OKRs and KPIs are both incredibly useful tools for tracking progress at work and determining if you’re on the right track, but there’s more to these acronyms than first meets the eye. As soon as you learn about OKRs, you’ll want to start implementing them in your company – but are they right for you? Here’s what sets them apart, and how to choose which tool is best for your business.
Key Performance Indicators (KPIs)
KPIs are measurements of the performance of a company, department or individual. These measurements are often used to track goal attainment.
Businesses measure their KPIs to find out whether they are on the right track with their goals.
KPIs can also be used by investors to determine whether a company is worth investing in or not.
Objectives and Key Results (OKRs)
An objective is a measurable, specific goal that you want to achieve in the next year. Objectives should be aligned with the company’s vision, mission and values. The objectives should also align with company strategies. Key results are pieces of an objective that are measurable to track progress. For example, if one of your objectives is to increase revenues by 10% over the next year, a key result could be increasing social media followers by 5%.
Why we still use KPIs in startups
In the startup world, there is a lot of talk about setting goals. But sometimes, it can be difficult to know which ones are right to set. Some say you should use Key Performance Indicators (KPIs) while others argue that Objectives and Key Results (OKRs) would be more effective.
While both have their own benefits, there are a few key things to keep in mind before deciding on which one is right for you. First off, the two methods have different definitions which could make them incompatible with each other if not understood correctly. With KPIs, they are quantitative measurements that show how well an objective has been met or if it has been achieved at all; this could include numbers such as profit margins or sales targets.
Important qualities of an effective KPI
Effective KPIs are hard to come by. Here are a few qualities they should possess:
-A KPI should be relevant to the success of the company.
-It should be measurable so that you can track it over time.
-It should be both qualitative and quantitative, because numbers can only tell half the story.
-It needs to make sense in relation to other metrics like goals, objectives, etc., or else it won’t provide any real value.
-Finally, it needs to have a clear connection with actionable steps so that you know how you’re going to fix things if they start heading in the wrong direction.
Important qualities of an effective OKRs
1. They are measurable – The goals are stated in terms of a number that can be tracked.
2. They are written in the present tense – Goals should be written as I will statements, not I will try to or I want to.
3. They are high-level – A good rule is to set three goals at a time (ie, they should not be more detailed than that).
4. They include an evaluation date – This ensures you’ll assess them at the right time and it’s easier to see how far you’ve come since you started working on them.
Key Difference between OKRs and KPIs
This is a common question that is usually asked in the context of comparing OKRs with KPI. However, there are different ways to use each one. In general, a company’s key performance indicators (KPIs) will measure the performance of an organization’s strategy or tactics on a particular goal. On the other hand, an objective key result (OKR) has a more narrow focus on only one specific task that can be measured by one or two metrics. Furthermore, the KPI method is more widely used at this point in time because it offers actionable insights about the entire organization’s operations whereas an OKR may not be as useful when looking at just one aspect of it.
OKRs are a great way to go if you need to focus on a few key goals at the same time. To get the most out of them, keep these three steps in mind:
-Get buy-in from leadership by pitching the benefits of adopting an OKR system as opposed to traditional metrics. This will help get people on board with change and make it more sustainable.
-Have a strategy in place for setting goals that are measurable, relevant, and timebound. Make sure these goals are realistic! It’s easy to set unrealistic expectations when we’re feeling ambitious or competitive, but this is where things start to fall apart down the line.
-Don’t forget about accountability—be sure to allocate resources accordingly so you can track progress over time.