OKRs And KPIs – How To Use HR Performance Metrics To Improve Your Business

OKRs vs KPIs – what is what and when should you use which? 

In the world of business performance measurement, two powerful frameworks often come up: OKRs (Objectives and Key Results) and KPIs (Key Performance Indicators). While they both help businesses track progress and drive success, they serve distinct purposes. OKRs focus on setting ambitious goals and defining measurable results, while KPIs track ongoing performance and efficiency. When used together, these tools create a strategic roadmap that helps businesses align teams, drive growth, and measure success. In this guide, we’ll break down the key differences between OKRs and KPIs, explain how they complement each other, and show you how to implement them effectively in your organization.

OKRs – aka, Objectives and Key Results

OKRs are a goal setting and leadership tool to communicate what you want to accomplish and how you track progress toward those measurable goals. An Objective is simply what is to be achieved; these are results driven, action oriented and (hopefully) motivational. Key Results on the other hand, benchmark and monitor the path to the Objective. Effective KRs are specific, measurable, and verifiable. KRs are also often tied to a schedule; think S.M.A.R.T. goals – Specific, Measurable, Achievable, Relevant, and Time-bound. OKRs typically have a main goal, or objective followed by measured steps to achieve the main goal or objective. 

Within the OKR platform there are additional sub-OKRs that can be formed – learning, Top-Down, Bottom-Up, and Personal OKRs provide opportunities for growth and development within their own realms. 

For example, a learning OKR could be set for a department to learn a new software program being implemented. Ask yourself, what are the key components of the software program my team must learn in order to be proficient and to roll it out to the rest of the company? Then, set your measurable goals from that. An example of a measurable goal would be to have all licensed personnel able to navigate the core areas of the software within two weeks. A follow up could be to have all licensed personnel able to provide training on their area within the software within a month, and so on. 

A Top-Down OKR is typically an objective that is set by company leaders that cascade to department heads, managers and supervisors, or individual employees. In this OKR, each member acts their part in a cross functional team to meet desired objectives. For example, company leaders may develop an OKR to be number one in their industry. The Marketing Department would then break down that OKR into smaller, achievable goals the marketing department can strive to achieve such as increasing market share by 15% within the next fiscal quarter. A Key Result would be to achieve a 30% new customer base. The Customer Service department may set their objective to retaining 95% of the current customer base while taking on the new customer base marketing is driving for. In order to achieve this, Customer Service representatives will be striving to reach a 99% satisfaction score on surveys and an average response time of under 2 hours. By working together, along with other departments in the company, the Marketing and Customer Service departments are supporting the Company OKR of being number one in their industry. 

A Bottom-Up OKRs approach includes those employees who are directly interacting with your clients or customers. They see what is working, what is not, whether there are trends in frustrations, etc. Often, OKRs on a Bottom-Up approach tend to come from friendly competition within the organization. Perhaps you have two teams of Customer Service representatives. Inevitably, someone on either team is going to attempt to make a competition out of something. An example of a Bottom-Up OKR approach would be for the customer service teams to actively compete against each other in attempting to achieve the highest level of customer satisfaction ratings. This ultimately supports company goals and strategic priorities. 

OKRs should target specific areas for improvement and provide tangible and measurable outcomes. 

KPIs – aka, Key Performance Indicators

While OKRs measure and manage progress, KPIs focus on measuring and managing performance. KPIs are a solid measurement of performance over time for a specified objective. For effective KPIs management, first you must look at your company’s strategic objectives and goals. Once you have identified what those goals are, you can define what success will look like. For example, the company’s strategic objective is to be number one in the industry. Success looks like securing 75% market share by the end of the fiscal year. The goals set to achieve this objective will be measurable. In order to reach the KPI, you will be watching specific numbers such as your revenue generated per client/sale, client/customer satisfaction scores, reduce operational costs by 15% by the end of the fiscal year and reduce customer acquisition cost by 12%. Each of these goals is measurable and can be tracked. 

As with OKRs, there are different types of KPIs as well; these (among others) include lagging, leading, quantitative, qualitative, and financial KPIs. 

Lagging KPIs are outcome based and report the results of past actions or performance. For example, tracking revenue growth or profit margins. Lagging KPIs are helpful in evaluating the effectiveness of previous or current strategies to assess whether objectives have been achieved. 

Leading KPIs on the other hand are predictive based. These KPIs focus on the data in real time in order to predict future performance. These KPIs offer insight into what efforts are working towards achieving the goals and objectives set by the Company. Leading KPIs allow companies to course correct in order to not lose valuable time in reaching their goals. 

Quantitative KPIs are numerical and measurable, making them one of the easiest KPIs to track. Quantitative KPIs include the number of units sold, customer acquisition costs, and sales revenue. These KPIs provide for precise measurement and decision making. 

On the other hand, Qualitative KPIs focus on non-number-centric measures often relying more on subjective information such as feedback and observations. Qualitative KPIs have their place in the business world still, providing deeper understanding of customer experience. Examples of qualitative KPIs include employee engagement, customer satisfaction, and brand perception. 

Financial KPIs are critical to understand the financial health of the business allowing company leaders to make informed decisions on cost-cutting measures, investments, resource allocations, and future business strategies. Important financial KPIs to measure include AR aging, Return on Investment (ROI), and Net Profit Margin among others. 

Use Performance Metrics To Help Manage Your Business

OKRs and KPIs are two sides of the same coin—OKRs define where you want to go, while KPIs measure how well you’re getting there. By leveraging both frameworks, businesses can set strategic goals, track meaningful progress, and continuously improve performance. Whether you’re a small business looking to scale or a large organization optimizing operations, a clear understanding of OKRs and KPIs will help you build a results-driven company culture. Ready to take your performance management to the next level? The Buzz HR is here to help with expert guidance on goal-setting, tracking, and strategic planning.

In conclusion, the saying, “What you don’t measure doesn’t succeed” highlights the critical importance of tracking progress through OKRs and KPIs. Put another way, “What get’s measured gets managed,” as the legend Tony Robbins likes to say. 

Without measurement, even the most well-intentioned goals will get derailed, lacking direction and accountability. At the end of the day, tracking not only performance, but also progress aids companies in being successful towards achieving their strategic goals and objectives.