OKRs are currently one of the most popular methods for implementing modern management and performance concepts. But KPIs are also an important variable in goal management. Time for us to take a closer look at the two concepts and how they differ from one another.
The Difference Between OKRs and KPIsLinh Tran, Wednesday 27 October 2021 | Reading time: 4 min.
Brief definition: OKR
OKR is the abbreviation for "Objectives and Key Results". It is a leadership or management method that focuses on the definition of goals. Individual objectives are defined for a specific period of time (e.g. a quarter). These objectives are compared with corresponding key results. OKRs can be applied to the entire company, to teams and departments, and to individual employees. It is important that the OKRs are not imposed " top-down", but are developed in collaboration. The goal is to create a certain commitment and focus in the company and for each individual employee. At the end of the period, a retrospective is conducted to review the achievement of objectives and to set new ones.
Brief definition: KPI
KPI stands for "Key Performance Indicator". KPIs are various key performance indicators that make the success factors of an organization measurable. KPIs help companies and employees to assess whether the work performed is good or bad in relation to predefined goals. KPIs can therefore be used to identify whether a company, department or team is fulfilling its purpose and to what extent predefined goals are being achieved.
Examples of KPIs include:
- Sales: revenue per employee
- Public relations: number of placements in the media
- Marketing: number of leads generated
- Personnel development: number of employee development measures carried out
- Production: number of units produced per day
The differences between OKRs and KPIs
After this brief look at the definition, some may wonder what exactly the difference is between the two concepts. In principle, OKRs and KPIs seem very similar at first: both are somehow about defining goals and measuring their attainment. So what is the difference?
KPIs help us quantify a goal and thus define the desired outcome of a process (e.g. 20,000 leads = increase of 10 percent compared to the previous year). We cannot actively influence the goal itself, but ultimately only check it at the time of measurement.
We can ultimately only influence a goal with the help of various supporting activities (e.g., ad placement, press releases, events). The quantification of these activities is similar to OKR logic (e.g. 3 successful ads with a total of 50 new contacts). OKRs therefore contribute directly to the achievement of KPIs. For example, a 10 percent increase in leads can be achieved through the objective "building a high-quality brand image." Corresponding key results would be, for example, the commissioning of a PR agency or the placement of three positive interviews in the media.
The difference between OKRs and KPIs is that OKRs look more at the causes of success and failure and KPIs are an indicator that makes the achievement of objectives measurable. OKRs thus define supporting goals for the achievement of the KPIs. Both models complement each other very well and can be combined."