How is OKR different from KPI?

How is OKR different from KPI?

Be it a Fortune 500 company or a Startup, every business strives hard to push the individual or team’s performance. Measuring performance is one of the crucial parts of growth to analyze the potential curve of your organization.

How to measure whether your company is propelling or is at a snail’s pace?

In quarterly meetings, your manager might have tossed the concept of OKR and KPI, the tools used to analyze and compare the performance of individuals and help them accomplish critical tasks at an organization. At first sight, they might seem similar, but they work differently at the base level.

Before learning how they are different, let’s have a glimpse of what these management tools are:

What is KPI?

KPI stands for Key Performance Indicator, a metric monitoring tool to evaluate the performance over a certain period of time. It is a tool that analyses whether a particular individual, team, or entire organization is performing up to their set goals.

The KPIs are usually quantitative and measurable metrics that assess the pace of an individual or a team in attaining their goal. Every department has a different set of KPIs, which adds value to its overall growth.

What is OKR?

OKR stands for Objective and Key Results, a strategic goal-setting framework. It is a management tool which helps you break down your strategy and execution in two components: Objective - the plan you idealized and Key Results - to execute the objective.

The objective is the goal, and it has a set of 2-3 Key Results, which measures the success of any set Objective. The OKRs are ambitious, qualitative goals which are packed with the caution of failing with deliverables since tasks are set higher than employees’ threshold potential.

Read our blog : An Introduction to OKR

Are they different?

Though they might seem similar on the surface as measurable management tools that help in accomplishing set goals, but OKR and KPI are entirely different from each other.

The core values and fundamental principles vary in both concepts. OKR focuses on the quality of the ambitious stretch goals, whereas KPIs are solely focused on the quantity of the goals attained in a particular quarter.

OKRs are used to motivate the individuals to work hard even with a looming fear of failing, but KPIs are structured for completion whatever the case is. The former allows the employees to prioritize their tasks in compliance with long-term company goals while the latter is all about stepping on the finishing line.

Any management tool shall have a positive impact on the individual, allowing them to feel they are part of something bigger than themselves. OKR is a framework which will enable them to explore their highest potential without being blamed for failure. However, KPI does not allocate this flexibility. They are frequently used for evaluation, so the employees usually avoid the risk of challenging their comfort zone.

Is there any midway?

OKR and KPI are like black and white, but in the real world, there are always certain grey areas. In simpler terms; OKR is a strategic goal framework, but KPI can be used a metric which suffice that framework. So there are ways to have a combined approach towards KPI in OKR, a metric-driven framework which advocates employee engagement.

Organizations can devise a way to incorporate the KPIs with their KRs to promote growth, hence forming a coalition between the two widely used performance management tools.

These concepts promote goal transparency, exponential progress, and design a plan for success, with a slight deviation of how to work towards the development and prioritization of tasks.

You can use both, but make sure to have a consistent tracking schedule.

How about using a tool for OKR? Pre-sign up for OKR Board - A tool to make your OKR Setting Process Smooth and Clutter Free.