Understanding the Difference Between OKRs and KPIs and Why You Need Both
With so many metrics and frameworks to choose from, it’s easy for organisations to lose sight of what truly matters. Objectives and Key Results (OKRs) and Key Performance Indicators (KPIs) are two of the most powerful tools for driving performance, but only when their roles are understood.
The truth is, these frameworks are not interchangeable, nor should they be. OKRs and KPIs serve distinct yet complementary purposes and when used together, they create a healthy system for achieving strategic growth goals while maintaining operational excellence.
What Are OKRs?
OKRs are a goal-setting framework designed to align organisations and drive sustainable growth. They consist of two parts:
Objectives: These are ambitious, qualitative goals that set a clear direction. Think of them as what you want to achieve as an organisation.
Key Results: These are measurable, outcome-based metrics that track progress towards the objective.
For example, an objective might be to “establish a dominant market presence in the UK construction industry.” The corresponding key results could include:
- Increase market share by 5% within Q2
- Achieve a 25% increase in website traffic from target audiences
- Close 15 new contracts with ‘tier 1’ clients
OKRs encourage teams to think big, focus on outcomes and align their efforts with broader strategic goals. Importantly, they are time-bound and adaptable, making them a great tool for driving sustainable growth.
What Are KPIs?
KPIs, on the other hand, are metrics that measure the health and efficiency of routine business operations. Unlike OKRs, which focus on growth and change, KPIs provide a snapshot of how well your foundational activities are performing.
For example, a KPI for a customer service team might be to “maintain a customer satisfaction score of 90% or above.” Other examples include:
- Monthly sales revenue
- Average customer retention rate
- Production efficiency rate
KPIs are typically stable over time and closely tied to the day-to-day running of the business. They’re essential for maintaining operational stability and ensuring that important processes are functioning as intended.
The Key Difference between OKRs and KPIs
While OKRs and KPIs both involve measurement, they serve distinct purposes:
Understanding these differences is important to leveraging their full potential.
How to Implement OKRs and KPIs Together
As data shows, only 51% of ‘Top executive teams’ could correctly name their strategic priorities, therefore we always recommend starting by identifying your high-level business objectives. To effectively implement both OKRs and KPIs, it’s important to create clarity and alignment across the organisation from day one.
Setting up OKRs often usually involves additional support from an external expert, who understands how to create clear, actionable objectives that align with organisational goals. If you’re willing to put the work in, it makes sense to start with the right tools and support. Then depending on the size and structure of your organisation, the next step is to separate OKRs at different levels — strategic, tactical and operational.
Once OKRs are set, KPIs will be introduced to support overarching objectives. The combination of performance tracking and accelerated growth comes from being ambitious and consistently reviewing results.
Remember to keep it simple and ensure that the number of OKRs and KPIs remains manageable. Too many can dilute focus, so prioritisation is key.
If your business is struggling to strike this balance, you don’t have to go it alone. At There Be Giants, we specialise in helping organisations implement OKRs and KPIs effectively, ensuring that your goals and metrics work together to deliver results. Get in touch today to learn how we can help you achieve your potential.