Performance and progress tracking should sit at the heart of your business operations. Business reporting impacts decision-making and enables strategic planning and goal setting. A company’s success and sustainability will often depend upon what is tracked, how it is tracked, and how the business uses the insights gained.
Key Performance Indicators (KPIs) and Objectives & Key Results (OKRs) are essential tools businesses can use to track performance. While similar sounding, they are fundamentally different in several ways.
| Key Performance Indicators (KPI) | Objectives and Key Results (OKR) | |
| What is it? | A metric used to track ongoing performance in a specific area of operations. | A goal-setting framework that combines a qualitative objective (what you want to achieve) with measurable key results (how you will track progress) |
| Purpose | Performance evaluation in key areas, including profitability, efficiency, HR and governance. | Focusing a business on bigger goals and keeping business operations pointed in the same direction. |
| Scope | KPIs are typically very specific, with each team or individual having KPIs to work towards. | OKRs are typically set across the wider organisation. |
| Fixed or adaptive | KPIs are usually fixed across long periods based on what matters to the business over the long term. | OKRs are set, adapted and refreshed more frequently based on the business's most up-to-date needs and goals. |
| Area of focus | KPIs look at past performance for valuable insights to aid decision-makers. | OKRs look forward and focus on future progress and achievements. |
What are Key Performance Indicators (KPIs)
Key Performance Indicators, or KPIs, are measurable values that track how well a business performs against its goals. For measuring and analysing ongoing processes, KPIs provide essential insights that stimulate discussion, reveal opportunities and highlight weaknesses or inefficiencies.
Hundreds of potential KPIs can be applied to a business, ranging from sales figures and customer satisfaction scores to technical performance and website traffic.
Here are some examples of popular KPIs:
- Revenue
- Customer Acquisition Cost (CAC)
- Email Open Rate
- Customer Satisfaction Score (CSAT)
- Employee Turnover Rate
- Debt-to-Equity Ratio
- Return on Investment (ROI)
Learn more about KPIs in our essential guide.
What are Objectives & Key Results (OKRs)
While KPIs are measurable values, Objectives & Key Results (OKRs) are a goal-setting framework used by businesses to define goals and track progress towards them. OKRs are typically set as an achievable objective, with a handful of key results (or goals) contributing to meeting that objective.
OKR Examples
For example, the objective of a company might be to produce the best-selling product within a particular space. For this objective, the key objectives might include:
- Achieving a particular market share within a timeframe of the product launch
- Achieve a certain level of customer satisfaction
- Grow sales by a certain amount compared to a previous period
- Increase brand awareness, such as social impressions, by a certain amount
What is the difference between a KPI and a “Key Result”?
Key Results are similar to KPIs, each designed to measure progress towards objectives. However, Key Results are typically more specific and narrow in scope; they are defined within the context of a particular objective and are, therefore, unique to that objective.
KPIs, by contrast, are established metrics used over more extended periods. They are less subject to change and may be used across different goals and objectives. KPIs can be specific to departments, teams, or even individuals.
Using KPIs and OKRs to transform business performance
KPIs and OKRs are both essential for sustainable business growth and success. It is certainly not a case of choosing one versus the other. If you aren’t deploying these already for your business, you may be missing out on vital insights to help your business grow and thrive in a sustainable way.
If you need help getting started, the Genus team can play a crucial role in helping you set up a robust performance management system and finance function; this means:
- helping you identify the best KPIs, pinpointing the metrics that matter most to your business;
- setting OKRs that are achievable, measurable, and in line with the values and mission of your business, and;
- advising you on how to track progress, analyse data effectively, and ultimately make better business decisions.
Alicia Williams
Alicia is Director of the Genus team at Shorts, a chartered certified accountant and Xero specialist.
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