OKR and KPI are two of those acronyms everyone talks about but no one explains, aren't they? But do you know the differences between OKR and KPI? 

It's common to see managers talking about the company's KPIs, or HR professionals commenting on how the team performed OKRs in the last period. But what about you? Do you know what these letters mean and how they can make a company's business more effective and improve its results?

So, that's what we're going to explain to you in this post! In addition to explaining their meanings, we'll talk about their practical applications, and if it's possible for both tools to work together. Want to know the difference between OKR and KPI? Keep reading!

What is OKR?

OKRs It is an acronym that comes from the expression Objectives and Key Results. It is nothing more than a way to internally align the company's objectives. This is translated into goals for executives, departments, teams, managers, and other individuals who contribute to the corporation.

This methodology has had a great track record of results, especially in the technology sectors. Silicon Valley giants, such as Google and Intel, were the precursors to OKRs, using them in their daily work. The positive consequences have been seen in how these companies grew and became benchmarks in their segments.

The reason OKRs are so effective is their simple, efficiency-focused approach. Some of their characteristics include setting short deadlines for each objective and key result, limiting objectives to a concise list for each period, and having a minimum value to be achieved.

From these particularities, the OKR methodology can guide companies and individuals, not just in terms of what should be done, but also in terms of what results to expect.

What is KPI?

The KPIs - Key Performance Indicators, or Key Performance Indicators, in Portuguese – are a way to measure all the work that has been done, aiming to create numbers that generate insights into the institution's performance. And, just like OKRs, KPIs are specific and concise, and in this way, they manage to deliver relevant information.

Logos, KPIs are a management tool that allows managers to know how internal processes are being performed. For a company to establish its KPIs, it must analyze what it is delivering and how that can be measured. 

One way to do this is through Balanced Scorecard, a methodology that helps in choosing the right metrics for your business. Let's look at some more common examples below Key Performance Indicator:

Sales

• Customer Lifetime Value
• Conversion Rate
• Average Ticket

Support

• Average Response Time
• Complaint rate

Marketing

• Website or blog traffic
• Closed leads
• Social media engagement

Another possible way is through the SMART methodology. It presents 5 points to make the specification the best possible:

• Is your goal specific?
• Is it possible to measure your progress toward the goal?
• Is your goal achievable?
• How relevant is the objective to the organization?
• What is the deadline to achieve the goal?

Thus, it is possible to define each Key Performance Indicator and ensure they are aligned, not just with expected goals, but with achievable results.

Have you started to understand the differences between OKRs and KPIs? We are going to delve deeper into this topic now.

What are the differences between OKRs and KPIs?

There are many differences between OKRs and KPIs.

When OKRs are used, the expectation is to align objectives that lead to the previously defined key results. KPIs, on the other hand, specify the numbers and how processes were performed. But, doesn't that seem more or less the same thing? So let's analyze.

Both acronyms have one aspect in common: “key.” In Administration, the term "key" is associated with something important, unique, and significant. Within the scope of these two methodologies, we are referring to key results and key indicators. Although they are not exactly the same thing, they go hand in hand. 

What's important to clarify here, for now, is that OKRs focus on the goals that must be achieved, as they are defined beforehand, and aim to be the guiding principle for each department and individual. KPIs, on the other hand, are the way to measure the performance of indicators. These indicators are not the same thing as the objectives and key results of OKRs.

Understanding these differences will help you, among other things, to know how to retain your company's talent, as performance is one of the main factors taken into account. But, if they are not the same thing, is it possible to work with both methodologies at the same time? Let's understand!

Is it possible to work with both at the same time, even with the differences between OKR and KPI?

The answer to this is: yes, it's possible! Strategically speaking, it's possible to align both tools so they work together, making KPIs work within an OKR strategy, for example, even with the differences between OKRs and KPIs.

Since OKRs define the macro criteria for the business to function and achieve its goals, KPIs can be the way to measure what needs to be improved, seeking to maintain a level of effectiveness within each area. In other words, it is possible to define goals for each objective and key result, and measure these goals with KPIs.

Another way they can work together is by measuring the success of processes with KPIs and then creating OKRs that improve those KPIs. Let's look at an example of how this can be done:

Imagine your company provides IT support. Dozens of tickets are opened and closed every day, with different priorities and closing deadlines. Your company can have KPIs that measure the ticket response time, the time it takes to resolve it, and the satisfaction of affected customers.

With these KPIs established, it will be possible to identify areas where the support department needs to improve and thus design new objectives and key results for the company's future. Therefore, KPIs and OKRs can go hand-in-hand, supporting each other!

Which one is better, analyzing the differences between OKR and KPI?

Which one should you use: OKRs or KPIs? Well, that depends on what you want to measure.

For example, if you want to improve a plan or project that has already been done before, KPIs can be the best option. They are objective and allow you to add a measurement system to ongoing projects and processes.

However, if you have a bigger vision or are looking to change the overall direction of your company, OKRs might be the best alternative! They offer greater depth and will allow you to expand your goals even further, enabling you to be a bit more creative when planning how to achieve your targets.

In other words, OKRs and KPIs work perfectly together. KPIs help monitor performance and identify problems and areas for improvement. OKRs, on the other hand, help solve problems, improve processes, and drive innovation. You will definitely need both, and one will complement the other.

Did you like learning the difference between KPIs and OKRs? How about implementing these two tools in your company?

Regardless of whether you use KPIs or OKRs, it is extremely important to monitor your performance. Therefore, use a business performance software, such as Actio Strategy Management. With this software, everyone will be able to see the action plan for indicators that have not reached their targets, meaning, who is doing what to achieve the goals, generating positive pressure for their fulfillment. This way, you can monitor these numbers transparently and in real-time.

Did you like what you read here? As you've seen, despite existing differences between OKR and KPI, they are two methodologies that go hand in hand! Whether in defining goals and objectives or in measuring process performance to improve your company's results.