Certainly, if you’ve been in the workforce, especially in office settings, you won’t be unfamiliar with terms like “OKRs” or “KPIs” as they’re quite common. However, not everyone fully understands what OKRs or KPIs entail. The following article will help you grasp a better understanding of these concepts.
I. What Are OKRs?
OKRs stand for Objectives and Key Results. Simply put, OKRs are a method that helps you easily achieve your goals by managing them in the most specific manner possible, with each goal measured by a key result.
The concept of OKRs originated from Intel and later spread to other companies in the Silicon Valley. Many world-renowned companies have adopted OKRs to enhance work performance, including Spotify, Twitter, and LinkedIn. Perhaps the most famous adopter is Google, which implemented OKRs in 1999. In its initial years of implementation, OKRs helped Google grow its workforce from 40 to 60,000 employees as it stands today.
To begin with OKRs, you first need to identify which goals are truly important to you, prioritize them clearly, and then set them apart from the rest. You must learn to prioritize based on factors such as the importance of the task, its urgency, and eliminate any barriers that may hinder you from reaching your ultimate goal.
Next, let’s explore the two main components of this tool:
- Objective: This is the destination you want to reach. Objectives need to be concise, understandable, and should evoke motivation and determination.
- Key Results: These are the outcomes you need to achieve on your path to your objective. Each objective typically has 3-5 key results (to avoid dilution during the implementation process). There are two main types of key results: “committed results” that you must achieve and “aspirational results” where reaching 70-80% is considered good enough.
A small tip to create a successful OKR is to answer questions such as:
- Where do you need to go? This question helps you determine your goals.
- How will you know you’re getting there? This question helps you identify key results to achieve your goals.
- What will you do to get there? Finally, this is the action plan to achieve your results and goals.
- Below is an example to help you better understand OKRs:
Objective: Improve personal marketing expertise.
Key Results:
- Complete 3 design courses.
- Develop and implement the marketing plan for Q2 2024.
- Run advertisements and generate 2000 orders in Q2 2024.
II. What Are KPIs?
Let’s continue our exploration with KPIs. KPIs stands for Key Performance Indicators. Simply put, these are metrics used to evaluate productivity and efficiency in work. KPIs serve as a measurement value to indicate the performance and effectiveness of tasks that companies aim to achieve, usually within their business goals. For employees and direct managers, KPIs often focus on departments such as sales, marketing, or human resources for measurement. For administrators, KPIs are usually linked to overall business performance.
When it comes to KPIs, we typically think of them as tools for measuring the efficiency and productivity of business outcomes. They are often represented through statistics, reports, or even charts, providing specific quantitative units. KPIs are usually designed in detail for everyday application and execution.
Some characteristics of KPIs include:
- KPIs can be quantified and measured using specific figures.
- KPIs often have specific deadlines and schedules, measurable and executable on a daily, monthly, etc., basis.
- Typically, each employee or department in an organization has their own specific KPIs tailored to their respective tasks and responsibilities.
III. Similarities and Differences Between OKRs and KPIs
Now that you understand what OKRs and KPIs are, let’s compare these two methods to avoid confusion.
1. Similarities
Both are tools for measuring work performance. Both methods provide results expressed in numbers, making it easy for you to measure and evaluate.
2. Differences
Although both are tools for measuring work performance, they have significant differences. The most obvious difference is that KPIs are used to measure departmental goals and cyclical work, and can be measured with precise numbers. On the other hand, OKRs are applied to more complex and less precisely measurable tasks, often not following a specific cycle.
There are also differences in the purpose of using these two methods. KPIs are used to measure the fairness, transparency, and proven results of employee productivity and effectiveness. OKRs help individuals and teams identify goals and priorities in their work.
Another difference is that KPIs can be implemented and measured daily, while OKRs are typically applied on a quarterly or yearly basis.
Both OKRs and KPIs are effective methods to manage your goals. However, each method has its own characteristics and purposes. Therefore, carefully consider your personal and organizational goals and thoroughly understand each method before applying them!
