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OKRs vs.KPIs

May 15, 2023 by admin

Since the time of industrialization, there have been several techniques introduced to measure performance, such as Management By Objectives(MBOs), SMART(Simple, Measurable, Attainable, Relevant, and Timebound)objectives, and Key Performance Indicators (KPIs). As time went by, a new concept named Objectives and Key Results (OKRs) emerged, which is built on the basis of Management by Objectives (MBOs). There are several companies, like Google, LinkedIn, Oracle, etc…,have achieved great results using the OKRs. However, some companies still use KPIs, and maybe they believe that the idea of performance evaluation does not become true without KPIs.

KPIs were inventedin the United Kingdom,andit is a performancemanagement method. KPIs are used to evaluate the performance of an organization, individuals,and team.It uses indicators as evaluation criteria to evaluate the performance,and KPIs intern usesSMARTcriteria.

OKRs,on the other hand,invented by INTEL, is a framework that helps to define Objectives and theirassociated success indicators which are called “Key Results.“OKRs are considered a critical thinking framework and a discipline to work together on measurable results. OKRs intern uses Management by Objectives (MBOs) criteria. OKRs can be implemented in four steps:

Setting Goals (Define the Objectives)
Determine the Key Resultsfor each goal
Establish and implementthe plan
Regular Review, feedback,and relentless improvement

Example OKR

Objective: Increase brand awareness

Key Result 1 (KR1): Create a subject matter article bi-weekly and upload it to the website

Key Result 2 (KR2): Conduct a minimum of two Agile trainings monthly

Key Result 3 (KR3): Meet and demonstrate our offerings to a minimum of three customers a month

OKRs

KPIs

OKRs focus on what is most important for the organization	KPIs give more emphasis on some of the performance indicators and less on some
OKRs are not used for performance scores	Monitoring KPIs is cost-effective, but some KPIs, such as employee satisfaction, are hard to quantify. For this reason, KPIs sometimes felt as not effective
OKRs are not top-down defined. They are defined at all levels, such as Executive Level, Management Level, and Team Level	It takes time and effort to get the employee buy-in to meet the KPIs
OKRs are not top-down defined. They are defined at all levels, such as Executive Level, Management Level, and Team Level	It takes time and effort to get the employee buy-in to meet the KPIs
OKRs are not be kept secret, and they should be transparent to every level in the organization	Measures of KPIs considered important in one department may not be considered important in other departments
Implementing OKRs requires highly proactive, responsible, and creative employees. Authoritarian leadership isn’t suited for OKRs	KPIs are a prediction of future activities; it is possible that these predicted activities may not happen. For this reason, if incentives are not in place, then innovation does not happen

There are some similarities; KPIs and OKRs are intended for the purpose of meeting the organization’s goals. Key indicators in KPIs and key results in OKRs are similar.

In conclusion, when compared with KPIs, OKRs are a perfect mechanism for an organization to meet the expected goals (objectives) since OKRs encourage transparency, collaboration, and involvement at all levels of an organization and a sense of ownership. In addition to it, OKRs provide a framework with steps to develop, track, and relentlessly improve.

References:

Niven, P. R., & Lamorte, B. (2016). Objectives and Key Results: Driving Focus, Alignment, and Engagement with OKRs (Wiley Corporate F&A) (1st ed.). Wiley.
Gray, D. (2019). Objectives + Key Results (Okr) Leadership: How to Apply Silicon Valley’s Secret Sauce to Your Career, Team or Organization. Action Learning Associates, LLC.