OKRs Vs KPIs: Which is a Better Performance Management Tool?

In the current scenario, most organizations are moving from traditional methods like Key Performance Indicators (KPIs) to Objectives and Key Results (OKRs) approach. But you might be wondering if OKRs are better performance management tools than KPIs. The answer is yes! Although OKRs do not replace KPIs but enhance the overall performance impact and drive business growth. Furthermore, OKR methodology aids organizations to focus on their priorities, set the clear goals and attain measurable outcomes that accomplish the company’s overall mission and vision.

OKRs Vs KPIs: Which One is Better?

Objectives and Key Results as well as KPIs are the powerful strategies for gauging workforce performance and meeting the long-term business goals. KPIs are metrics based on employee performance per their varied job roles, skills, and learning habits. This metrics serve as an indicator for managers to analyze how their team members are progressing while achieving a specific goal. KPIs also provide measurable output on whether the company is moving in the direct direction and focusing on the right goals. On the other hand, OKRs are the performance management framework to effectively align to strategic goals and yield the best results. While objectives are ambitious and realistic, key results are metrics that define progress against the targeted goal. Each objective must have 2-5 key results. Effective OKRs set a clear set of priorities, cascade top-level goals to different teams, and focus on what matters.

Let us explore their individual roles as performance management tools:

• Corporate leadership create KPIs for the entire year and evaluate performance and compensation based on metrics. While OKRs are assessed and refreshed from quarter to quarter based on business requirements, individual progress, and overall strategy.

• KPIs focus on a specific objective that will strive the company to succeed. On the other hand, OKR methodology is adopted to focus on the broader picture, that is how to accomplish the company’s long-term goals with a consistent vision and mission.

• Top leaders set the KPIs based on individual job roles and business needs. OKRs set by the leadership and further cascaded to the teams so that they can adjust accordingly. Further, individual and team OKRs are aligned with the top-level goals, bringing transparency of between the teams, driving collaboration, and ensuring that everyone contributes towards the company’s growth and success.

• KPIs are used to gauge the quality and success of an ongoing business process. On the other hand, OKRs serve as a performance management framework for setting inspiring goals and attaining improved outcomes at the end of every quarter.

In a nutshell, KPIs are important when organizations need to evaluate their employees’ performance throughout the year. Objectives and Key Results are ideal for setting a shared set of goals and achieve a major uptake in business performance. However, adopting both OKRs as well as KPIs can bring out the best outcomes by fostering a collaborative environment, driving performance, and overall on-the-job productivity. Clearly, OKRs reflect the long-term goals of a company, quantify outcomes through metrics, and take actions to bridge the gap between strategy and execution.

So, are you willing to move from traditional goal setting methods to the powerful OKR framework? If yes, then Unlock:OKR can be the one-stop solution for you! The ideal framework will help you unlock performance and success through Alignment, Focus, Clarity, and Accountability. Join the club of some of the leading companies like Netflix, Amazon, LinkedIn, and others that successfully adopt, track, and implement OKRs for performance management and goal setting. You can request for a Free Demo to explore how Unlock:OKR can align your teams to meet the organizational goals, thus directing towards achieving success and accelerating performance.