OKRs vs. KPIs: How they work hand-in-hand to keep you on track
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Not everything has to be a competition.
The Olympics — that’s a competition. Trivia night? Competition. A hot dog eating contest? Verified competition.
OKRs and KPIs, on the other hand, don’t have to duke it out for the title of “Top Project Management Metric.” In fact, they can work hand-in-hand to help you meet your goals and keep teams on track.
In the world of project management and analytics, it’s easy to pit different solutions against each other. This way, you can weed out what’s unnecessary and focus only on what really matters and drives results.
But while it might be tempting to favor one over the other, it’s important to track both OKRs and KPIs. And that starts with understanding the unique benefits of each, as well as where they fit into your project structures.
Here’s what you need to know.
OK, what are OKRs?
OKR stands for “objectives and key results,” and it’s a common solution for setting and meeting company goals.
So let’s further break down those two components of OKRs:
- Objectives — These are the big-picture goals you want to achieve, such as increasing annual revenue or improving customer experiences.
- Key results — These are the metrics you’ll use to track your progress in meeting your objectives. For example, if your objective is to improve customer experiences, your key results might be increasing your Net Promoter Score (NPS) five-star Yelp reviews.
Now, can we use that in a sentence? Yes, we can. The standard way to approach OKRs is to say: “I will [objective], as measured by [key result].” For instance, “I will increase brand awareness by gaining 100,000 new Instagram followers.”
OKRs can help companies set and stay on track towards long-term goals. They can also help team members better understand how their work contributes to overall company success and achievements, which can boost internal engagement and productivity.
In a recent webinar, for instance, Tom Bash, Head of Product at Tastemade, shared how he uses OKRs to ensure all projects have a defined value output.
“We have a form that stakeholders can use to request builds from the engineering team,” he said. “That form largely asks, ‘Why is this valuable? What’s the value you’re getting from this? What impact do you expect it to have? What OKRs does it roll up to?’”
What is an OKR example?
Here’s an example of an OKR breakdown for a customer support team:
- Objective — Streamline ticket resolution
- Key result — Handle 20% more tickets each week
- Key result — Achieve a 5X increase in response time
- Key result — Reduce recurring tickets by 30%
What are KPIs?
KPI stands for “key performance indicators.” Similar to the “key results” part of OKRs, KPIs are quantifiable metrics that you can use to track your progress towards a certain goal.
KPIs commonly don’t stand alone; they’re tied to larger goals, benchmarks, past data points, or ongoing measurements of performance.
What is a KPI example?
In line with the OKR example above, say a customer support team is trying to improve ticket resolution. They might set the following KPI: Resolve 30 ticket responses per day for a month. That might help in the short term. But, of course, if their number of incoming tickets increases, they’ll need to reevaluate and adjust that KPI the following month.
OKRs vs. KPIs: How do they compare?
OKRs and KPIs have many similarities: They provide a framework for setting and tracking business goals. They can be measured quantitatively with concrete data. And their metrics follow the “SMART” guidelines: specific, measurable, aligned, relevant, and time-based.
Still, OKRs and KPIs have key differences that are important to understand. Namely, OKRs are best used to maintain focus and alignment for big-picture goals, while KPIs are used to evaluate the progress of a specific ongoing project or task.
How can you use OKRs and KPIs together to meet your goals?
OKRs and KPIs aren’t mutually exclusive. They can be managed in tandem and inform each other to boost your project management outcomes. In fact, they should. Because if you rely solely on OKRs, you might miss opportunities to gauge ongoing progress across specific metrics. And if you rely solely on KPIs, you might lose track of how they tie into your overall business goals — or even which teams and stakeholders own them.
After all, you can gather data and crunch the numbers to reach a certain benchmark, but if you don’t really understand why you’re doing it, you risk wasting resources on unnecessary tasks. As management consultant and theorist Peter Drucker famously said, “There is nothing quite so useless as doing with great efficiency something that should not be done at all.”
With that in mind, here are just a couple of ways OKRs and KPIs can work hand-in-hand:
- Use KPIs to achieve your OKRs. Set KPIs that inform your key results and help you meet your objectives. So, if your objective is to improve customer experiences and your key result is to generate more five-star Yelp reviews, you might use this KPI to help you get there: Gather 1,000 customer feedback forms this week to learn more about what customers need.
- Create OKRs to improve lagging KPIs. If your KPIs aren’t hitting their marks, go back to the OKR drawing board for a solution. For instance, your KPI might be to reach $1 million in sales this quarter, but you’re falling short. You can create an OKR with these key results: increase revenue per deal by 20% and finalize X number of new contracts.
So, yes, competition can be fun. But when it comes to streamlining project management, sometimes it’s best to use various resources — backed by the right tools and strategies — to keep teams and goals aligned across your organization.
