Most people are confused between OKR and KPI and often wonder if they happen to be the same. Well, to clear out the confusion, it is first necessary to learn about OKR and KPI individually so that it helps to differentiate between the two easily and learn what is used where.
What is OKR?
OKR stands short for Objectives and Key Results. To put in simple terms, Objectives tell an organization what target to reach, and Key Results tell whether or not the goals set are achieved or not.
OKRs help an organization divide the entire set of work into two major categories, that is, objectives and key results. It breaks down all the tasks into simpler tasks and completes them in comparatively less time. It is as simple as setting a goal and mapping out a process to get there.
OKR inspires people to set ambitious, and realistic goals depending on their capabilities.
It further motivates the employees to work towards achieving the goals productively. Additionally, everyone is accountable for the work they have done as there is a high level of transparency.
Some of the most popular tech and social media giants such as Google and Twitter use the OKR framework. Their success shows how effective OKRs can be in the growth of an organization. OKRs focus on both the quality of the work as well as the quantity in the form of metrics and numbers that the key results display. Each employee's work can be tracked, and all the ups and downs are shown. This will help the organization align everyone to work together to achieve the target.
What is KPI?
KPI stands short for Key Performance Indicators. They are the performance metrics that can help measure an individual's, team's, or the entire organization's performance. Additionally, they can also measure the performance of a particular activity or task.
KPIs can measure the success rate of an assignment of any domain. There are several types of KPIs, and an organization can choose the kind that would fit their requirements or objectives. Undoubtedly, there can be a usage of different types of KPIs within the organization based on the team and their specific purposes.
It is essential for an organization to tailor the KPIs to their specific uses rather than using another organization's. The Keys in KPIs can range between any number of keys which may include even 40 keys. For easy understanding, here are a few examples where the metrics are derived with the help of KPIs.
For a sales department, customer's lifetime value, and trial-to-customer conversion rate can be easily measured using KPIs. For a marketing team, they would be measuring the website traffic and conversion rates.
For a technical or customer support team, the keys would include the average reply time and the number of tickets per month. On the whole, KPIs are used to measure evaluate and control processes of individuals, teams or departments success rates.
KPI vs. OKR - The Basic Difference
One of the primary and significant differences in OKR and KPI is the keys. There are a limited number of keys in OKR whereas the number can range from a single digit to a three-digit in KPIs.
OKRs help to set goals and measure their results while the KPIs measure the results against goals.
OKRs can give detailed information on how the task is performing, what needs to be done to improve it, and how it can be done. On the other hand, KPIs only show the area that requires action and the success rate.
OKRs may sometimes set unrealistic goals which may not be reached in the specified timeline. On the contrary, KPIs set realistic and achievable targets. KPIs show the results of a task that is already set.