Monitoring and measuring certain aspects of your company's success is a natural part of operating a business. Not only can you ensure that your business is moving in the right direction, but you can also double-check that your company is on track for a successful future.
Working in tandem, objectives
and key results (OKR) — as well as key performance indicators (KPI) — are an excellent way to accomplish exactly that. Let's take a look at how they go hand in hand.
KPIs and OKRs: the bottom line
OKRs act as the framework. You can use them to set strategic goals, like increasing employee engagement. Meanwhile, KPIs are what you can use to track the tasks within your goals.
For example, let's say you have an OKR in place to reduce the number of employee complaints from five to one per month. A supporting KPI — such as the metric being tracked to measure performance — might be a reduced rate of absenteeism. Ultimately, KPIs can help you reach OKRs.
Advice for those tracking OKRs and KPIs
Let's take a look at five pieces of advice that can guide you when setting KPIs and OKRs.
KPI- and OKR-related goals are not immediately achievable
Results don't happen overnight. Achieving OKRs and KPIs is more akin to running a marathon than a sprint.
To stay aligned with the dynamic business landscape, OKRs should undergo monthly or quarterly reviews. Make sure you allow for necessary adjustments as conditions shift, not only for OKRs but for KPIs too.
OKRs and KPIs require patience
Take it slow. OKRs and KPIs are not instant solutions. Rather, they require time and careful planning as you set out to achieve the objectives that will guide the company in the right direction.
For example, the duration needed for effective sales training will vary based on the size and experience of the sales team. Afterward, a KPI — such as sending out 25 sales emails and conducting follow-ups — can be put into effect, and it's favorable because this KPI is easily trackable.
However, if results indicate that 25 contacts are excessive or that follow-up calls don't yield any meeting sign-ups, you may want to revise the KPI.
Make sure your OKRs are specific, measurable and flexible
OKRs should be ambitious. They must be clear enough to be measured yet flexible enough to be deemed successful even if you do not reach your goal in full. For instance, in many cases, hitting at least 80% of your goals is deemed a success.
Returning to the earlier example of enhancing employee engagement, an OKR should go beyond improving employee engagement. Instead, why not specify a target by defining it more clearly?
You could set an OKR of "increase participation in performance reviews from 65% to 80% by Q4" instead. From there, the KPIs related to this OKR should contribute to the achievement of this target in a practical way.
Quantitative measures reflect companywide strategic goals
OKRs represent quantifiable metrics that are tied to the company's strategic objectives. On the other hand, KPIs outline the actions that must be taken if you wish to fulfill the goals set forth by the OKRs.
Transparency and communication are imperative
As with most organizational efforts, making your intentions known in a straightforward and honest way is important. All in all, you should define what success looks like via OKRs and outline the steps that must be taken to reach the OKRs via KPIs.