Measuring performance is one of the many important aspects of every business. It is a continuous process that involves collecting and analyzing information regarding performance of individual employees or a specific department.
How do you measure performance? There are many employee performance metrics that are used to measure their performance from time to time. KPI and OKR are two of the most important and commonly used performance measurement processes.
KPI and OKR work differently for different organizations. They help you understand how tasks are accomplished at your organization and provide you a positive workplace framework to improve employee performance.
A key Performance Indicator (KPI) is a business metric that demonstrates how organizational objectives are achieved. Different organizations use different key performance indicators based on the type of industry and level of focus. Different departments use different kinds of KPIs. KPIs are generally obtainable and can be used to measure the progress on existing smaller projects in the company.
What Is OKR?
As we said in our previous article, OBJECTIVES are something that you want to achieve, and KEY RESULTS are a measurable way to keep track of how close you are to achieving your objective. OKRs work on different levels in the same way as KPIs do but are more challenging and ambitious than KPIs. OKRs are popular for their use at Google in the 1990s. Since then, they have been used by many successful organizations.
KPI vs OKR
Though both KPI and OKR help you measure performance and motivate you to accomplish your goals, they both are different from each other. The OKR process is often more motivating and focuses more on quality of work, while KPI purely focus on the quantity and is a passive indicator of the current situation.
It is challenging to understand which approach is suitable to your organization. OKRs help employees understand and prioritize their tasks and help them make a plan on how to achieve it whereas, KPI help them only to measure the completed work. KPIs can exist without OKRs but for a OKR to function, KPI are important.
OKRs are often more motivating and focus more on quality of work, while KPIs purely focus on the quantity and are passive indicators of the current situation. Both these goal-setting processes require one thing in common, frequent progress check-in and measurement of progress.
However, using OKRs and KPIs as a combined approach helps you create a metric-driven culture and promotes employee engagement. There are more similarities between these two goal management methods than differences, they have the same purpose: Setting goals, promoting transparency, measuring progress and plan for success. The difference is how they work towards their purpose, how to prioritize their goals, and how to measure their progress.
Srikant Chellappa is the Co-Founder and CEO at Engagedly and is a passionate entrepreneur and people leader. He is an author, producer/director of 6 feature films, a music album with his band Manchester Underground, and is the host of The People Strategy Leaders Podcast. He is currently working on his next book, Ikigai at the Workplace, which is slated for release in the fall of 2023.