OKRs vs KPIs

Published On: October 10, 2022|Categories: Objective and Key Results|

OKRs vs KPIs

Published On: October 10, 2022|
OKRs vs KPIs-min

While implementing OKRs the most frequently asked question is that, the difference between OKRs and KPIs. Though most of them are familiar they are very different from each other. Their techniques for success are completely different. Nevertheless, before diving into the details of OKRs and KPIs we should understand the role that both play in the organization. 

 What are OKR and KPI? 

OKR is a goal-setting framework that helps organizations measure business and people performance. OKRs goal setting technique lets you know whether we are headed in the right direction in terms of employees achieving their goals for the quarter and whether the organization is headed towards the right direction for the quarter or annual. OKRs provide a simple and powerful approach to setting business targets, measuring progress, and achieving greater targets and success. 

For example, 

  • Improve our customer retention
  • Increase our website conversion rate
  • Gain qualified leads 

KPI or Key Performance Indicator is a management tool that aims and measures the organization’s business-as-usual metrics that evaluate the success of an ongoing process or specific activity. A KPI is not predefined and it is usually customized and rendered to the team and organizations. KPI mostly concentrates on the result. It evaluates an ongoing process or activity’s effectiveness, output, quantity, or quality. It evaluates currently implemented procedures or activities. 

  • Tie to your strategic goals
  • Can be measured against benchmarks
  • Inform resource planning
  • Track something you can control and influence

Difference between OKR and KPI:  

KPIs are often attainable and indicate the results of an ongoing process or project. KPIs are utilized to assess performance, however, they are unable to reveal what must change or grow to improve those figures. You evaluate these high-level company performance data regularly (yearly, quarterly, monthly, weekly, etc.). But using KPI, the company’s overall performance/growth cannot be evaluated. This sets a drawback among the organizations.  

To determine what needs to be changed, corrected, or enhanced, OKRs are employed. After identifying which area need improvement, you create an Objective specific to that area and Key Results to gauge your progress toward this Objective. Therefore, Key Results are unique to a target area represented by an Objective. Another benefit of this Goal setting platform is that it is transparent among the employees on attaining the goal or the objective. Each individual is allowed to set his OKRs to achieve even greater heights rather than following the same protocol. 

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

Metrics based on activity or metrics based on results: 

Both OKR and KPI are different metrics that are used to measure and evaluate the organization. KPIs are more of an activity-driven metric, whereas OKRs are more of a results-driven metric. For activity-driven businesses, there are only procedures and initiatives, which are both output- or activity-driven goals. On an everyday basis, their employees execute the tasks that the organization considers important to maintain the performance of the business and to advance to their final goal. The drawback for activity-driven companies is that they are used to measuring performance, but they don’t tell you what needs to change or improve to drive the growth of those numbers. They are high-level business performance metrics that you analyze with precise frequency (yearly, quarterly, monthly, weekly, etc.).  

  • Results-driven businesses take a different approach. To start with, they view their efforts (i.e., processes and initiatives) as a means to a goal. Instead, they concentrate on the outcomes that these actions are designed to achieve. 
  • Secondly, they regularly look at the bigger picture and consider how they should do business as usual and what improvements they should make to achieve their ultimate objective. 

 Why OKR is better than KPI: 

OKR focuses on transparency and collaboration among the employee and it lets you implement your own OKR. OKRs are built upon two incredibly effective goal-setting methods, SMART goals, and MBO, but they are tailored to meet the needs of today’s fast-growing businesses and fast-paced work environments. They also center goal setting, measuring, and tracking around the thing that matters most for your business. KPI follows more of a predefined goal where the employee is intended to achieve the target no matter what.  OKR focuses more on the bigger picture rather than a predefined goal. In terms of setting goals for employees and helping them achieve them, OKR is way better than KPI. 

 Conclusion: 

By reading how much OKR helps an organization and more about how it helps an employee achieve even greater heights in a very transparent technique, it is safe to assume that OKR helps not just employees but also an organization achieves more incredible heights.  

If you are ready to achieve your ambitious goal, try our free trial today to start with OKRs. 

FAQ

1. Is OKR better than KPI?

While OKR is an objectives technique that helps you enhance performance and drive change, KPIs are business metrics that indicate performance.

2. Can OKR replace KPI?

OKRs replace many ways of managing KPIs. 

3. Does Google use OKR?

OKR (Objectives and Key Results) is a goal system used by Google and others. It is a simple tool to create alignment and engagement around measurable goals.

4. How do you set good OKRs?

Make it Measurable, Break Key Results into Smaller Goals, and Cascade Your Objectives

5. What is the difference between OKR and smart goals?

SMART simply describes a goal in isolation. OKR provides an extra level of organizational context and turns goal setting into a company-wide exercise. 

 

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