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Ensure your businesses success by utilising OKRs and KPIs. Learn about the differences between the two tools and how you can best employ these frameworks to optimise your success.
Running a company and managing its growth, especially in a hybrid world, can be an extremely difficult thing to handle. There are so many components of any company that need attention in order for the business to thrive, from communication styles and ensuring trust in hybrid teams.
Often growth relies on the competency of all the workers, from the CEO to part-time employees. And when it comes to ensuring that your business prospers, there are certain tools you can use to help you in measuring your progress. Two of the most common are OKRs and KPIs.
In this blog, we’ll break down what these terms mean, what the differences are and how both are uniquely beneficial. You’ll also learn how you can use them to make your company the absolute best it can be.
OKRs stands for Objectives and Key Results. It is essentially a framework that companies use when setting and managing goals for their business.
OKRs fundamentally involve two separate aspects:
Objectives: The first is objectives which lay out what it is that you would like to achieve. This needs to be something that is measurable and reasonably attainable.
Key results: The second is the key results, which are the quantifiable results that you need to produce in order to achieve the objective.
Here are a few OKR examples that can be used for various roles in your company.
Objective:
Grow the business
Key results:
- Grow website users by 110%
- Increase revenue to £4mn
- Reduce churn to less than 4%
Objective:
Improve employee happiness
Key results:
- Launch two employee surveys
- Achieve employee happiness score of over 7
- Create quarterly Ask Me Anything with management team
Objective:
Improve product
Key results:
- Upgrade security level
- Improve process for prioritising feature development
- Launch 6 new application features
KPIs stands for key performance indicators. They are simply a quantifiable measure of a specific aspect of the company’s performance over time.
Companies use these when tracking their performance within a specific field, and they can be used to gauge the progress of any company.
KPIs can be strategic or operational. Strategic KPIs can otherwise be understood as big-picture organisational goals. These are what CEO’s and managers will use when seeing how their organisation is progressing at any given time. Operational KPIs are therefore the small-picture organisational goals. They generally focus on a more succinct time frame and will focus on a specific process or aspect of the company.
Here are a few KPI examples that can be used for various roles in your company.
- Ensure profit margin of above 20%
- Increase revenue by 10% this year
- Hire 5 new employees
- Maintain 4:1 Interview-to-hire ratio
- Identify and resolve 10 bugs each quarter
- Keep NPS score above 8+
OKRs are extremely important when managing success within a company as they provide you with a framework to establish and achieve clear goals. They bring a clear perspective onto what needs to be accomplished, through the setting of the main objective and the use of key results to see how well this objective is being met.
KPIs, on the other hand, offer great insight into how well specific aspects of your company are functioning. It can serve as a sort of ‘health check’ for your company which serves to show how well your company is performing in any given area.
For this reason, we believe OKRs are better for a business that is wanting to create and to achieve an overall goal. KPIs are better for a business when you are tracking a specific achievement as a company.
OKRs allow companies to establish their goals and motivations through a clear and transparent framework. This can lead to a stronger work ethic and higher levels of commitment across the workforce as everyone is aware of what they're working towards. They can also be used to track success and achievement from a company level. How? Through OKRs, it is straightforward to assess how easy or difficult it is to achieve the main objective by reflecting on the success or failure of the specific individual key results.
KPIs can be used within a specific OKR. For example, if your objective is to increase your online presence, you can use KPIs to track the overall website engagement you are gaining to see how realistic this objective is.
By tracking specific areas of your business using KPIs, it can also help your business to establish whether your goals are being met and whether changes need to be made. KPIs can also help to hold workers accountable to their performance as it can show how well they are completing certain tasks.
Now that we have established what an OKR is, here is our step-by-step guide on how to write one.
1. Quarterly or annually: Generally speaking, OKRs are either set for a quarter or for a year. It is important to know the timeframe before you do anything else as it will help to manage your expectations for what you will be able to achieve.
2. Set an objective: The clearer and more specific this objective, the better. This will allow you to be really certain about what your company is aiming towards.
3. Recognise the levels: In any company, there are three main levels: company level, team level and individual level. You will need to recognise which level(s) you will need to use in order to achieve the set objective.
4. Three key results: For each level, set out three key results that they will need to reach in order to work cohesively to achieve the final objective. Again, these key results need to be attainable, succinct and understandable. If you include more, then there is a chance that you may end up overcomplicating the process and make the road to achieving your objective less clear.
5. Monitor and make changes: Throughout your time in trying to reach the set objective, you can use KPIs to monitor your success and make changes based on what is working and what is not.
6. Report: At the end of the process, you will need to grade your OKR achievement. This is generally done on a scale from 0 to 1, where ‘0’ would mean that the objective was not met and ‘1’ would mean it was, with the numbers in the middle representing whether it was somewhat met.
Here is how to write great key performance indicators:
1. Set a clear subject: Much like with OKRs, when writing a KPI you need to set a clear and specific subject of the KPI so that you know what it is exactly that you are measuring the success or failure of.
2. Share your KPI: Given that KPIs measure the success and progress of a particular aspect of a company, you will need to share this KPI with the relevant and important people which include stakeholders and the relevant members of your team.
3. Review: It is important to regularly review your KPIs to see if you are measuring the right part of your company and if you are getting the results that you would like to see.
4. Report: When writing a KPI report, there are many digital software tools you can use. There are some great templates for KPIs available here or you can use a BI tool such as PowerMetrics to help with real time visualisation of your KPIs. You can check out our full list of the best digital tools in the next section.
Following on from the last point about writing a KPI report, digital tools can be used to really support the writing and reporting of OKRs and KPIs. Here are our five best recommendations.
1. GTM Hub - For OKRs, GTM HUB is a must-have digital tool. It enables your company to orchestrate strategy and deliver business results. It has been used by over 1,000 companies in over 75 countries.
2. Scoro - For KPIs, Scoro is a great work management software which tracks your progress as a company with a focus on both time and money management.
3. Zokri - For OKRs and KPIs, Zokri is a strategic planning, goal and KPI management tool which allows businesses to best execute their strategy.
4. Perdoo - For OKRs and KPIs, Perdoo allows companies to execute strategy and propel growth by putting OKRs into context, offering robust reporting and expert coaching and industry-leading resources.
5. Weekdone - For OKRs, Weekdone is an OKR software which offers coaching to ensure a results-driven company culture. It is best placed for SMEs and startups.
Both OKRs and KPIs are absolutely crucial in ensuring that your company is functioning to the best of its ability and is achieving its set goals.
OKRs are best used as a framework to create objectives and to measure your performance in achieving them. KPIs on the other hand are best when evaluating how effective a specific aspect of your company is. With our beta, you can automatically get updates from your OKR and KPI software alongside all your other applications. You can sign up for early access here.
What style of tracking does your company use to ensure you are staying on the top of your game? Let us know by sending us a message on our Twitter or LinkedIn.