OKR vs KPI: How They Differ and Why You Need Both to Be Successful
Udn Webber
Managing Editor
Confused between an OKR vs KPI ?
OKRs and KPIs are a dynamic duo in the world of goal setting and performance measurement.
However, just like any great duo, they have to play different roles to execute a mission flawlessly.
While OKR takes a close look at processes and the bigger picture , KPI focuses on the outcome and attainable goals.
In this article, we’ll take a look at each of them in detail, how they differ in approach, and how they can be used together . We’ll also highlight a project management tool that can handle both methods.
In order for us to investigate the differences between OKRs vs KPIs properly, we need to take on the role of two famous detectives from 221B Baker St. So, put on your top hat and get ready for some good ol’ clue spotting 🎩
Let’s get sleuthing! 🔎
What Are OKRs?
Note: We’ll cover what OKRs and KPIs are first to help you better understand what they are and how to use them. However, if you’re just looking for a comparison between the two, skip ahead to our handy comparison chart.
OKR stands for objective and key results.
It’s a goal-setting framework that helps you develop goals and devise a way to measure them.
Let’s break down OKRs even further into two components.
Your objectives are the specific goals you want to achieve, and the key results are the metrics that track your progress towards meeting those goals.
Once you complete your key results, you achieve your objectives.
You’re essentially a detective who needs to gather all the clues (key results) before solving the case (the objective).
OKRs are usually used to set quarterly goals.
So every quarter, you need to complete an OKR cycle that has three simple steps:
Check out some OKR benefits and some examples that we use at UDN Task Manager !
What Are the Different Types of OKRS?
The OKR framework is all about being Agile and creating OKR goals that work for you , so of course, there are different kinds:
How Do I Set OKRs?
Here’s all you need to do to implement the OKR methodology:
When setting up your OKRs, you should always have some way to ensure that the goal is achievable.
To do this, you need to follow this simple formula:
I will: ( objective )
As measured by: (set of key results)
Here’s an OKR example:
OKR Objective : I will increase my company’s annual revenue by 50% as measured by:
Key Result 1 : Acquiring 100 new customers
Key Result 2 : Increasing marketing leads by 40%
Key Result 3 : Increasing customer retention to 90%
By accomplishing the above sales goals (key results), you achieve your objective.
Check out these useful tips on how to write effective OKRs and product OKR examples .
And if you need help with goal management, try out UDN Task Manager ’s Goals feature.
With UDN Task Manager ’s Goals, you can create Goals and split them into smaller Targets.
Once you set a Target, you can check how well you’re doing by tracking how your progress in achieving that Target (key result) has contributed to your Goal (objective).
Confused?
Here’s a table to unboggle your brain:
Basically, when you’re setting up Goals in UDN Task Manager , you’re actually setting up OKR Objectives, and when you’re setting up Targets in UDN Task Manager , you’re setting up OKR Key Results.
You can also use Goal Folders to keep all your new and existing goals in one place.
You can also use Folders to group your weekly goals and align business objectives. This helps you unify your company as everyone knows what’s going on and how they can contribute to the company’s largest goals.
But that’s not the only kind of Goal you can track in UDN Task Manager .
Similar to a balanced scorecard , create score cards using UDN Task Manager Goals to show your team what you’re working on for the week.
Common OKR Mistakes
Although OKRs are a source of inspiration for companies, there are a few common mistakes that can make your objectives unattainable:
Building OKRs in a vacuum means that you’re making decisions without paying attention to what other departments of your business are doing.
The result?
Your objectives won’t really align with your organizational objective.
So, when building OKRs, you can either use a top-down or bottom-up approach.
For example, Managing directors set a bunch of high-level OKRs for department managers who set smaller OKRs for teams, and so on.
You should also communicate your OKRs to your entire company. This way, cross-functional teams and individuals have a common goal and can be transparent about what tasks and projects they’re working on.
This sort of transparency encourages collaboration and accountability.
This goes against the entire OKR framework!
Setting ambitious goals is a critical success factor. If you aren’t ambitious enough, how can you expect your team to reach its full potential and reach for the moon? 🌚
Learn the 7 steps to efficiently set team goals .
Your key results determine how successful your objectives turn out to be. So setting vague key results will lead to ineffective objectives. Here’s an example of an unclear personal KR:
Objective: Wake up earlier (Why?)
Key Results:
KRs should be super specific, follow Mycroft’s advice, and…
What Are KPIs?
KPI stands for key performance indicator.
KPI goals only target key business objectives.
Hence the name 😉
The KPI framework focuses on the outcome and not activities.
For example, KPIs care about how the detective solved the case rather than the number of hours that detective put into that case.
KPIs are a great tool to track the overall performance of a company and to keep team members accountable.
You can keep your team members even more accountable by using UDN Task Manager ’s Reports.
With UDN Task Manager ’s detailed reports, you’ll have everything you need for performance management.
Here are the amazingly-detailed reports you can use to track your team’s performance:
Looking for more reports? Check out our ultimate guide on KPI reports.
What Are the Different Types of KPIs?
Here are the five most-used KPIs:
BTW, here are some more resource management tips !
How Do I Set KPIs?
Similar to the SMART goal framework , your KPIs should focus on three main success drivers: specificity, measurability , and relevance.
Specific: While you achieve your goals and objectives , KPIs are there to measure your performance to the T. But to get accurate results, your KPIs need to be as specific as possible.
Measurable: Every KPI you set needs to be measurable, so you can easily see how things are going. This way, you can verify if things are on the right track.
Relevant: As you’re using KPIs to track performance over key areas, your KPI metric must be relevant to whatever you’re doing.
Here are some KPI examples for common goals:
Want even more examples? Check out our guide on HR KPIs and these 35+ KPI examples!
However, to track your KPIs efficiently, you’re going to need a KPI dashboard.
But don’t worry, after much sleuthing, we’ve uncovered that UDN Task Manager has the perfect Dashboards just for you.
Let’s take a look:
Each Dashboard can have different Custom Widgets . Use them to monitor a chosen performance metric in a style of your choice.
Here’s are all the widgets you can choose from in UDN Task Manager :
With all these Widgets, your detectives have all the gadgets and gizmos they need ! 📈
Common KPI Mistakes
If you don’t set your KPIs properly, they’ll end up looking fantastic on paper but not so fantastic when you actually try to implement them.
To help you avoid this, let’s take a look at the two common KPI mistakes:
You need to have more than one KPI. If you’re only looking at half the picture, you’ll only get half the results!
Being specific is important for any performance management framework.
Sometimes KPIs fail because they aren’t that specific.
For example, just saying: solving more cases or obtaining more clients doesn’t really cut it 💇
KPIs aren’t ideas of what you think success looks like.
For your KPIs to be a success, they need to have specific indicators that are relevant to your company objective and can be measured over time.
You need the following:
So, Our KPI is : Decrease time taken to solve cases by 8% by August 2020 so that our detectives have more time to solve other cases.
This is a specific KPI because the detectives know who needs to do it, what’s expected of them, when they need to do it and why they’re doing it.
Differences between OKR and KPI
Here’s a chart summarizing all the differences between OKR and KPI:
How OKRs and KPIs Can Work Together to Achieve Business Goals
Apart from the fact that both OKRs and KPIs are used to measure performance in your company, here are a few other reasons why you need both :
1. You need to use goal-setting tools to implement performance metrics
You need OKRs to set specific objectives , but you also need to review their metrics regularly, and that’s where KPIs come in.
Without both, you’re missing out on the opportunity to perform even better.
You can use an OKR software to accomplish this.
Sherlock and Watson certainly agree.
2. They’re connected
A successful KPI could be a key result in an OKR.
Wait, how?
For example, your objective in your OKR is to become a market leader in the advertising industry, and your measurable result is to increase your staff by 50%. In order to measure this key result, you need to count the number of employees you have.
And how are you going to measure that increase in your staff?
With a KPI formula.
3. They complement each other
KPIs help you set attainable goals and keep your team accountable, whereas OKRs help you inspire and encourage your team to reach for more ambitious results.
Like a cherry to your sundae 🍧
You just gotta have both!
Conclusion
Now that we’ve closed the case between KPI vs OKR, let’s take a final look at the clues we found 📝
KPIs and OKRs both help you measure performance, but in different ways: KPIs are grounded, like Watson, whereas OKRs are more ambitious, like Sherlock.
And using both of them is like having both by your side; no goal is too complicated for this powerful duo to reach!
But to help you achieve even better results, you need a project management tool like UDN Task Manager .
If you need help with setting and managing your OKRs and KPIs, UDN Task Manager can help you every step of the way with features like Goals, Team Reporting, and Dashboards.
Like Sherlock’s brilliant brain, UDN Task Manager ’s is the perfect tool to help you plan meticulously and think outside the box.
Get UDN Task Manager for free today to feel like this every time you achieve your objectives:
