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OKRs and KPIs: What They Are and How They Work Together - Reflektive
OKRs and KPIs: What They Are and How They Work Together - Reflektive
OKRs and KPIs: What They Are and How They Work Together - Reflektive
GENERAL
OKRs and KPIs: What They Are and How The Reflektive Team
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If your employees express confusion about the difference between OKRs vs. KPIs, they’re
not alone. Many people don’t understand the difference between the two, let alone how
OKRs and KPIs work together.
The simplest way to distinguish OKRs vs. KPIs: OKRs are used to reach objectives, while
KPIs measure employee, departmental and organizational performance.
OKRs
OKR stands for Objective and Key Results, and it’s used to set and achieve specific goals.
OKRs are set for a defined time period, usually a business quarter, and include a specific
objective accompanied by two to five smaller key results. The objective details a desired
destination, while key results show how the objective will be achieved. OKRs must be
measurable and attainable, but they are often more aspirational in nature.
Think of an OKR as a road trip, with the objective as the destination and the key results as
your GPS. Ask yourself three questions:
The first question — where you need to go — should provide a clear objective for the
OKR. Examples of possible OKR objectives include:
Once you determine your objective, you need to develop your key results. An OKR’s key
results are highly specific and outline how you’ll know you have reached your objective.
Depending on the scope of your objective, you may have a single key result or multiple.
Examples include:
Most OKRs have more than one key result. For instance, if your objective is to select 25
new franchise candidates, your key results might include:
Once you achieve your key results, you need to consider future initiatives. What steps will
you take now that you’ve achieved your OKR objective? Initiatives form the basis for your
next set of OKRs. If you didn’t meet your objective, determine how close you came to
meeting your objective and build new OKRs based on your progress.
Sometimes called health metrics, KPIs vary within industries and even within individual
companies. The KPIs for, say, accounting, will be very different from those used to
evaluate IT processes. Common examples include KPI measurements of:
Count
Downtime
Production rates
Sales revenue
SEO traffic
Takt time
Web traffic
OKRs are often used to help companies break out of the norm and grow into new
territory. OKRs are often for the inspiring goals that often take company-wide
involvement. A KPI measures the success, quality, quantity or output of an ongoing
process.
More often than not, KPI goals are attainable and represent the output of a process or
project already in place. On the other hand, OKR goals tend to be more aggressive and
ambitious — without being unreachable.
Effective use of both OKRs and KPIs requires consistent communication between
managers and employees to share feedback, discuss progress, and identify potential
challenges and opportunities. When used correctly, both KPIs and OKRs are influential
tools for goal management.
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