As a training and on-boarding expert at Rhythm Systems, I know a lot about KPIs. Recently, I’ve also learned a lot about OKRs. Many of my newer clients have come to us for a systematic way to implement their OKRs. As I help these clients map their goals into our software, I’ve been thinking a lot about whether the KPIs I know and love have a place in this world of Objectives and Key Results. I’ve come to the conclusion that while KPIs and OKRs are different, there’s a clear benefit to having both.
You don’t have to take my word for it, either. According to Ryan Panchadsaram on the Measure What Matters resource page, “There is no competition, KPIs and OKRs complement each other. They both have their place in a well-functioning organization.”
Key Differences Between OKRs and KPIs:
To paint a clear picture of the difference, Felipe Castro uses an analogy of a road trip in his Medium post on this topic. For a road trip, first, you need to know where you are going (this is your Strategy), then you need the directions to get there (these are your OKRs) and finally, you need to know if your car has fuel and tires have air to get there (these are the KPIs that monitor the overall health of the business.)
How to Use KPIs and OKRs Together:
This helps to see how you can use KPIs and OKRs together. You may have a set of monitoring KPIs that you will always track just to know how healthy your business is, whether or not they are tied to any specific goals or OKRs for the year or the quarter. For example, you’ll probably always want to keep a finger on the pulse of financial indicators like Revenue or Profitability. You may also have key metrics around employee health or customer retention that are always going to be on your dashboard.
Some of your KPIs may also naturally become Key Results for your OKRs. If you have an objective around improving your website’s performance to generate X more qualified leads, and you are already tracking the number of qualified leads as a KPI in your marketing team, this KPI becomes a Key Result for the objective for the quarter.
What KPIs and OKRs have in Common:
- Both should be specific, clear and measurable. We recommend using Red-Yellow-Green success criteria for both.
- You should focus on a few of each that are truly key. (Both acronyms contain the letter K for key - which means both require you to make choices to focus on a few things that are most important.) You should have 3-5 OKRs at a given time and no more than 8-12 KPIs.
- You can have OKRs and KPIs for the company as a whole, for departments or teams, or for specific roles, individuals, or projects.
- Both can help you run your business by aligning everyone around well-defined goals and clear measures of success.
What goals are you using to run your business? Do you have a good way to maintain your company’s health while also stimulating growth and progress?
Looking for some additional examples to help get you started?
Photo Credit: iStock by Getty Images