OKRs vs KPIs: Bridging and Forging a Winning Combination 

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okrs and kpi winning combination

Setting ambitious goals propels motivation, providing a clear finish line to strive towards. Two distinct methods gauge company performance: OKRs and KPIs. Originating in the 1990s, OKRs consist of objective and measurable key results that steer goal accomplishment. Conversely, KPIs represent business metrics reflecting organizational efficiency.

In this article, we explore the meaning of OKR and KPI (maksud KPI), and the dynamic interplay between the two, crafting an effective synergy that propels companies and teams towards success.

 

What Is a Key Performance Indicators? Apakah Maksud KPI Petunjuk Prestasi Utama

Key Performance Indicators (KPIs) are like gauges that help understand how well a business is doing. They’re used to measure things like projects, products, or how well employees are doing. KPIs can be thought of as looking back in time, showing how the business did over a certain period.

But remember, KPIs are just numbers on their own. They can tell you if things are going well or not, but they don’t give the whole story or suggest what your team should do next. 

A KPI Example 

We will use a co-working space as our example. Two of their KPIs are the number of freelancers who use their space and the number of yearly subscriptions to their co-working desks. So, they gather data for two ongoing metrics:

  • How many freelancers use their co-working space every day?
  • How many of them will actually buy a yearly subscription to work from there?

 

What Is an Objectives and Key Result? Apakah Maksud OKRs Objektif dan Hasil Utama

Objectives and Key Results (OKRs) are a method for outlining both the goals a company or team aims to achieve (objectives) and the specific measurable outcomes that show progress toward those goals (key results). OKRs are used to set ambitious targets and detail the measurable steps needed to reach them.

They’re often employed for setting goals on a quarterly basis, though they can also be used for yearly planning. The popularity of OKRs has grown, thanks in part to their adoption by big companies like Google for planning purposes.

OKRs are utilized at different levels: company-wide, within teams, and for individuals. Here are a few examples of OKRs:

OKRs Objectives Key Results
Boost brand recognition and awareness. Enhance media engagement by 20%.
Roll out a customer referral program by January 1.
Expand social media presence to two additional target markets.
Broaden the thought leadership initiative by featuring guest articles on four industry-related websites, each with an Alexa ranking of at least 30,000.
Achieve the highest number of iOS productivity app downloads. Survey users to identify the ten most-requested features and launch five of them by December 15.
Conduct 10 user tests to find and resolve any user experience issues.
Attain at least a 50% increase in user satisfaction with the app’s usability (measured through customer surveys).
Garner 200 five-star ratings by December 31.

 

What Is the Difference Between KPIs and OKRs?

OKRs serve as effective guides for leadership since they clearly outline your goals and the steps to achieve them. Objectives capture the changes you want to make, and they’re matched with Key Results, which are the measurable outcomes.

On the other hand, KPIs are individual numbers, basically metrics. They don’t provide a direction, track progress, or convey purpose. While KPIs usually keep an eye on the current state, OKRs are built to propel your company forward in a strategically significant way.

What’s more, crafting OKRs is a team effort. Team members actively contribute to defining OKRs by regularly sharing feedback and setting their own team-level OKRs that contribute to the overall organizational goals. In contrast, KPIs are predetermined metrics that show how well an organization is operating. Usually, they’re set by management. 

While OKRs are often re-evaluated to adapt to market changes, the same key performance indicators are frequently used from one quarter to the next. Think of KPIs more like reference points that help you answer the question, “Did we achieve our goals or not?

Can OKRs Replace KPIs?

No. KPIs are used to monitor the performance and health of an organization. OKRs, on the other hand, are used to drive change. However, the two concepts can be combined fruitfully by turning developments in KPIs into catalysts for new OKRs.

Can OKRs and KPIs Work Together?

If you’re unsure about choosing between OKRs and KPIs, the solution might be to use both. OKRs and KPIs work best when they’re combined and used together, creating a powerful impact.

KPIs are like markers that measure overall performance. They provide a solid foundation, backed by data, for establishing your OKRs. For instance, let’s say your organization sets a KPI to keep the employee turnover rate below 15% for the upcoming year.

However, during your regular monthly assessment, you find that your current turnover rate is around 23%. This indicates a need for action, and this is where setting OKRs at the company, team, and individual levels can be valuable in getting things back on track.

For instance, the HR team could set an OKR like this:

Objective Key Results
Enhance employee engagement scores by 20% in the next engagement survey. Launch a new employee intranet to connect and inform onsite, remote, and hybrid workers.
Introduce clear career paths for all employees to show advancement opportunities.
Provide targeted training to managers on topics such as autonomy, well-being, and career growth.

 

Notice how these OKRs link back to the broader KPI? The OKR’s focus on engaging employees can likely lead to reduced turnover and improved KPI performance.

In simple terms, you can use your KPIs to identify areas where growth and improvement are needed, and then establish OKRs to foster progress in those areas. This approach ensures that your KPIs and OKRs complement each other, rather than causing confusion or competition.

 

KPI Best Practices

kpi key performance indicator

To make the most of your KPIs, it’s vital to follow effective methods that guarantee their accuracy, significance, and effectiveness.

1. Limit the Number of KPIs

While it might be tempting to track all available metrics, it’s crucial to remember that KPIs should focus on your business’s main objectives. Prioritize the most crucial KPIs that match your strategic goals and give a clear, concise view of performance.

2. Provide Clear Definition and Context

When establishing KPIs, offer a clear explanation of what each metric measures and how the measurement will take place. Context is also key; explain why the KPI matters and its connection to your overall business strategy.

3. Regularly Review and Update KPIs

Regular reviews ensure that KPIs stay relevant and effective. Metrics important for your company’s success today might not hold the same importance in the next quarter. Therefore, routinely revisit your KPIs to confirm they align with your business objectives.

4. Simplify Tracking with Software

Employing a software reporting tool can simplify KPI monitoring, eliminating the need for manual data collection and analysis. When selecting a software tool, ensure it can integrate with your current systems and fulfill your specific requirements in terms of features, functions, and user-friendliness.

 

OKR Best Practices

To make the most of your OKRs, it’s important to follow best practices that ensure they’re accurate, relevant, and effective.

1. Start with Specific Objectives

Begin with a select few objectives that align with your overall business goals and are achievable within a defined timeframe. Clear objectives provide clarity for decision-making, helping you prioritize initiatives effectively. Starting with a focused set of objectives lays the foundation for successful OKR implementation.

2. Secure Executive Support

Before launching your OKR program, ensure key stakeholders understand the benefits and are willing to support it. Create a communication plan that emphasizes how OKRs can add value to the organization.

3. Set OKR Cycles

Opt for monthly or quarterly cycles to break down long-term goals into manageable tasks. This approach allows for regular check-ins and adjustments, ensuring progress is on track and obstacles are addressed promptly.

4. Regularly Review and Adjust

Typically, review and adjust OKRs every quarter, but faster-paced or dynamic projects might benefit from more frequent reviews. During these reviews, assess progress, reevaluate key results for relevance and achievability, and make adjustments as needed.

5. Utilize OKR Software

Implement OKR software to simplify metric tracking and reporting. Regularly tracking progress toward your objectives is essential for success. OKR software offers user-friendly interfaces that display real-time progress. By automating metric tracking and reporting, companies can stay focused on objectives, make informed decisions, and enhance their goal achievement.

 

How often should OKRs and KPIs be reviewed?

KPIs are usually reviewed constantly to keep an eye on ongoing performance, while OKRs are commonly established and assessed every quarter to stay aligned with the company’s strategic path. However, the frequency can differ depending on the business type and its objectives.

 

Final takeaways

The combined use of OKRs and KPIs exemplifies a good strategy in the pursuit of corporate excellence. When you use these different methods effectively, they work together to create a strong way of evaluating performance. As you learn about OKRs and KPIs, you can make the most of their abilities.

By setting challenging goals and using measurable performance measures, organizations can achieve great success. Remember, even though OKRs and KPIs are different, using them together can help you succeed in reaching your goals.

Empower your team and lead with clarity using Lark’s OKR feature. Set clear objectives and key results seamlessly, ensuring everyone is aligned with the vision. Dive into one of Lark’s standout features and transform your goal-setting process.

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