIs like

  • Revenue KPI
  • Cost KPI
  • Quality KPI
  • Customer Satisfaction KPI

Few Examples of KPI

  • Response time to the customer
  • Customer churn percentage
  • Customer satisfaction score
  • Net promoter score (NPS)
  • Customer retention rate

These mentioned KPIs cascade to the respective departments and get broken down into individual KPIs, such KPIs help organizations to measure people and department performance.

For Example Revenue, KPI can be broken down into different departments that include sales and marketing and both are measured by the leads generated or revenue generated by their respective teams.

What are OKRs, Examples, and Components?

Objectives and Key Results (OKRs) are a goal-setting framework and they are the key pointers that help organizations to measure organization and people performance. OKRs promote aggressive and aspirational goals and they are mostly used in a quarterly cadence and can also be used for annual strategic objectives. OKRs are acquiring popularity very rapidly after Google, Intel and a few other industry giants have used the framework and that has also successfully worked for them.
OKRs have a simple approach. They help to measure the goal and typically they have 3 to 5 objectives to start with along with 5 to 7 key results each. Key results are mostly quantitative and have measures attached to them. They are scored mostly by 0-100. The Objectives are always ambitions yet achievable.
We come across a few KPIs that has characteristics as KPI and they are generally called operational or Commit OKRs this helps us to measure objectives at all levels

#1. Few Sales OKR examples are :

Objective 1 – Acquire 500 leads by end of Q2

KR 1 – Achieve XX leads through email campaigns
KR 2 – Achieve XX leads through targeted online campaigns
KR 3 – Decrease depreciation cost from XX% to XX%

Objective 2 Improve our sales department performance by XX%

KR 1 – Maintain a sales pipeline of qualified leads at a value of XXX every quarter
KR 2 – Increase our closing rate from XX% to XX%
KR 3 – Increase Email campaign from XX per week to XX per week

Learn more about Sales OKR examples

#2. Few Digital marketing OKR examples are :

Objective 1 – Improve and enhance Digital marketing
KR 1 – Improve SEO site health from XX% to XX%
KR 2 – Increase traffic through backlinks from XX% to XX%

Objective 2 – Improve social media branding

KR 1 – Instagram impressions increase to XX%
KR 2 – Increase the quora post from X to Y a week

Learn more about Digital marketing OKR examples

#3. Few Examples Finance OKRs

Objective 1 – Reduce tax liability

KR 1 – Increase tax-advantaged investment from XX% to XX%
KR 2 – Decrease current liabilities from XX% to XX% by the end of Q3
KR 3 – Decrease depreciation cost from XX% to XX%

Objective 2 – Complete Accurate Financial Reports

KR 1 – Review internal audit for process accuracy and optimization
KR 2 – Coordinate with department heads for revenue projections.

Difference between OKR and KPI

The OKR goal-setting methodology has gained popularity over the past 2 decades, with tech giants like Google and Intel implementing it to optimize their operations. We have spoken in detail about OKRs in the above sections, now let us understand what KPIs are. Key performance indicators (KPIs) are metrics that shed light on the performance of your business.

KPIs are more targets than goals. There are too many KPIs with no limitation which prevents action against each KPI. They simply measure whether you are successful in achieving your goals. They measure the processes or activities already in place. OKRs and KPIs complement each other and for best results, they should be tracked alongside each other.

okr vs kpi

Whereas KPIs or Key Performance Indicators don’t motivate or encourage you to set ambitious goals. As leaders, most of them would have worked in KPIs but OKRs excite them on a higher level. In KPI every indicator is a priority, and we end up not focusing on something that matters.
Reviews on KPIs are retrospective and exhaustive exercises, with no room for course corrections.
This is precisely why we advise teams and organizations to limit the OKRs.
OKRs are not day-to-day tasks but rather a macro-level objective, whereas Key results help the journey possible but setting Key results with measures.
OKRs work on your priority which enables teams and individuals to dedicate the time as per the priority.

How to Combine OKRs and KPIs?

Making OKRs and KPIs work together will give clear and long-term focus to the objectives set. KPIs can be connected to the objectives that help in measuring the outcome

For Example, if we need to improve the customer satisfaction scores to 9, we need the KPIs that indicate where is the current trend and that gives us an idea to create the ambitious OKRs that will help us to reach the satisfaction score of 9.

This plan can happen once we combine the KPIs with the Operational OKRs
All the metrics set will not yield results instantly, it takes at least a quarter to show the results. KPIs like OKRs should not be generic, For example,
Enhance employee experience. This is too generic and has no specific values that you are driving towards.
OKRs will also have Key results that are value-driven and which drive the progress. The outcome of the Key Results should drive the vision or the goal of the organization or the team

How to write a good KPI?

Every KPI must be defined with an understanding of what are we trying to measure, more quantitative than qualitative.

  • KPI that measures activity and also has the Unit of measurement attached to it. For example, No of Customer complaints.
  • KPIs that measure outcome with Unit of measurement like percentage or Currency attached. For example, Increase Revenue from the MENA market from 20% to 30%
  • Project KPIs that help in measuring the deliverables or a task or a module and typically measured with the percentage completed. For example, % completion to the new product module
  • Target-driven KPI that helps to measure the targets. For example, Increase sales from 2000 USD to 3300 USD

OKR vs KPI Examples

While understanding the meaning of all three, let us give an example of a lady who wishes to excel in business. To be successful she needs to decide the strategy and the long-term vision.
Having decided that we need to plan on how do we achieve that and what are the key things we need to do to achieve the target.

OKRs are those which track the strategy and give us insights on how aligned are we with the goal and should we shift gears to move faster.
KPIs are the Key things that we evaluate like, leads generated and sales done are the indicators that will help us to decide where we are now
Conclusion

The above article discussed in detail the OKR and KPI with examples. Datalligence‘s OKR software helps companies to create OKRs for different roles and functions. Track and monitor and align OKRs to your organizational objectives. Sign up for a free trial of our software to explore exciting ideas in setting OKRs.

Frequently Asked Questions

The difference between the OKRs and KPI is that OKR measures outcomes, whereas KPI measures output. OKRs are collaborative whereas KPIs work on Silos. Ideally, KPIs are connected with compensation but OKRs don’t connect compensation.

OKRs do not replace KPIs as both are can work very well with each other. KPIs will continue to measure the business as usual metrics and OKRs promote growth. Where ever there is an improvement or a new process or product launched, OKRs can be introduced.

Making OKRs and KPIs work together will give clear and long-term focus to the objectives set. KPIs can be connected to the objectives that help in measuring the outcome

  • OKRs are those which track the strategy and give us insights on how aligned are we with the goal and should we shift gears to move faster.
  •  KPIs are the Key indicator that we evaluate like, leads generated and sales done are the indicators that will help us to decide where we are now
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