OKR vs KPI: What’s the Difference?

If you want to grow your business, it’s of utmost importance to set measurable goals and regularly check how you’re progressing toward achieving them. That’s where OKRs and KPIs come into play. They allow you to learn what works best for your business, what doesn’t, and what you can do to make it perform better. In this article, we’ll break down the OKR vs KPI comparison and show you real-time examples of how they can help your company’s growth. 

Key Takeaways:

• KPIs vs OKRs are two measurement frameworks that influence the development and actions of both smaller and larger organizations.
• OKRs can show organizations potential areas for improvement through smart goal setting, which can help reach the KPI targets. 
• OKRs are useful for launching a new product or service, expanding to another market, or increasing the market share. On the other hand, KPIs can help you track website traffic, sales volume, and other metrics.

Quick Summary

Differences between OKRs and KPIs often leave novice project managers and smaller organizations in general confused. But it doesn’t have to be that way. What they share in common is that both are business performance metrics, but they serve distinct purposes and apply to different circumstances. 

The OKR (Objectives and Key Results) framework helps set and achieve specific strategic goals of an organization. It’s worth mentioning that OKRs aren’t just about setting goals; they’re about creating alignment and driving engagement across an entire organization.

OKRs represent an ideal framework for motivating teams, aligning efforts across the organization, and promoting transparency and accountability. An OKR might seem challenging at first, but it’s designed to push the boundaries of what’s possible and inspire innovation within the team. 

KPIs (key performance indicators) are quantitative metrics that are used continuously to monitor the efficiency and effectiveness of ongoing operations. Organizations use KPIs to track progress and see whether they’re meeting operational targets and ensuring quality standards.

Common KPI metrics are the number of sales, customer service satisfaction (e.g. through NPS), production output (e.g. produced units of “X”), and other metrics that provide real-time data that can inform important decisions. 

KPIs are often mistaken for OKRs, but both serve important purposes in this organization. A KPI measures progress, while OKRs come forward as an important framework for setting goals. Continue reading this OKRs vs KPI comparison and learn more about these metrics and how to choose the right metrics to track.

At Kanban Zone, we’re equipped with a state-of-the-art solution that allows you to both set OKRs and measure KPIs. There’s no ambitious KPI or a too challenging OKR structure for us, so make sure to try us free or book a complimentary coaching session with our team.

What Are Objective and Key Results (OKRs)?

Objective and key results (OKRs) are a goal-setting framework that you can use to outline your organization and team’s key objectives. 

The goal is to define measurable objectives and then track their outcomes through specific and quantifiable results. What is an objective in particular? It’s a clear goal that has a motivational purpose. On the other hand, key results serve as benchmarks for measuring progress towards this goal.

OKRs grew in popularity because they help teams align their efforts while prioritizing work. Additionally, they help link goals across the organizations with measurable outcomes. This helps drive engagement and allows teams to focus on outcomes over outputs. 

Some of the key mistakes to avoid with OKRs include setting vague objectives, lack of proper communication and team involvement, and others. 

With OKRs, the organization should encourage setting challenging and ambitious goals. However, they should also set clear and realistic deadlines. In the end, this practice will help foster transparency and accountability among team members.

OKR Examples

If you didn’t come across OKRs in the past, you’re probably looking to know some real-life examples. We have listed them below. 

1. Objective: Increase company revenue

• Key Result 1: Grow quarterly sales by 15%.
• Key Result 2: Launch two new product lines by the end of Q3.
• Key Result 3: Increase customer retention rate by 10% in Q4.

2. Objective: Improve customer satisfaction

• Key Result 1: Achieve a customer satisfaction score of 90%.
• Key Result 2: Reduce response time to customer inquiries to under 2 hours.
• Key Result 3: Implement a new customer feedback system by the end of Q2.

3. Objective: Enhance employee engagement and retention

• Key Result 1: Reduce employee turnover by 5% by year-end.
• Key Result 2: Implement a quarterly team-building program.
• Key Result 3: Achieve an employee satisfaction rate of 85% in the next employee survey.

4. Objective: Expand market presence

• Key Result 1: Enter 3 new international markets by the end of the year.
• Key Result 2: Increase brand awareness by 25% as measured by social media engagement.
• Key Result 3: Partner with 5 major industry players for cross-promotion by Q3.

What Is a Key Performance Indicator (KPI)?

A key performance indicator (KPI) is a performance metric that demonstrates how effective a company is at achieving key business objectives. KPIs are high-level business performance metrics that help monitor performance across different departments of an organization. 

Organizations rely on KPIs to evaluate their success in reaching new targets and objectives. It’s worth noting that they vary between companies and industries. That’s because different companies have different priorities and performance criteria. 

KPIs are critical in evaluating performance over time because they offer a simple way to measure progress against goals. Companies can use KPIs to assess the impact of their actions which leads to more informed decisions.  

KPIs are like a scoreboard at a sports game. It helps show the score and tell you how well each team is playing towards winning the game, a KPI shows a company how well it’s performing towards its main goals.

KPI Examples

There are many KPIs that an organization may keep track of. Here are some of the most important ones that you may want to consider for your organization. 

1. KPI: Customer Satisfaction Score

• This measures how satisfied customers are with a company’s products or services, usually collected through surveys and feedback forms. A target might be set to maintain a score above 80 out of 100.

2. KPI: Monthly Sales Growth

• This tracks the month-over-month percentage increase in sales. For example, a company might aim for a 5% increase each month to indicate healthy growth.

3. KPI: Employee Turnover Rate

• This measures how frequently employees leave the company. A lower turnover rate, such as less than 5% annually, might be a target to ensure stability and employee satisfaction.

4. KPI: Net Promoter Score (NPS)

• This tracks how likely customers are to recommend a company’s products or services to others. A score of 50 or higher might be set as a goal to demonstrate strong customer loyalty.

5. KPI: Website Traffic

• This measures the number of visitors to a company’s website. An increase in traffic, such as a 20% rise each quarter, might be targeted to reflect effective marketing strategies.

OKR vs KPI: Key Differences

The main difference between KPIs and OKRs lies in their function and application. 

Both KPIs and OKRs serve different purposes in an organization. KPIs are used to measure the performance and efficiency of ongoing operations in your team. Using KPIs allows you to get quantitative data on various aspects like sales, productivity, efficiency, and customer satisfaction because ultimately KPIs are measurable. 

In an organization, KPIs can provide a snapshot of how well different areas are doing. The leadership will monitor these metrics and take any necessary actions to ensure continuous improvement. 

On the other hand, OKRs are more goal-specific because they focus on setting goals that aim to push the boundaries of the organization’s current capabilities. The leadership will use OKRs to set ambitious goals. 

OKRs are prone to regular reviews and updates, as this ensures to measure progress and realign efforts as needed. 

This table shows the breakdown of OKR vs KPI differences more effectively. Make sure to check the table and observe the comparison between these two metrics.

When to Use OKRs vs KPIs?

Now that you have learned what’s the difference between OKRs and KPIs, you should be able to identify when to use which. Both will help you reach the desired outcomes if you apply them properly. However, first, you need to identify what you want to achieve with your organization. 

Many organizations use OKRs and KPIs interchangeably, and that is hurting their growth. One serves one specific purpose, while the other helps with other outcomes related to your organization. 

However, you won’t go wrong if you choose to use both OKRs and KPIs for your organization. It’s worth noting that you can leverage one of each for different situations in your organization. KPIs are measurable, which means you can use them to improve your performance in the current or future sprints. 

If there is some project that didn’t turn out the best in the past, you can use KPIs to monitor results while identifying what was wrong in the first place. With KPIs, you can adjust the metrics to match the needs of your projects and keep up with them.

OKRs on the other hand are more suitable if you have some long-term goals that you’re looking to achieve. They are also helpful if your organization is becoming more ambitious and looking to bring some new products and services. 

The best thing about OKRs is that you can break them down into smaller tasks and milestones and increase your workspace engagement by giving each team member a role that contributes to the greater objective equally. 

At the end of the day, you can combine these two frameworks to achieve better results. Whether you’re setting or measuring goals, setting OKRs and KPIs will help organizations with performance management and measure success. 

Track OKR and KPI with Portfolio Kanban

As we navigate to the conclusion of this OKR vs KPI comparison, it’s important to remember to stay aligned with your business goals. To use OKRs and KPIs effectively, you should consider using Portfolio Kanban to manage your OKRs, delegate them into smaller milestones, and measure your success. With Kanban Zone, you can start combining OKRs and KPIs and achieve both better results and long-term goals. 

Kanban Zone is equipped with a robust Kanban board, cards with mirroring options, and a plethora of other features to share work among individual team members. Try Kanban Zone free and manage your OKR progress towards your goals.