Setting ambitious goals is motivating. Nothing quite pushes you forward like knowing the exact finish line you want to cross.
But working toward your goals is a process, not an event. There’s inevitably a lot that happens between the starting line and the finish line, and it’s helpful to have some mile markers that help you figure out if you’re sticking with the right route or if you’ve found yourself off course.
That’s where KPIs and OKRs come into play. These goal setting methods and frameworks help you keep close tabs on your progress as you work your way toward that finish line.
These two catchy acronyms are frequently confused and conflated, but there are some distinct differences between the approaches.
Objectives and key results (OKRs) require you to identify both your target and the metrics that will help you stay on track. Key performance indicators (KPIs) are focused only on tracking your progress — think of them like the signals that you’re heading the right way.
Lace up your running shoes. This guide has everything you need to understand the definitions and differences of KPIs vs. OKRs and how use them to achieve your desired outcomes.
What is a KPI?
Key performance indicators (KPIs) are defined as performance metrics that evaluate the success of an organization or particular activity. KPIs can apply to projects, programs, products, and a variety of other initiatives. They can measure the success of anything from sales goals to social media metrics.
The exact origin behind KPIs is unknown, but the act of measuring performance dates back to the third century when the emperors of the Wei Dynasty (221-265 AD) rated the performance of official family members. Today, KPIs have been adopted by countless organizations and used to evaluate and forecast success.
However, a KPI is only as valuable as the action it inspires. Often, companies try to adopt KPIs used by other companies and use them as their own, then wonder why their goals are never met. Just as every employee is different, every organization is different. KPIs should be tailored to your specific organizational objectives, how you plan on achieving them, and who can act on this information.
Let’s take a look at an example. Let’s say your product management KPI was to increase marketing qualified leads (MQLs) by 30%. Here’s how you define it:
KPI for MQL growth
- What: Increase MQLs by 30% this year
- Why: Achieving this target will allow the business to become profitable
- How: Hiring additional sales staff, improving existing marketing strategies, adopting a new tool, creating more content, etc.
- Who: VP of Marketing is responsible for this metric
- When: The KPI will be reviewed on a quarterly basis
What is an OKR?
Objectives and key results (OKRs) are defined as a metric that outlines company and team “objectives” along with the measurable “key results” that define the achievement of each objective. OKRs represent aggressive goals and define the measurable steps you’ll take toward achieving those goals. They’re typically used to set quarterly goals but can also be used for annual planning. The rising popularity of OKRs is mainly attributed to Intel and Google, which have adopted this technique for their planning.
OKRs are set at the company, team, and individual levels. Here are a handful of OKR examples:
Company OKR 1:
- Objective: Become the #1 most-downloaded iOS productivity app
- Key Result 1: Conduct a survey to identify the ten most-requested features and launch five of the top most-requested features by Dec 15
- Key Result 2: Conduct 10 user tests to identify UX issues
- Key Result 3: Show at least 50% improvement in satisfaction with UX (via customer survey)
- Key Result 4: Earn 200 five-star ratings by Dec 31
Company OKR 2:
- Objective: Increase brand recognition and awareness
- Key Result 1: Increase media engagement by 20%
- Key Result 2: Launch customer referral program by Jan 1
- Key Result 3: Extend social media reach and visibility to two new target markets
- Key Result 4: Expand the thought leadership program by placing guest articles on four industry-related sites with an Alexa ranking of at least 30,000
Marketing team OKR:
- Objective: Increase social media engagement by 35%
- Key Result 1: Research and identify the three most popular social media sites among two new target audiences and develop an engagement strategy by Jan 1
- Key Result 2: Participate in six Twitter chats involving industry leaders
- Key Result 3: Respond to new Facebook comments within three hours
- Key Result 4: Increase the number of followers on Facebook and Twitter by 20%
- Objective: Increase the number of social media connections by 25%
- Key Result 1: Increase posting frequency on Twitter to 8x daily and Facebook to 3x daily
- Key Result 2: Establish a social media presence on two new sites — LinkedIn and Quora
- Key Result 3: Join five LinkedIn groups with at least 2,500 members each and leave comments on the 10 most popular discussions in each group
- Key Result 4: Gain 15 followers on Quora by posting three answers and one question every week
What are the differences between OKRs and KPIs?
They’re both three-letter acronyms focused on goal setting, so it’s understandably easy to confuse OKR vs. KPI. However, there are some notable differences between the two.
Here’s a quick breakdown on what separates an OKR from a KPI:
Objectives and Key Results (OKRs)
Key Performance Indicators (KPIs)
OKR vs. KPI: Which one to choose?
Still scratching your head wondering which way to go? Take comfort in the fact that there isn’t one “right” answer. When evaluating whether to use OKRs vs. KPIs, it’s really up to you and what you’re looking to measure.
For example, if you’re looking to scale or improve upon a plan or project that’s been done before, KPIs might be the better option. They’re straightforward and allow you to add a measurement system to your ongoing projects and processes.
However, if you have a larger vision or are looking to change your overall direction, OKRs might be the better choice. They have a greater depth that will allow you to stretch your goals even further and be a bit more creative in how you plan to reach them.
Can OKRs and KPIs work together?
If you’re still feeling stuck on whether to choose an OKR or a KPI, use them both. OKRs and KPIs not only can work together, but are most powerful and impactful when used in combination with each other.
Your KPIs measure overall performance, which means they’re a relevant and data-backed starting point for setting your OKRs. For example, perhaps your organization set a KPI of maintaining an employee turnover rate under 15% for the next year.
But when you do your monthly reporting and check in on that KPI, you realize that you’re currently hovering at about 23% turnover. You have some work to do, and setting some OKRs for the company and even at the individual and team level can help you get that back on track.
To provide just a quick example, the human resources team might set a related OKR that looks like this:
- Objective: Improve employee engagement scores by 20% on next engagement survey
- Key Result 1: Launch new employee intranet to inform and connect onsite, remote, and hybrid workers
- Key Result 2: Roll out career paths so all employees see clear paths for advancement
- Key Result 3: Provide targeted training to managers on pertinent topics like autonomy, wellbeing, and career development
See how that objective and those key results connect to the broader KPI? The OKR is focused on engaging employees, which will likely reduce turnover and improve your KPI performance.
Put simply, you can use your KPIs to monitor and highlight potential areas of growth and improvement and then set your OKRs to support development in that area. Doing so helps you set KPIs and OKRs that support each other, rather than confuse or compete against each other.
Importance of measuring performance
Regardless of which technique you choose, the bottom line is: The only way to improve is to measure and review performance. If you don’t take the time to set objectives, or you’re setting them but not reviewing them at the end of the year or quarter, you miss a prime opportunity to learn and improve. Remember, you can actually learn from failures and successes, so make it a top priority to implement performance metrics. You may be surprised by how quickly you and your team reach them.
How Wrike can help you define business goals
Wrike’s OKR management and goal tracking software is designed to help organizations meet and exceed their objectives. You can visualize milestones with calendars and Gantt charts, keep track of progress with personalized dashboards, and share results with our custom reports.
What's more, our OKR template makes it easy to build OKR projects, create OKRs for individual team members, and align your team’s work with the overall company goals.