OKR vs. KPI: How they compare and work together

OKR vs. KPI: How they compare and work together

Recommended reading: Benefits of using OKRs goal-setting software

What’s the difference between OKRs and KPIs?

OKR stands for Objectives and Key Results. An OKR is made up of 3 separate components — an Objective, Key Results and Initiatives. 

Simply put, an Objective tells you where to go, a Key Result will let you know whether you’re there or not and Initiatives will tell you what you need to do to get to your destination. Initiatives are often confused with Key Results, it’s important to note that they’re not the same thing. In case you were confused, head over to this article

It leads to unfair and inaccurate performance reviews

OKRs are collaborative by nature and push employees and teams to move out of their comfort zones. Evaluations based on these objectives do not offer an authentic performance report of individual employees. 

Rather, it reflects the comparative evaluation of a group of people working together to fulfill common goals. 

Results in the creation of unusually modest and simple objectives

The primary aim of the OKR framework is to help companies set realistic and ambitious objectives. With the framework’s scope for failure, employees set difficult objectives even if they are not able to fulfill them. 

But, linking OKRs with performance evaluation eliminates this advantage. This is because failure to achieve the goal impacts the benefits employees get. This prevents them from setting goals that may be too difficult or too risky. 

Shifts employees focus on their output rather than the outcome

When companies link OKRs with performance reviews, the objectives are cascaded down to individual employees for easy evaluation. This results in huge multiplication of OKRs at the employee level and makes managing them quite difficult. 

Most importantly such cascading of objectives shifts the focus of teams and employees on the output at the individual level rather than the outcome at the organizational level. This negates the very essence of OKRs which are designed for setting common business objectives. 

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