What’s the difference between OKRs and KPIs?
At their core, Key Performance Indicators (KPIs) and Objectives and Key Results (OKRs) measure company performance. They can work together to guide and measure the success of an organisation, including what HR teams are doing to contribute.
At their core, Key Performance Indicators (KPIs) and Objectives and Key Results (OKRs) measure company performance. They can work together to guide and measure the success of an organisation, including what HR teams are doing to contribute.
What are KPIs?
KPIs are metrics used to evaluate the ongoing performance of part of your business or team. They normally compare current performance against a target and are generally focused on understanding the performance of business-as-usual activities or processes. KPIs don't usually change over time since they relate to the underlying business.
Examples of HR KPIs include:
- Employee Engagement Score
- Time to Hire
- Employee Turnover Rate
What Are OKRs?
OKRs is a goal setting framework that defines two things:
- Objective: what the organisation wants to achieve
- Key Result: what tangible thing will be done and measured to progress towards achieving the Objective.
The easiest way to think about OKRs is that they guide, align and measure "new things" - basically where you invest resources and energy to change things (eg. special projects, strategic focus areas). They often have stretch goals - which are high targets of measurement - so you can really reach for the best outcomes, even if you don't hit them.
Usually 60-70% is considered "successful" when it's a stretch goal. But all organisation will define this differently, and don't always use stretch goals.
Examples of HR OKRs include:
- Objective 1: Improve employee retention and engagement
- Key Result 1: Reduce employee turnover rate from 15% to 10% in the next quarter
- Key Result 2: Achieve an employee satisfaction score of 85% or higher in the annual survey
- Key Result 3: Implement a new onboarding process with 90% satisfaction from new hires
Note:
- OKRs change and flex overtime since they reflect an organisations priorities.
- Each key result will have related "projects & initiatives" that the team agree will drive the key result the MOST
- To stop silos you need to make sure these are cross functionally agreed priorities
- OKR's should help you prioritisation - ask yourself "Will this project give us the BEST outcomes to drive Objective forward?"
You can quickly see why if you set the wrong OKR's - you will quickly work on the "wrong" things.
In Summary: When to Use KPIs vs OKRs in HR
- Use KPIs to monitor the health of your HR operations and maintain consistency in the day to day running - they can inform areas for improvement (eg. OKR's)
- Use OKRs when to change or improve, like implementing a compensation tool - just make sure the OKR's you pick are considering the bigger picture of the company - "is this REALLY the best use of our team?"
Need help with OKR's and setting team prio's - reach out to me (Jess).