Comparing OKRs vs. KPIs is an apples and oranges discussion.

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Comparing KPIs vs. OKRs is a hot topic you’ll hear in performance management meetings, but it’s an apples and oranges discussion. While there can be overlap (more on that later), these two concepts are really very different.

On that note, ClearPoint Strategy offers a powerful platform that simplifies the tracking and management of both OKRs and KPIs, enabling organizations to align their strategic goals with measurable outcomes. With ClearPoint, you can streamline data collection, create customized reports, and gain actionable insights to drive your strategic initiatives.

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This article breaks down the key differences between OKRs and KPIs and how ClearPoint can help you leverage both for success.

What is a KPI (Key Performance Indicator)?

An acronym for key performance indicator, KPIs are used to evaluate performance over time for an organization, individual, program, project, action, etc. While you may have some outliers, these indicators should usually:

We highly recommend you make your KPIs measurable. Adding quantitative value makes it easier to provide context and compare performance for whatever you’re measuring. Creating qualitative KPIs is possible, but not advisable because this structure can lead to confusion and subjective interpretations of data.

KPI Examples

There are near unlimited examples of KPIs across all industries. A KPI could truly be any quantitative (and in rare cases, qualitative) measure a company uses to evaluate its progress and successfully reach its goals.

It’s important to note that, unless you have a very small company, your KPIs can and should be broken down by department (and by industry if you are a conglomerate).

Here are some common KPI examples for a variety of industries and divisions:

  • Retail Industry: revenue per square foot, same-store sales, sales per employee
  • HR Department: attrition rate, employee performance, average recruitment time
  • Sales Department: customer lifetime value, sales revenue, calls made
  • Technology Industry: monthly recurring revenue, customer retention or churn, ticket resolution time
  • Healthcare Industry: patient wait time, average treatment charge, number of educational programs

What is an OKR (Objective and Key Results)?

OKR is the acronym for objective and key results—more specifically, an objective is tied to key results. OKR is a strategic framework, whereas KPIs are measurements that exist within a framework.

OKR is a simplistic, black-and-white approach that uses specific metrics to track the achievement of a goal. Typically, an organization will have three to five high-level objectives and three to five key results per objective. Key results are numerically graded to obtain a clear performance evaluation for the objective. OKRs are:

  • Always quantifiable
  • Able to be objectively scored on a 0-1 or 0-100 scale
  • Timelined
  • Ambitious (if you easily achieve your objective, it wasn’t aggressive enough)

The OKR framework was popularized by Google and Intel, but it has also been used by Amazon, LinkedIn, Spotify, and other hugely successful companies for goal management. Generally speaking about OKRs vs. KPIs, the former are a good fit for organizations heavily focused on growth. Not to create confusion, but sometimes an organization’s KPIs are the same as the key results used in an OKR framework. Keep reading and this will become clearer.

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OKR Examples

OKRs are built on big-picture goals and targets that are designed to push employees and companies forward, so they should toe the line of “almost impossible.” The OKR framework is a continual cycle of fast, dynamic growth.

Some general OKR examples include:

  • Objective: Become the market leader in our industry.

            • Key Result #1: Record $100 million in revenue.

            • Key Result #2: Increase staff by 45 percent.

            • Key Result #3: Increase market cap sufficiently to enter S&P 500.

  • Objective: Develop autonomous vehicles.

            • Key Result #1: Hire 10 artificial intelligence subject matter experts.

            • Key Result #2: Invest an additional $500 million in research and development.

            • Key Result #3: Roll out prototype by fiscal year-end.

  • Objective: Increase revenue by 30 percent.

            • Key Result #1: Acquire 50 new customers.

            • Key Result #2: Increase marketing leads by 20 percent.

            • Key Result #3: Increase customer retention to 85 percent.

95% of employees don’t understand their company’s strategy   Don

KPI & OKR Best Practices

KPIs

When it comes to KPIs, do:

  • Keep your KPIs to a minimum. Only certain data is actually key. We recommend identifying one to two KPIs per objective—measurements that will truly help you determine whether you are making progress. Ideally you will have 15 to 25 KPIs on one scorecard.
  • Make sure KPIs are attainable yet challenging. Your employees need a target that’s motivational and makes them stretch, but one that’s too far out of reach will only serve to frustrate people.
  • Be clear. Provide context for each KPI by tying it to an objective and comparing it to a target (for example, an industry average, year-over-year growth, etc.).
  • Frequently review KPIs and update as necessary. Strategy meetings are a great time to reassess your performance measures. If a KPI doesn’t seem to be a good indicator of performance, or if the linked objective has changed, then you may need to adjust or retire it altogether.
  • Use a software reporting tool to simplify tracking. ClearPoint Strategy produces a single, clean, and cohesive monthly KPI report that saves time for everyone and aids in decision-making. Here’s an example of what a KPI report looks like in ClearPoint:
An example KPI Scorecard in ClearPoint.


Can’t decide if the KPIs you’re considering will be effective? Use the seven questions in this article for guidance.

We also recommend that you don’t:

  • Track every single performance indicator in your organization in the same place. At the executive level, only track and report on the indicators that have the biggest impact and value for your company. You can create additional KPI reports and dashboards for department-level goals.
  • Use spreadsheets to track KPIs. Unless you’re just trying out KPIs for the first time or on a trial basis, spreadsheet tracking will only make the process harder to manage.

OKRs

When it comes to OKRs, we recommend you do:

  • Start with a few specific objectives so OKRs are easier to implement. You can also keep it simple by starting with enterprise-level OKRs only, and then add levels for departments (and even individuals) as you gain experience and buy-in.
  • Think in the short term. OKR cycles run on a monthly or quarterly basis. So when you’re creating them, think about the goals you can reach within that time frame that will make a meaningful difference to your company.
  • Make sure that executives support your OKRs. OKRs essentially outline the path your company will take to accomplish its goals. If your leadership team isn’t bought in, they won’t be walking the same path as you, which will inevitably lead to failure.
  • Use strategy reporting software to simplify OKR metric tracking and reporting. Below are two views of OKR reporting in ClearPoint. We make it simple to gather data and be transparent about progress, both of which are necessary ingredients for the OKR framework to succeed.
An example OKR Scorecard in ClearPoint.

An example OKR Dashboard in ClearPoint.


We also recommend you don’t:

  • Build OKRs in a vacuum without visibility into what other parts of the business are doing. OKRs should be created from the top down. Start by defining your OKRs for your organization overall, and then roll them down to the department level, team level, and maybe even the individual level.
  • Use the OKR framework if your organization is focused on maintaining its offerings or growing slowly. OKRs are better for fast growth. You will lose steam with OKRs if you are tracking the same element with regularity each quarter (100% trash pickup for a city, for example).

Your Path Forward: Applying OKRs and KPIs

When comparing OKRs vs. KPIs, we’ve used some clear-cut examples. In the real world, you will have some gray areas—a twist in nomenclature can turn a key result into a KPI (or vice versa). In the first OKR example above, a key result was to “Increase staff by 45 percent.” Counting the number of employees could also be a KPI. The OKR framework is simplistic and based on tracking data, and a KPI is usually a single data point, so you will find cases where there’s overlap.

If your key results and key performance indicators start to sound similar, that’s ok. Just remember that one’s an outcome and the other a measurement—overlap the wording but not the usage of each.

Now that you know the difference between these two concepts, you can choose the right approach for goal achievement in your organization. Whatever framework you decide on, ClearPoint can help you drive it all with our comprehensive system for strategy management.

ClearPoint Strategy has been named a top OKR software in 2023 by the International Business Times!

Streamline Your OKR and KPI Management with ClearPoint Strategy

Are you ready to optimize your goal-setting and performance tracking processes? ClearPoint Strategy offers a robust platform that seamlessly integrates OKRs and KPIs, providing real-time data visualization, automated reporting, and comprehensive strategic management.

Our software simplifies the complexity of performance management, helping you align objectives, measure key results, and achieve your organizational goals. Book a demo today and see how ClearPoint Strategy can revolutionize your approach to OKRs and KPIs.

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FAQ:

What is an OKR?

OKR has two components, the objective and the key result: Objectives are memorable qualitative descriptions of what you want to achieve, and key results are a set of metrics that measure your progress towards the objective. Doerr, who introduced Google to OKRs, has a formula for setting goals: I will ___(objective)___ as measured by –––(key result)–––.

What are key performance indicators (KPIs)?

KPIs are measures used to evaluate the success of an organization. KPIs can be quantitative or qualitative in nature. Quantitative KPIs include metrics such as sales revenue per employee, number of customers served by each call center agent, or revenue. Qualitative KPIs, on the other hand, may include customer satisfaction scores, quality ratings, or product reliability rates.

What's the difference between OKRs and KPIs?

A KPI is a metric and an OKR is a strategic framework. A metric, like a KPI, could be in your OKR framework. If you're looking to create a broad, high-level strategic plan, then you would use the OKR framework. If you're looking to measure the success of a project, however, you'd use a KPI.

What are some common mistakes to avoid with OKRs?

When using the OKR framework, you need to be ambitious and aspirational. Dream big with your OKRs! You should also ensure your key results are tied to your objectives well. It's how you'll measure success, so be smart about the measures you pick.

What are some common mistakes to avoid with KPIs?

Similar to the OKR framework, you want to make sure your KPIs are important and relevant to your strategic objectives. Pick KPIs that truly showcase the success of your strategy. Don't just pick KPIs that you think look good either –while it's great to know how many people are downloading your app, for example, it's even better to know how engaged they are with it by looking ar bounce rate and retention.

What are the different types of OKRs and KPIs

Types of OKRs (Objectives and Key Results):

- Committed OKRs: Objectives that the organization commits to achieving within a specific timeframe.
-Aspirational OKRs: Stretch goals that are more ambitious and may not be fully achievable but aim to push the organization further.

Types of KPIs (Key Performance Indicators):

-Lagging KPIs: Measure the outcomes and results of past activities (e.g., revenue, profit).
- Leading KPIs: Predict future performance and outcomes based on current activities (e.g., sales pipeline growth, customer acquisition rate).

How can OKRs and KPIs be used together to improve business performance?

OKRs and KPIs can be used together to improve business performance by:

- Aligning Objectives and Measures: Use OKRs to set clear, strategic objectives and KPIs to measure progress towards these objectives.
- Driving Focus: OKRs provide a focus on key strategic priorities, while KPIs track the performance of critical metrics.
- Enhancing Accountability: OKRs create accountability for achieving specific goals, and KPIs provide measurable benchmarks to monitor progress.
- Promoting Agility: Regularly review and adjust OKRs and KPIs to respond to changing business environments and ensure continuous improvement.
- Supporting Decision-Making: Data from KPIs inform whether the strategic objectives (OKRs) are on track, enabling timely decision-making and corrective actions.

What are some challenges of using OKRs and KPIs?

Some challenges of using OKRs and KPIs include:

- Setting Relevant Metrics: Identifying the right OKRs and KPIs that align with strategic goals can be challenging.
- Balancing Ambition and Realism: Ensuring OKRs are ambitious yet achievable, while KPIs are realistic and relevant.
- Data Accuracy: Ensuring the accuracy and reliability of the data used to track KPIs.
- Overcomplication: Avoiding the creation of too many OKRs and KPIs, which can dilute focus and overwhelm employees.
- Consistency and Follow-Through: Maintaining consistency in tracking and reviewing OKRs and KPIs regularly to ensure they drive performance.

How can OKRs and KPIs be used to track progress on strategic goals?

OKRs and KPIs can be used to track progress on strategic goals by:

- Defining Clear Objectives: Setting clear and specific OKRs that align with the organization’s strategic goals.
- Selecting Relevant KPIs: Identifying KPIs that directly measure the progress towards achieving the OKRs.
- Regular Monitoring: Continuously tracking KPIs to monitor performance and progress towards the OKRs.
- Reporting and Review: Regularly reviewing and reporting on the status of OKRs and KPIs to ensure alignment with strategic goals.
- Adjusting Strategies: Using insights from KPI data to make informed decisions and adjust strategies to stay on track with strategic goals.