No matter how long you’ve been in business, you’re bound to be overwhelmed by all the acronyms tossed around. In this article, we’ll discuss OKRs vs. KPIs, two popular acronyms that help you set your goals, and measure performances and results.

We’ve covered OKRs a bunch in previous posts, so we’ll start with KPIs. We’ll discuss OKRs down the line. But first….

What does KPI stand for?

KPI stands for 

Key
Performance 
Indicators

They are performance metrics aimed at evaluating success, output, quantity, and/or quality of ongoing activities (i.e. projects, programs, products, and etc), and individuals. KPIs are unique for each team, company, and industry so don’t go implementing someone else’s KPIs into your workflow because it worked for them.

How do I define my KPIs

You define your KPIs according to your core business objectives. They should be linked to strategic objectives and not just anything that can be measured, otherwise, you are wasting time and resources. It can be a challenge, but you can ask yourself 6 simple questions:

KPI OUTCOME

What is the desired outcome
Why is the outcome desired
How will you influence your desired outcome
Who will be in charge of the outcome
When will you track the outcome

Here’s an example of how to answer these questions:

KPI OUTCOME: Website traffic growth
What: Increase website traffic by 10% this quarter
Why: Achieving this target will build brand presence which in turn can make the brand more profitable
How: Adding more SEO-friendly content, improving funnels to the site, adopting new marketing strategies and tools, creating more engaging content on social media.
Who: VP of Marketing will be in charge for this metric
When: The KPI will be reviewed on a weekly basis

Tips for super effective KPIs

• Make the information succinct, clear and relevant to be absorbed and acted upon more quickly
• Focus on outcomes, not business activities
• KPIs metrics should be very carefully thought through. No random numbers for the sake of having a number.
• KPIs need to express metrics that are integral for a business’s success
• Ensure that your KPIs are attainable

When you encounter a KPI that needs improvements, it becomes a starting point in creating OKRs.

What does OKR stand for?

OKR stands for

Objective
Key
Results

Like KPIs, half of OKRs are metrics while the other half is the objective aka your goals. With OKRs, you set your objectives and see your success with your key results. They’re more inspirational and help everyone share the company vision.

Aspects of OKRs:

• Measurable – there should be a significant percentage/number of improvement you need to achieve.
• Ambitious – the goal must seem impossible but can be reached with enough effort. They should be inspirational.
• Flexible & Agile – Your timeline to meet these goals must be to respond to changing conditions.
• Clear – everyone needs to know and understand what your OKR is and how they are contributing.
• Bidirectional – this means that teams define their tactical OKRs (bottom-up) and see how they align with the C-levels strategic OKRs (top-down).

Companies such Google, Microsoft, and Netflix use OKRs. C-level executives set these objectives for everyone to follow, with contributions made by the team. OKRs are both strategic (annual goal) and tactical (monthly/quarterly). Their purpose is to align teams with transparent goals and metrics in which the teams set their own goals in a bottom-up approach. When employees are able to have a voice in company goals, employee engagement increases.

In the battle of OKRs vs. KPIs, the ambitious nature of OKRs means your goals will be hard to achieve 100% of the time. It’s best to achieve 60-70% of your objectives, while anything more means it was too simple and anything less means you didn’t plan well enough to execute it. KPIs measure the metrics to help you achieve your goals by helping you see what areas you can improve or adjust on.

It’s important to note that because you are setting ambitious goals that will be very hard to achieve, failure of achieving an OKR should not be calculated into an employees’ bonuses. If you connect bonuses with OKRs, then employees will not set ambitious goals for themselves that could have benefited the company.

Objectives themselves are not countable, but with key results they are. Key results are the metrics that tell you what you have done and what else needs to be done to get to your goal. Teams can choose one or several key results, but it’s recommended to have three to five. The less you have the more you can focus.

How do you set OKRs?

John Doerr, who brought OKRs to Google, used the following formula:

I will (objective) as measured by (this set of key results)
Here’s an example of how that would be filled in:

I will get people to visit my website as measured by (1) Increasing traffic from 5,000 to 10,000 by the end of the quarter and (2) creating 20 new pieces of SEO-friendly content on the website.

OKRs are commonly written this way:

Objective: Get more traffic to my website

Key Result #1 Increase traffic from 5,000 to 10,000 by the end of the quarter

Key Result #2 Create 20 new pieces of SEO-friendly content on the website

If you remember only one thing about OKRs, then remember they MUST be measurable. As Felipe Castro says, “Measurement is what makes a goal a goal. Without it…all you have is a desire.”

Pros and Cons: OKRs Vs. KPIs

The pros of OKRs

John Doer outlines the 4 superpowers of OKRs

Superpower #1 – Focus and Commit to Priorities

You hone in what’s important and everyone is clear on what is not. OKRs dictate the hard choices leaders need to make and make communication between departments, teams, and individual contributors more precise.

Superpower #2 – Align and connect for Teamwork

Making goals transparent and shared everyone links to the overall company goal, identify cross-dependencies, and coordinate with other teams effectively and share ownership. When individuals connect with the organization’s success it makes top-down work more meaningful.

Superpower #3 – Track for Accountability

As OKRs are periodicly checked, graded, and reassesed thanks to data, if a key result is endanger, you are notified and are able to track it or revise/replace it.

Superpower #4 – Stretch for Amazing

With OKRs’ ambitious nature it motivates workers to excel by pushing themselves more than they thought possible. It tests their limits due to no fear of failure to worry about.

The cons of OKRs

While there are good aspects of OKRs, there are some drawbacks

OKRs, in general, are just straightforward lists that can easily make it hard to find relationships between different objectives and how each objective can feed into another. This creates transparency and alignment issues. Transparency issues can also arise if OKRs are only designed bottom-up creating a lack of clarity on what the business is trying to achieve as a whole.

Because of the difficulty in making different OKRs relate and align, it also comes with a hefty investment. It can a long time to fully integrate a company, or even a single team, to OKRs, and some departments like experimental and research-based, can’t even make OKRs work at all, no matter the effort. People can be hesitant about trying a new approach and end up throwing in the towel because it’s easier to just go back to how things was like before because it was familiar.

The pros of KPIs

KPIs track progress and make performance across teams visible with access given to accurate results and metrics daily, weekly, and/or periodically. This helps to track the progress of a team’s goal and make decisions easier, especially for managers looking to redesign or modify future strategies. It also shows who is underperforming and how to improve upon that as well

The cons of KPIs

Result-oriented and short-term oriented KPIs runs the risk of a decrease in quality of standard and output as workers feel discouraged from implementing innovative approaches and lose the overall strategic vision. If attaining short-term goals begins to take more priority, it gets in the way of long-term goals.

What is the difference in KPIs vs. OKRs?

First, OKRs sit on top of KPIs, but not because it’s better.

OKR is a strategic framework while KPIs are measurements within that framework.

The overall difference between OKRs vs. KPIs is the intention behind setting goals. OKRs are aggressive, ambitious goals concerned with the whole process and improving performance drastically while KPIs are treated as health metrics to check and measure the output of ongoing projects and specific activities.  They are substantially different but will make you more productive and help achieve your goals faster.

Look over this chart for a quick go-to reference:

Conclusion

So, in OKRs vs. KPIs, which one is better?

Well, it’s not that simple. They have different purposes. and so can be used alone for certain things.

Let’s say you want to scale or improve current plans or projects, KPIs are the way to go.

On the other hand, if you have a more broad vision or want to change the full direction of your company or project, OKRs are better.

Instead of seeing it as OKRs VS. KPIs, think of it as OKRs AND KPIs because ideally they should be used together. KPIs can coincide with the Key Results of OKRs. By implementing both OKRs and KPIs, you drive your team to grow and accomplish greater goals.

We built a focus management platform to help companies be more effective and stay focused on top priorities in daily operations. You can try Focus for free to automate check-ins, one on one meetings, and OKRs. Start working smarter with Focus today.

The post What’s the difference between OKRs vs. KPIs? appeared first on Focus.

OKRs is a goal-setting framework that increases employee engagement while helping people to focus on the most important things.

However, one of the biggest challenges with OKR is setting the right goals. I talked with a lot of HR Professionals who proved that their OKRs are not perfect.

That’s why we gathered the best practices and created 20 OKR examples for HR teams. In this article, you will find goals for main Recruitment areas: 

• Recruiting
• Onboarding
• Training and development
• Employee relations
• Employee satisfaction
• Compensation and benefits

Before we start, a short talk about OKRs.

What is OKR?

OKR (Objectives and Key Results) is a system for uniting an organization across the most important goals. Companies like Google, Netflix, Twitter, and others use OKRs.

Why do they do it? 

OKRs help companies to focus on the most important goals, align the team, and increase employee engagement. 

An objective is WHAT we want to achieve. It’s an ambitious goal, which motivates and inspires the team. 

Key results are metrics that track HOW we get to the objective. Are we in the timeframe? Should we increase the velocity or change the goal? Are we going in the right direction or we lose the focus? Key results give you answers to these sorts of questions and measure the objective’s progress.

Why do OKRs increase employee engagement?

There are several reasons. First, OKRs are interesting and ambitious goals that inspire people to achieve new heights. Another reason is the method of creating goals. It’s not only a top-down process as it works with Key Performance Indicators (KPI). Setting objectives and key results is a joint process when half of the goals are created top-down and the other half bottom-up. It allows everyone to participate in the goal-setting process and be more responsible for goals that people set themselves.

If you want to know more about OKRs, you can read this article on how to set powerful OKRs. And here are OKR examples for marketing and product teams.

OKR example

Objective: Create the best workplace in the world
Key results:
– Run interviews with each of 257 employees to find areas for improvements
– Decrease new hire turnover from 20% to 5%
– Increase employee Net Promoter Score (eNPS) from 50% to 90%

20 HR OKR examples

We created these objectives for inspiration to help you create your best OKRs for People Operations Teams. All OKRs include 6 main recruitment areas: recruiting, onboarding, training, and development, employee relations, employee satisfaction, compensation, and benefits.

HR OKR examples for Recruiting

Objective: Create the A-Team
Key results:
– Hire 5 A-class engineers this quarter
– Increase the quality of hire from 30% to 60%
– Maintain cost per hire at $4,000 

Objective: Make recruiting great
Key results:
– Increase employee retention rate from 80% to 95%
– Increase in hiring manager satisfaction from 30% to 60%
– Maintain cost per hire at $3,000 

Objective: Hire the best people
Key results:
– Increase the quality of hire from 40% to 80%
– Increase performance appraisal rate from 3.4 to 4.5
– Decrease first-year churn rate from 30% to 10%

Objective: Improve recruiting funnel
Key results:
– Decrease time per hire from 40 days to 20 days
– Increase application completion rate from 40% to 80%
– Increase Candidate Net Promoter Score from 50% to 80%
– Maintain cost per hire at $3,000 

HR OKR examples for Onboarding

Objective: Make great onboarding
Key results:
– Create a detailed 3-month onboarding program
– Achieve 100% training completion rate
– Achieve 90% new employee satisfaction rate

Objective: Improve the onboarding program
Key results:
– Decrease time-to-productivity from 6 weeks to 3 weeks for new hire
– Increase training completion rate from 70% to 100%
– Decrease first-year employee turnover from 30% to 10%

HR OKR examples for Training and Development

Objective: Create an amazing training program
Key results:
– Achieve 100% training completion rate
– Increase employee performance post-training by 30%
– Decrease new hire turnover from 30% to 10% 

Objective: Improve the effectiveness of the training program
Key results:
– Decrease the time to complete the course from 30 to 15 days
– Improve the average training score from 70% to 90%
– Increase the return of the investment (ROI) of the training program from 130% to 260%

Objective: Build an awesome mentorship program
Key results:
– Increase the participation rate from 30% to 60%
– Increase the talent retention rate from 80% to 95%
– Increase employee satisfaction rate from 65% to 90%
– Increase internal promotions by 50%

Objective: Make Employee Development Better
Key results:
– Increase the number of employees with an Individual Development Plan (IDP) from 50% to 100%
– Implement Continuous Performance Reviews
– Increase the number of employees who run biweekly 1 on 1 meeting from 50% to 100%
– Increase employee Net Promoter Score (eNPS) from 40% to 80%

Objective: Implement Continuous Performance Management
Key results:
– 100% of employees participate in a quarterly review process
– 100% of employees run weekly updates on the pulse of morale and overall employee satisfaction
– 90% of employees run biweekly 1 on 1 meeting
– Increase employee productivity from $65 per hour of work to $100 per hour.

HR OKR examples for Employee Relations

Objective: Create an Amazing Culture
Key results:
– Reduce the number of internal complaints from 8 to 2 per month
– Increase the number of monthly recognitions coming from employees from 25 to 50
– Increase employee Net Promoter Score (eNPS) from 40% to 80%

Objective: Improve Employee Relations
Key results:
– Reduce the number of employees who report they have a bad manager from 5% to 2.5%
– Increase the average employer performance score from 3.2 to 4.5
– Increase manager satisfaction rate from 65% to 90%

Objective: Build Effective Employee Appraisal Processes
Key results:
– Switch from Yearly Performance Management to Continuous Performance Management
– 100% of employees fill 360 Degree Feedback surveys
– 80% of critical objectives are achieved by the end of the year

HR OKR examples for Employee Satisfaction

Objective: Create the Amazing Culture
Key results:
– Increase eNPS (Employee Net Promoter Score) from 60% to 90%
– Reduce Employee Absenteeism from 3% to 0%
– Decrease employee turnover from 30% to 10%

Objective: Boost Employee Wellbeing
Key results:
– Increase Weekly Pulse Score from 3.5 to 4.7
– Increase employee retention rate from 80% to 95%
– Increase eNPS (Employee Net Promoter Score) from 60% to 90%  

Objective: Make Great Employer Branding
Key results:
– Increase candidate quality rate from 8% to 16%
– Decrease cost-per-hire from $3,000 to $1,000
– Increase employee referrals from 5% to 10%  

Objective: Increase Employee Engagement
Key results:
– Increase employee productivity by 50% 
– Increase eNPS (Employee Net Promoter Score) from 70% to 95% 
– Decrease employee turnover rate from 20% to 5% 

HR OKR examples for Compensation and benefits 

Objective: Build an Effective Compensation Strategy to Retain Employees
Key results:
– Decrease % of employees below the salary band from 30% to 15% 
– Increase employee productivity by 50% 
– Increase eNPS (Employee Net Promoter Score) from 70% to 95% 
– Decrease employee turnover rate from 20% to 5% 

Objective: Design Irresistible Employee Benefits Program
Key results:
– Retain benefit revenue ratio at 10% 
– Decrease the absence rate from 10% to 5% 
– Increase ROI of Employee Benefits Program from 150% to 200%

Summary

We made these OKR examples for your inspiration. You can use these examples and create your own based on it. Making your own OKR, you set goals that fit your needs much better. Current OKR examples help you to avoid the most popular OKRs mistakes that companies make. 

At Focus, we believe that using OKRs is the process of continuous improvements. OKRs can bring your team significant benefits like focus on top priorities, alignment in your organization, synchronization, and much more. For using and tracking OKRs, you can use Focus. It allows teams to keep the focus on top priorities in daily operations. Start working smarter with Focus today.

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