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.

What does an ideal team mean for you?

First, each team leader should clearly understand what the ‘ideal team’ means to him or her. How many people are in their ideal team? How do they communicate? How do people set their goals and evaluate them? How does a manager evaluate how employees are performing? How many regular meetings do they need to stay in sync? How does each employee fit with company culture and values? What’s important for the leader and what’s not so crucial? In what type of team does the manager want to work?

It’s hard to achieve and create the ideal team, but the goal of this practice is getting a vision for yourself. It helps the manager to make decisions in hard situations, when the leader will be able to compare current conditions with his or her ideal scenario. And as you know, difficult situations are not rare occurance the life of a company.

Ok, let’s think that you did it. You understand your ideal team and its criteria. Great! Now we’re going to consider best practices for improving management in the team.

1. Transparency

You know this trendy word. Transparency. It’s all about the new way of communication between the company and an employee. You know, people don’t like to be a small piece of the big bureaucratic machine. People don’t like to do a job when they don’t understand why should they do it. But a lot of companies maintain this kind of communication. 

95% of employees don’t know their company goals. 

Wait for a second, think about it. It means that only 5%, including the founders, understand what’s going on in the company and what it wants to achieve. How do you think this impacts employee engagement? Do your team members enjoy being people who don’t understand company goals?

Transparency is a way of communication with your employees when you don’t keep secrets from people about the main events in the company. It helps you to improve employee engagement and makes team members more outcomes-oriented. 

Share with them all the main goals and events in the company. Give them a total picture of how things are moving. 

What can you share with employees?

• Company’s goals
• Current status of the projects
• Issues and struggles that your company has at the moment
• Why they are doing what you ask them

This is only basic list of things that you can share with the team. Some companies go one step further and create a totally transparent culture by showing all information to employees, including profit and loss.

It’s not a necessary step. However, for reasons good, you should be transparent and deliver clearly values, goals, and causes happening in the company. 

Well, we’ve now identified one way we’re improving employees performance, nailed down how to communicate it to them, and made it super easy to get started. Now we just need to actually, you know… provide that improvement. What should you do tomorrow? 

First, you could start to do daily and weekly updates. They’re online meetings that allow your team to stay in sync each day. It helps to know what’s happening in your team, and build alignment between members with 5 minutes a day. To do daily and weekly updates, you can use Focus. 

2. Continuous performance management

Go further. The next crucial thing for building top engagement culture in the team is continuous performance management. Old school performance management is a once per year activity. It’s all about providing performance reviews once or twice a year and setting goals for the next one for each employee. It’s mechanics are useful, but it doesn’t always work well. The reason for that is New Years Syndrome. Say that you decided to go to the gym more next year, but when it happens, you start putting it off and then give up. Sounds familiar? Yeah, performance plans have the same pattern. Employees generally forget about their performance goals in their daily routine. 

Instead, aim to flexibly accommodate all the behavioural conditions and use continuous performance management. Continuous performance management (CPM) is a new approach for increasing employee engagement. The real value of CPM lies in the sustained improvement of the employees while providing them with ongoing feedback, recognition, and coaching. 

That way, you will be acting as their personal trainer – totally invested in their improvement, and working to make sure their personal goals align with company outcomes. The more you can get people to connect with CPM, the stronger their results become. 

So how do you implement CPM in your workflow and how does it work?

First, CPM consists of three main areas, like ongoing feedback, recognition, and personal meetings for coaching people. Ongoing feedback helps to keep your finger on the pulse of employees thoughts and mood. You’re able to figure out what’s going on right now with your employees and you are aware of what’s important. 

The real value of recognition lies in the sustained improvement of employees engagement. You probably aren’t saying “thank-you” nearly as much as you should be. But it really matters for people. 

And last but not least, CPM are personal meetings for coaching people. It’s called 1:1 session and, you know, it’s a crucial part of employees performance. Few managers do it in their regular workflow, but it’s vital in improving personal outcomes. The right structure of a 1:1 meeting helps to provide more personal encounters for both team management and the employee.

At Focus, we’re using our own software to do it correctly. All three parts of the CPM implemented in Focus help companies stay on the same page and build high-performing culture. 

3. Employee development

Employee development is a process when you, as a manager, help an employee to improve a person’s skills and gain new knowledge or skills. Today, employee development is an essential factor for employee retention. 

Generally, employee development consists of three main parts: 

• Plan
• Learning programs
• Feedback

i. Plan

The first step is creating a plan for personal growth. So what’re the individual goals of the employee? What’re the person interests? What does she or he want to achieve this year? What do they want to do? It’s time to be a personal trainer for your employees. You can get answers to these question in private conversations. 

Once you understand personal interests, you can go further and create an individual plan that includes goals, a realistic timeframe, and detailed roadmap of how he or she will achieve it. 

ii. Learning programs

Depending on what your employees say, you’ll find out key areas that they want to improve. Time for learning. It can be group training or personal courses, or both of it. The main point is to tailor your learning program to individual’s needs, but not on trend-led ideas.

iii. Feedback 

Building a system of regular employee feedback is a crucial piece of high-performing culture. When people perceive qualitative feedback from their manager, it’s practically impossible not to be engaged. In the exact same way, it makes sense for employees when they understand that their feedback about the job will be considered by the manager or the team. 

Ok, ok, that’s enough celebrating feedback for now. But how to implement feedback routine in the company workflow as smooth as possible? It’s the question that each manager should think about. It seems simple but don’t undervalue it. A rule like “you can tell me everything that you’re thinking about” generally doesn’t work well. Employees often have top priorities in their job that should be done. It means that an idea ‘to go and talk with the manager’ becomes top priority when something critical happens. I don’t think you want to wait that long.

In that way, you should implement the workflow feedback routines as general tasks. Another side of that, people don’t like fill reports and spend a lot of time writing it down. That’s why it should be as simple as possible. For example, we create lightweight check-ins at Focus that requires only five minutes per day. It’s several key questions about a person’s results for the last day, which an individual regularly receives in email or messenger. This approach doesn’t take a lot of time, helps to focus on the key results, and allows employees to get praise for their work. The last point is a treat for individuals because they like it when other people appreciate them. You can check here to find out more details about Focus. 

Conclusion

Team management is a challenge for managers and founders because communication with others has the potential for misunderstanding, especially when the company is growing. It impacts on team’s motivation when employees are starting to lose sight of the company’s goals and vision. Three best practices that improve performing culture:

• Transparency
• Continuous performance management 
• Employee development

Focus, is a continuous performance management platform, which helps companies build high-performing culture. We provide an easy to implement continuous feedback loop and create transparent outcome-oriented mechanics in your workflow. And best of all, it only takes 5 minutes per day for an employee to share their results and stay in sync with the team without meetings. It helps you to focus on what matters. 

How do you increase team engagement? Let us know in the comments below. 

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