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Jessica Malnik on May 20, 2020 (last modified on May 19, 2020) • 15 minute read
Many people confuse OKRs and KPIs.
It is easy to do.
The simplest way to think about OKRs is the big hairy audacious goals that your company wants to reach in the future.
KPIs are specific, measurable, tactical goals that can help you stay on track.
As Mark Walker of Attest says, “OKRs and KPIs can complement each other perfectly.
OKRs are all about setting ambitious, cross-functional goals that motivate teams and individuals to achieve great things.
KPIs help teams and individuals to break down OKRs into smaller, tactical goals that provide more near-term feedback on whether they’re on track to achieving the bigger OKRs.
This way, KPIs and OKRs reinforce each other and remain 100% aligned, giving teams the right level of vision and granularity to drive the whole company forward.”
In this post, we’re going to outline what OKRs and KPIs are as well as ways that you can combine these two frameworks for better results:
“The acronym OKR stands for Objectives and Key Results, a popular goal management framework that helps companies implement strategy,” says Matthew Turner of Boston Turner Group. “The benefits of the framework include improved focus, increased transparency, and better alignment. OKR achieves this by organizing employees and the work they do around achieving common objectives.
An OKR consists of an Objective, which defines a goal to be achieved, and up to 5 Key Results, which measure progress towards the Objective. Each OKR can also have Initiatives, which describe the work required to drive progress on the Key Results. The framework includes a number of rules, which help employees prioritize, align, focus, and measure the outcome of the work they do. OKRs helps entire companies communicate company strategy to employees in an actionable, measurable way. It also helps companies to move from an output to an outcome-based approach to work.”
In fact, most companies have fewer than 6 OKRs.
“For me, KPI’s are more static,” says Nathan Bliss of Kinsta. “They should always be top of mind.
For example, talk time is a KPI that I always closely observe of the Account Executives on my team. It is often an indicator of momentum in a pipeline. OKRs are dynamic and more closely aligned with company initiatives. Those can change over time to coincide with the launch of new products, business goals, etc. Your KPIs should be set up in a way that they can always support your OKRs. No matter what they are.”
“There are some key differences,” says Julia Adler of OPIN Software. “Objectives and key results (OKRs) help an organization to set its quarterly goals and their corresponding key activities that will help drive those goals. Whereas, key performance indicators (KPIs) are used to verify and measure the desired outcome that has happened in the past. Key results and key performance indicators have a lot of overlapping similarities.
Let’s use an example, your Quarterly Sales KPI is $200k MRR whereas your OKR is to Build a Sales Machine with KRs of Helping sales learn to better quality prospects, Make 100 calls a month, Follow up with all SQL’s within 48 hrs. OKR’s help organizations measure and focus on the activities, behaviors, and processes that are truly needed to help hit those KPIs.”
“An essential point for us is having measurable OKRs that directly impact the KPI,” says Giedrius Zakaitis of Zyro. “It’s not so easy to come up with at first glance. To get to the very bottom of the issue, we continuously keep asking, “why” until we’re pretty much out of ideas for drilling down deeper. That has helped us get the most out of this system.”
Ken Christensen of Christensen Recycling adds, “KPIs and OKR stats work very well together. Once you have a good understanding of your monthly or quarterly goals, you can then amplify that to set your annual goals and outlook as well.
In the construction business, we always look at our bottom line based off the averages that we have in place from previous years (along with budget and ad spend), and then always try to surpass these numbers across the board.”
“Use KPIs to Help Determine Your OKRs,” says Lior Ohayon of Hush Blankets. “I always recommend using KPIs (Key Performance Indicators), to help identify issues that OKRs (Objective & Key Results) can solve. KPIs help give a precise indicator of where you need improvement. OKRs set the long term goals based on that information.”
This process also works in reverse.
Melanie Musson of LifeInsuranceTypes.com adds, “KPIs can tell you if your OKRs are working. OKRs can help you decide what your KPIs should be. Your KPIs can help you tweak or change your OKRs. OKRs explain what you will do to improve your KPIs.”
William Chin of Bumblebeelinens.com says, “Ensure that the OKRs come from high in the organization (Founders, Owners, C-level execs etc..). These individuals should have the forward vision for the company and therefore know the following:
Afterward, it’s up to Directors and Managers to build the associated KPIs with their relevant executives and give them a roadmap on how these OKRs can be answered. In the Product world, Epics (large projects or series of tasks), would help accomplish a specific OKR over a period of time. Usually, an epic will target some sort of KPI in the process.”
In fact, according to our survey, director-level roles are typically responsible for specific KPIs.
Anton Ross of Upgrow.io says, “Since OKRs are specifically designed to be unattainable, what sets OKRs apart from other goal-setting techniques is that they can enable teams to focus on big bets and accomplish more than the team thought was achievable, even if they don’t fully attain the stated goal. OKRs can help teams (and individuals) get outside of their comfort zones, prioritize work, and learn from both success and failure.
KPIs are critically important for strategy. They allow us to decide and communicate on what our strategic goals are for the organization. A good KPI says, “If this business is going to be successful, we need to achieve THIS.”
In contrast, good OKRs should serve a tactical purpose, allowing us to identify particular initiatives that we want our team to work on…and then have them get to work!”
Ameet Khabra adds, “The way I view OKRs and KPIs is that OKRs are the blanket statement of what you’d like to achieve and KPIs are how you’d go about measuring if you’re successful or not. In that, your OKRs and KPIs would always align as your KPIs would be in relation to OKRs.”
Or, put another way, Melissa Hughes of Foundation Marketing adds, “Think about objectives qualitatively. They are the destination you are desiring. Then think about KPI quantitatively. They are the tangible steps you need to take to arrive at your destination.
We set objectives for the company overall and then together as a team we determine KPIs that see us achieving each.”
“OKRs and KPIs need to be worked together,” says Jonathan Aufray of Growth-Hackers. “OKRs define the vision and overall growth strategy of your company while KPIs are metrics showing that your business is on the right track to reach your OKRs. Focus on improving your KPIs and you will get closer to attaining your OKRs.”
David Denning of Jumpstart Go says, “They work together in the fact that KPI’s are the driving force behind the key results for the main objectives in your OKRs. So, ideally, if you’re hitting your KPIs, then you should achieve the key results that will help you achieve your objectives.”
Alicia Hunt of Koan adds, “In terms of our OKRs, objectives are what you’re going to accomplish, and key results are the metrics to know if the objective was achieved – or commonly, the KPI that our team is driving.”
It is for this reason why KPIs often make ideal key results.
“When you set KPIs, you’re defining the milestones that lead to bigger goals,” says Obaid Khan of Planet Content. “Therefore, you need to determine the metrics that let you analyze both past and present performance.
You determine which of them need to improve and then set OKRs to improve those KPIs.
Keep updating your OKR progress and by the end of a predetermined period, evaluate how your KPIs have improved.
Essentially, the cycle consists of checking for KPIs that need improvement, setting OKRs for those shortlisted KPIs, carrying out efforts to try and achieve them, recording the results – and repeating.”
Nick Montagu of alphawhale says, “A KR is a KPI. It is a key result and it is the thing you measure that determines if you’re meeting your objective or not. Instead of just measuring metrics and a set of objectives. We need to give our teams a sense of purpose behind why we’re going in this direction. It’s like an umbrella. At the top of the umbrella is an objective, and below that are the key results that are synonymous with KPIs.
Our best advice is that your key results have an antonym key result. In other words, a negative key result.
As an example of how that works together as a concept. Let’s say you’re a bank, and your goal is to increase people signing up for new credit cards. In that case, you should have a negative keyword result which says that your “fraud rate on credit cards doesn’t go up”. By doing so, your team will be less incentivized to sell a credit card to just anyone.”
“The KPIs and OKRs must align and all connect to the same greater goal or else we have missed the boat and are dead on arrival,” says Kevin Miller of The Word Counter. “The KPIs should act as contributing factors that will lead to OKRs being achieved.”
Brandon Chopp of iHeartRaves adds, “It’s very important to align the entire organization behind the company’s top goals so that everyone is rowing in the right direction. It’s also extremely important that each team member fully understands what winning looks like, has their own clear measurable goals, and also understands how it ties to the company goals.”
Nikola Roza of SEO for the Poor and Determined says, “As for aligning KPIs and objectives, the key is to find a KPI that best correlates with reaching or not reaching the set goal and then tracking its progress.”
For example, Josh Ho of Referral Rock says, “An objective for our product team is to improve overall product quality, the related KPIs are the number of breaking changes released where we have a limit set to 4 in the quarter.
Yet another objective for the product team is to, ‘Deliver high-value features’ and that is not tied to a KPI, but more of a binary metric of did we do the feature or not do the feature.
We have a mix of OKRs that align with KPIs and ones that do not.
Every team has their own OKRs and subsequent KPIs.”
“Both KPIs and OKRs are essential to measuring performance and motivating team members,” says Joseph Pineiro of 360training. “In fact, I’d argue that the only way to track and review performance over time is the only way to get better.
Ideally, your KPIs will work as attainable goals you plan on achieving each quarter. One of our SEO KPIs, for example, is a 15 percent growth YoY.
OKRs should be more ambitious, and you shouldn’t always be able to achieve them. They tend to be less specialized and are a way to set goals for the company as a whole. Sometimes, they don’t even include numbers. Our company’s most important OKR is to control a majority dedicated market share in the online education economy. Think of OKRs as the way of measuring the CEO’s vision for a company, while individual departments’ goals are measured with KPIs.
Your OKRs should always encompass your KPIs, and your KPIs should help you to achieve your OKRs. A good way to ensure your KPIs align with your OKRs is to set your OKRs first and then determine which metrics will be most helpful to consistently track and review.”
“KPIs are a great way to monitor past performance while OKRs are more forward-looking to lead to positive outcomes and change,” says Joe Martin of CloudApp. “Understanding historical trends from KPIs can help lead to creating OKRs for positive change.”
Alejandro Rioja adds, “Without KPIs, it’s difficult to know what to improve and without OKRs you won’t be able to focus on your business goals.
In short, they work hand in hand in helping you assess your business performance with a keen focus on targets.
For KPIs, I just have one advice: Only focus on what’s important for your business and nothing else! It’s not always smart to have more than 30 metrics on your dashboard just for the sake of having a huge amount of data.”
Editor’s Note: A streamlined sales dashboard like this Hubspot CRM dashboard can help you quickly see insights about your sales pipeline and new deals won.
Stephane Gringer of Chameleon Collective says, “OKRs put the emphasis on end results. Setting and agreeing on OKRs leads to pragmatic strategy building with tactics measured by KPIs.”
Alex Azoury of Home Grounds says, “KPIs should fold into your OKRs. If you have an overall objective, your key performance indicators are how you measure your progress (or lack thereof) toward achieving that objective.
For example, if our objective is doubling MRR, we need to track KPIs such as daily sales. This will allow us to project future growth, and adjust our tactics if needed.”
“KPIs and OKRs are both used to measure the performance of an organization, but are used for different purposes,” says Bruce Hogan of SoftwarePundit. “KPIs are the key metrics that indicate how well a business is performing. For an ecommerce company, KPIs could be traffic volume, conversion rate, and monthly active customers.
In contrast, OKRs are used in the planning process to help individuals and teams determine if their initiatives are successful. For example, when launching a new paid search campaign, a marketer might have an OKR that sets a target for that campaign’s revenue and ROI.
In sum, KPIs help teams execute against shorter-term goals that allow the company to achieve its OKRs over the long run.”
Pranay A of Keka HR adds, “OKRs helps you to define your goals and play a key role in developing the path to attain those goals. And, KPIs on the other hand, help you to assess the success of the process. When the KPI is not met or is not up to the mark, you need to develop an OKR to achieve it. The KPI will now become a Key Result in the OKR.”
For example, Justina Bakutyte of Yieldify explains, “KPIs feed into OKRs and not the other way around.
The way they work together is that after setting OKRs and mapping out certain initiatives you’re going to take to achieve your KRs, you need to know which metrics you can use to track your progress on those initiatives. A very rough example could be:
Objective: Substantially increase demo signups.
KR 1: Generate 3,000 demo sign-ups in Q2.
IN 1: Reduce the number of fields on the sign-up form.
IN 2: Run A/B tests of single-step vs multi-step form.
IN 3: Increase quality traffic to demo signup page by 30%.
In this scenario, you would use a variety of KPIs that relate to your initiatives, such as Conversion rate, Form abandonment rate, Sessions, etc.”
You can take this a step further by building out a dashboard to track all of your OKRs and KPIs.
Nicole Jackson of Foundation Marketing adds, “To ensure your KPIs align well with your objectives, you want to consider what you, and your team, can actually do to affect progress toward your particular objectives. That’s why our team uses a proactive dashboard alongside our OKR tracking sheet.
Each activity that you add to a proactive dashboard is an activity that you have control over. So, if your objective is to increase brand awareness online, perhaps one key result, or KPI, is an increase of 20 new followers, across social media channels, month-over-month. Well, how can you make that happen? You don’t have control over how many new followers you’ll get, but you have control over how many tweets you send, you have control over how many times you post on LinkedIn, how often you engage with those followers, etc. Essentially, you have to work backward to craft a strategy toward that end goal.”
Editor’s Note: You can track social media reach and follower counts using this social media dashboard template.
In sum, you can think of OKRs as big picture goals. Then, you can reverse engineer your success path with KPIs.
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