OKRs Vs KPIs: Take Your Pick

Here’s the complete guide to OKRs Vs KPIs!

The debate on OKRs Vs KPIs is a never ending one. OKRs and KPIs are essentially goal-setting frameworks. However, it is important to note that both terms serve different functions. These frameworks are distinct from one another in terms of the criteria for measurement, time duration and end-goal. 

OKRs are popularly used by teams to achieve personal or professional goals. Whereas KPIs are used to track performance of set company goals. If you want clarity on these two frameworks, keep reading to find out more. 

What Are OKRs?

OKRs have been around since the 1970’s. This methodology was first introduced by the Intel Corporation. Objectives and Key Results (OKRs) consist of definable goals and the relevant metrics that represent the results or impact. OKRs can be created for achieving personal or professional goals.

For example, a writer working for a digital marketing company sets an objective of taking up a three month writing course. The key result for this specific learning objective could be a 30% increase in the  user engagement rate.  

Examples of OKRs   

If your company has introduced OKRs and you’re confused as to how you should go about it, here are a few examples of OKRs to help you get clarity:

  • Individual OKR: A great example of an individual objective would be to improve one’s communication skills. The expected key results of this skill-acquisition objective could be to lead a presentation at work. 
  • Team OKR: There are various team OKRs. A great example of a team objective would be to boost digital marketing efforts. The key results of this would be an increase in the sales rate by 20%.
Source: What Matters

Benefits of OKRs 

The OKRs framework has numerous benefits. There are a lot of ways companies can benefit from this incredible goal-setting framework. The popularity of OKRs can be attributed to the multitude of  benefits it offers. 

Boosts Motivation 

OKRs instil a sense of purpose in employees. This can inspire them to achieve their objectives and set even higher ones. As a motivational tool, OKRs are a great way to increase workforce performance. 

If you find your team struggling with collaboration, use the OKRs framework. This can work wonders for team collaboration projects. 

Enables Accountability  

By stating the objectives and achieving the key results, individuals ensure a system of accountability. This framework informs them of the points of failure as well as the success associated with achieving an objective.  

It is essential for employees to take accountability for their work related responsibilities. This is why OKRs are popularly used by small and large companies. 

Increases Organisational Agility 

OKRs are crucial for any company seeking to increase organisational agility. The processes involved with OKRs enable accountability and transparency. Both of these are marks of any agile organisation.  

This seemingly simple framework can help a company grow and become stronger. The process of tracking and achieving a team objective can help organisations improve their workforce performance. 

Types of OKRs (Source: What Matters)

What Are KPIs?  

Key Performance Indicators (KPIs) are used to measure business goals. These are highly effective in guiding marketers to create targeted campaigns that are also relevant. The use of financial KPIs are particularly useful in forecasting business growth.   

It has become almost impossible to run any high-performing business without the help of relevant KPIs. It does not matter if you run a startup or an established business, these indicators are a must. 

Examples of KPIs 

Many businesses use KPIs in areas of marketing and finance. These are crucial for the victory of any business. Here are some examples of popular sales and marketing KPIs:

Return on Investment (ROI): This KPI works for both marketing campaigns and for other financial investments. This KPI informs the profits obtained from the investment. To measure the success, in terms of profits, this KPI is popularly used. 

Conversion Rate (CR): The CR is an essential indicator for many businesses, especially those just starting out. The CR of a website represents the number of first time visitors turning into customers. It can help marketers focus on web optimization to supplement their efforts. 

Customer Acquisition Costs (CAC): The CAC KPI is used by companies to determine the costs associated with securing a customer. These costs take into account marketing and other services. It is a crucial indicator for businesses that wish to create a good name for themselves.

Net Promoter Score (NPS): The NPS indicator informs business owners of the loyalty their customers subscribe to the brand. This can be highly advantageous for the future growth of a business. 

Here are some examples of popular Financial KPIs: 

Gross Profit Margin: The Gross Profit Margin is an incredible KPI. It represents the profitability of a business. Business owners can use this information to gear-up their efforts to grow the brand.  

Inventory Turnover: This KPI guides business owners to efficiently manage their finances. For instance, if the inventory turnover is low, it means that sales are going slow. This can force marketers to reconsider their marketing tactics. 

Source: Passionned Group

Benefits of KPIs

KPIs are highly effective tools of measurement. These indicators help business owners and marketers to strategize effectively. For startups, KPIs can be a great way to reduce costly errors. Here are a few of the most incredible benefits of employing KPIs.   

Makes Marketing Effective 

For digital marketers, KPIs are an essential part of their marketing arsenal. These indicators guide them to improve their efforts. For example, if the conversion rate on a website is low, then marketers would opt for web optimization. 

If the user engagement on social media posts is much lower than usual, then marketers can choose to opt for engaging content like short-videos. By doing so, they can ensure a large following on these platforms. 

Helps Businesses Grow  

The use of KPIs is particularly useful for growing a business. With the help of financial KPIs like the Gross Profit Margin, business owners can assess the damage a recession would cause to their sales. 

This information can enable them to come up with precautionary measures. For example, setting up an emergency fund or seeking a loan from the bank. By doing so, businesses can survive the impact of economic uncertainty. This can end up being incredibly useful in the long-run.  

Improves Customer Satisfaction 

With the help of the right KPIs, business owners can improve their customer service. For example, if the Net Promoter Score is low, then business owners can introduce the appropriate changes to their brand.

KPI’s are highly informative of a business’s performance. For the improvement of a brand, these indicators are essential. If any brand wishes to boost their customer service, they need to use KPIs as guides.   

How Can Businesses Use KPIs the Right Way?

KPIs can be powerful in leading business growth. However, it is of highest importance to keep a few considerations in mind. Business owners need to avoid using too many KPIs as this can create problems.

To pick the right KPIs, you must put your business objectives in focus. For example, for calculating the performance success of a social media campaign, you can use the ROI KPI. The costs of running ads on online platforms can be taken into account for this. 

The use of incorrect metrics can lead marketers to a standstill. It is crucial to pick only the relevant KPIs for your business.  

How Can Companies Use OKRs the Right Way? 

To use OKRs the right way, companies can use a bunch of software tools. The most popular tool has to be Google Sheets. This makes OKR management easier for employees. The amazing part about it is that it has collaboration features. 

There are OKR templates available online that can guide you to kickstart this initiative. Here is the link to Hyper Context’s OKR template: Template Link. You can decide to tweak the template to make it more fitting to your company.   

To make OKRs work, you must be super consistent in your efforts. This can help make the goal-setting system more efficient. OKRs require focus and determination from participants which is why it’s necessary to stay on track with this framework. 

OKRs Vs KPIs?    

Both of these frameworks are effective in measuring progress and driving results. With the help of the right OKR software, employers/HR managers can ensure a smooth process of fulfilling personal or team objectives. 

In digital marketing, KPIs are crucial. It is difficult to achieve a business objective, whether that is associated with marketing or finance, without the help of these incredible tools. The OKRs Vs. KPIs debate would be an unfair one because both of these frameworks are built for different purposes.  

Have you ever used a KPI for your business? 

Featured Image: Credo


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