In today’s business world, performance and goal management play a critical role in helping companies achieve success. Two of the most commonly used approaches in this process are OKR (Objectives and Key Results) and KPI (Key Performance Indicators). So, what are the key differences between these two methods? In which situations should OKR be used, and in which situations should KPI be applied? In this article, we will examine the differences between OKR and KPI in detail and discuss how both methods can be used together.
Future vs. Past: The Primary Focus of OKR and KPI
The fundamental difference between OKR and KPI is the time period they focus on. OKR focuses on the future. It defines the big goals that a company wants to achieve and the steps to take in order to reach those goals. You can think of it as a navigation system: you define your destination and plan the route you will take to get there. OKR shows you the path and your progress during this process.
KPI, on the other hand, focuses on the past and current situation. It is used to check whether the company is progressing in a healthy way. You can think of it as the fuel gauge in a car: how much fuel is left, and when do you need to refuel? KPI answers questions like these.
Change and Transformation vs. Stability
OKR is used in processes of change and transformation. It aims to move the company from its current state to a better point. For example, goals like increasing employee satisfaction or developing a new product can be set using OKR. OKR requires continuous improvement and development, making it a dynamic system. KPI, on the other hand, has a more stable structure. It is used to check whether existing processes are functioning properly. For example, monthly sales figures or employee turnover rate can be set as KPIs. KPI helps the company maintain its current state and detect potential problems early.
Alignment of Performance with Collaboration
OKR is based on collaboration and commitment. The goals set with employee contributions are aligned with the company’s overall strategy. In this process, the ideas and contributions of each employee are of great importance. It boosts employee motivation and makes them more committed to the company’s goals. KPI, on the other hand, is used to align performance indicators with the company’s overall objectives. It has more of a top-down structure.
For example, suppose the company sets an employee turnover rate of 10%. This is a KPI that measures the current situation. The company can take various measures to keep this rate low. The company may aim to reduce the employee turnover rate from 10% to 5%. To achieve this goal, they can initiate projects to increase employee satisfaction or invest in employee career development. In this process, OKR progresses dynamically and requires continuous improvement.
How to Use OKR and KPI Together?
OKR and KPI are not alternatives to each other, but complements. By using both methods together, you can monitor your current situation and set large goals for the future. Here are a few tips:
- View the current situation (KPI): First, assess your company’s current situation with KPIs. This will help you establish a healthy starting point.
- Set goals (OKR): Next, define the goals your company wants to achieve using OKRs. These goals will determine the future direction of your company
- Continuously improve: Regularly review your OKRs and track them alongside your KPIs. This will help you understand how close you are to your goals and which areas need improvement.
- Track capabilities with OKR.
- Measure performance with KPI.
Myliba offers you all the tools and resources you need for both OKR and KPI management, guiding you through the process. With Myliba, you can define and track your goals more effectively using an OKR map. Monitor your corporate performance with KPI and create personal KPI cards for your employees in seconds.
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