Know Your KPI from OKR: A Guide
- By Zenia Henckel
- January 30, 2025
Measure Your Progress to Accomplish Project Goals
KPIs and OKRs are essential tools for measuring organizational progress and setting relevant, achievable goals that steer the organization in the right direction. Regardless of which framework your organization adopts, you will gain a clearer understanding of their use and how to distinguish between them.
Every organization updates their goals and processes to ensure continuous growth and adaptability, avoiding potential setbacks or misalignment. One of the most effective ways to track and evaluate this progress is through measurable indicators. This is where KPIs come into play, offering a structured approach to assess performance and success across various organizational objectives.
KPI: Key Performance Indicators
KPI stands for “Key Performance Indicators”, which are metrics used to measure how well an organization is performing. These indicators assess progress toward organizational goals, evaluate how objectives are met, and track key factors such as project deadlines, budgets, and overall efficiency.
Many organizations rely on KPIs to monitor performance and ensure a balanced workflow among teams and projects. Establishing effective KPIs begins with identifying what the organization aims to achieve—whether in product development, project execution, or overall business strategy. The process starts by answering key questions:
- What results do you aim for?
- Why do these results matter to your business?
- How will you measure business progress?
- How can you influence the outcome?
- Who is responsible for the final result?
- When and how will you know you have achieved the desired outcome?
- How often will you track progress toward the final goal?
Once these questions are addressed, organizations can work systematically to identify and resolve obstacles that may hinder progress, ensuring continuous improvement and goal attainment.
When working with KPIs, the first step is to develop a SMART model to gain a clear overview of the organization’s progress and identify areas for improvement. This model helps evaluate the effectiveness of the organization’s mission and vision statements, ensuring they provide a strategic foundation for achieving long-term objectives.
The SMART model consists of five key factors, each represented by its initials:
- Specific – What do I want to accomplish?
- Measurable – How do I track my progress?
- Achievable – What is a realistic deadline for the final result?
- Relevant – Is this goal aligned with the organization’s objectives?
- Time-bound – How long will it take to achieve the goal?
These questions should be straightforward to answer, as no project should begin without a clear understanding of the intended outcome. By applying the SMART model, organizations can set well-defined KPIs that drive success and continuous improvement.
OKR: Objective Key Results
OKR, which stands for “Objectives and Key Results,” is a strategic method that helps organizations create focus, alignment, and accountability across teams and departments. By implementing the OKR model, businesses gain a structured approach to goal management, ensuring that everyone works towards common, clearly defined objectives. The model consists of three key steps:
Choose Your Objectives – Where do you want to go?
The objective is to identify the organization’s overarching ambitions. These goals should be inspiring, challenging, and time-bound. They are designed to motivate employees and provide a clear direction for future work.
Define Key Results – How will you achieve the objective?
For each objective, concrete key results are established to clearly indicate what needs to be accomplished to meet the goal. Key results must be measurable, specific, and realistic, enabling an objective assessment of progress.
Track Progress – Are you on the right path?
The final step involves continuously monitoring and evaluating whether the key results are being achieved. Through regular status meetings and follow-ups, focus on the objectives is maintained, and any challenges or deviations can be promptly addressed.
From a broader perspective, this process demonstrates how an organization’s ambitions are translated into concrete results. Objectives define what the company aims to achieve, while Key Results serve as measurable indicators that assess whether those goals have been met. The combination of ambitious goals and clear performance metrics allows organizations to work more effectively and strategically. Furthermore, OKR fosters a culture of continuous learning and improvement, ultimately enhancing overall business performance.
KPR vs. OKR: Which is Better?
What is the difference between OKR and KPI? While both are strategic tools designed to measure and manage business performance, they serve different purposes and approaches.
What is a KPI?
A Key Performance Indicator (KPI) is a metric that organizations use to monitor and evaluate specific business outcomes and performance levels. KPIs can be both financial and operational, typically focusing on key areas such as sales, customer satisfaction, productivity, or business growth. Examples of KPIs include:
- Revenue growth percentage
- Customer Satisfaction Score (CSAT)
- Number of new customers per month
- Employee turnover rate
KPIs help track how well a business is performing against its current goals, but they rarely provide insights into how to drive improvements or changes.
What is OKR?
Objectives and Key Results (OKR) is a goal-setting methodology designed to help organizations identify improvement areas and drive progress and change. OKRs are composed of two main components:
- Objectives: Ambitious, inspiring goals that the organization aims to achieve. These goals should provide direction and motivate employees.
- Key Results: Measurable indicators that determine whether an objective is achieved. These results need to be specific, realistic, and quantifiable.
OKRs are intended to create forward momentum by aligning teams around strategic objectives and driving growth through continuous progress.
How do OKR and KPI differ?
While both OKRs and KPIs focus on performance measurement, they differ significantly in purpose and application:
KPIs are primarily used to track and monitor current performance. They are typically static targets that reflect the business’s ongoing results over time. KPIs provide insights into how a specific business activity is performing but do not indicate which actions need to be taken to drive improvement.
OKRs, on the other hand, are focused on change and improvement. They provide a strategic framework that helps organizations define where they want to go and what actions are necessary to get there. OKRs are often short-term and regularly updated to ensure ongoing progress and alignment.
Can OKRs and KPIs be used together?
Yes, many organizations choose to combine OKRs and KPIs because they complement each other well. OKRs can provide context for KPIs by showing how the company’s performance metrics relate to its strategic goals and daily activities. For instance, an organization might establish an OKR with the objective of improving customer satisfaction, while specific KPIs (such as customer satisfaction scores and the number of complaints) are used to track progress.
Which method is best for your organization?
The answer depends on your business needs and processes. If you aim to monitor and evaluate performance over time, KPIs might be the best tool. However, if your business needs to focus on change, growth, and strategic goal-setting, OKRs may be more effective. For many organizations, a combination of both provides the best results by offering both performance insights and a clear direction for improvement.
By strategically applying both OKRs and KPIs, organizations can achieve better focus, goal attainment, and continuous improvement in their business operations.
Conclusion - Getting Started with OKR & KPI
Both OKRs and KPIs are valuable tools that help organizations measure and drive performance, though they serve different purposes. KPIs are essential for tracking ongoing performance and business health, while OKRs focus on achieving strategic goals and fostering continuous improvement. By understanding these differences, companies can leverage each tool effectively to support both short-term operations and long-term growth.
To quickly get started with OKRs and KPIs, follow these steps:
- Identify Key Objectives – Define clear, ambitious, and time-bound goals that align with your company’s vision and strategy.
- Select Relevant KPIs – Determine the metrics that provide insight into your organization’s core performance areas.
- Develop Key Results – Establish specific, measurable results tied to each objective, ensuring progress can be tracked.
- Create Alignment – Communicate the objectives and performance metrics across teams to ensure everyone is working towards the same goals.
- Monitor and Adjust – Regularly review both KPIs and OKRs through status updates and performance reviews, making adjustments as needed.
By integrating OKRs and KPIs into your workflow, your organization can achieve both operational stability and strategic growth, while fostering greater focus, accountability, and collaboration across all levels.
References
Hvad er okr (objective and key results). Newmind. (2023, August 24). https://newmind.dk/hvad-er-okr-hvad-er-objective-key-results/
Klitkou, P. (2024, September 3). KPI – Hvad er det? – læs her og Bliv Klogere på kpi’er. PK Medier. https://pkmedier.dk/hvad-er-en-kpi/
Nick. (2022, January 28). Manage performance like google – the OKR framework – technopark. Adobe Experience Cloud Blog. https://technopark.org.za/news/how-can-okr-goal-setting-support-hybrid-workforce-performance-in-times-of-change/
Rurup, M. (2024, January 19). Okr – en dybdegående guide til objective & key results (OKR). michaelrurupandersen.dk. https://www.michaelrurupandersen.dk/objective-key-results-okr/
What is OKR? everything to know. Weekdone. (2023, September 21). https://weekdone.com/resources/articles/objectives-key-results
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