KPIs & OKRs: The Peanut Butter Cup of Tracking Performance

If you’ve made it this far through these posts, you may be feeling a certain level of discomfort caused by framework creep. Will your team perceive you as being overly enamored by the acronym of the week? What will be your answer if you’re asked which is more important: OKRs or KPIs?

To which I respond: why not both? Utilizing OKRs and KPIs isn’t a case of trying to impose two unrelated programs on your teams, or adding to an already jumbled alphabet soup of terms, and reports, and time consuming obligations. Instead, deploy them together and you’ll become the H. B. Reese of your organization, perfectly marrying the chocolate of KPIs with the peanut butter of OKRs, and improving performance faster than only utilizing one or the other.

Start with KPIs

It is easiest to set your OKRs if your company or department is aligned on “what good looks like.” “Good”, your North Star for the organization, should be fixed around your company’s strategy and its critical numbers.

Sidebar on Strategy: I haven’t covered strategy yet in these articles, and I’m not sure anything I can say will be more useful than Michael Porter’s famous 1996 article, “What is Strategy” from the Harvard Business Review. If you haven’t read that, and don’t have an alternative instructional document that your leadership team can refer to when identifying its strategic priorities, stop here, go to HBR.org, and check that out. I’ll wait. If you can’t easily recite your organization’s strategy, I strongly recommend you lock your fellow executives in a room and work on that first.

If you don’t love the KPIs you’re tracking for your company or department, please start

here. In the absence of these targets you’re the sitcom dad lost on vacation with his family packed into the station wagon: you don’t know where you’re going, but you’re making great time. It makes no sense to spend time introducing OKRs without your ultimate destination in mind.

KPIs as Objectives

The value of using KPIs as objectives was highlighted recently when I found myself repeating the same conversation with multiple department heads. The first draft of their OKRs would include objectives such as: “update and document QC process”, or “build new staffing schedule”, or “communicate platform benefits to users.” In each case, these were useful and necessary initiatives that could be traced back to defined strategic priorities or longer term projects.

However, these goals were turning Key Results into Objectives. They were accurate, but ultimately were describing the “how”, and not the “what” for the goal. (See Anatomy of an OKR for more about writing strong Objectives).

OKRs excel relative to “Rocks” or other simpler goal-setting exercises because they demand specificity in targets. Adding KPIs to your Objectives forces specificity and minimizes ambiguity in what your team is trying to accomplish. The updated version clearly defines when success is reached. The table below shows how we migrated from these first drafts into stronger final versions.

First Draft Objective	KPI-Driven Objective
Update and document QC process	Reduce monthly Error Rate from 3% to 1% by implementing new QC Process
Build new staffing schedule	Increase call pickup rate from 97% to 99% by optimizing staffing schedule
Communicate platform benefits to users	Increase average monthly activity per user by 15% for Q4 vs. Q4 in Prior Year

Stretch Goal KPIs

Well written Objectives can also be more motivating for your team. They create a stronger “why” around the extra work Team Members are taking on, offering transparency regarding the benefits of any changes being pursued. Setting KPI-driven Objectives enhances those factors by creating the opportunity for stretch goals.

In the first example above, “Update and Document QC Process,” we expected that an updated QC process could reduce our error rate. Perhaps we even thought internally that a decline from 3% to 2% would be a good outcome. But as is, the OKR wasn’t telling our team what “good looked like”, and definitely didn’t inspire anyone to reach for “great.” It only inferred that writing down some new processes qualified as success.

The updated version embraces the OKR Superpower of “Stretch for Amazing.” It lets the team know what you think is possible, and asks them to be more creative around process changes that might allow you to far surpass your “good” outcome. Even if that 1% goal isn’t reached, stretch goals often lead teams to achieve a higher performance level than if no target were set at all.

Just remember to mark your stretch goals as Aspirational OKRs so you don’t risk discouraging your team with what may initially seem like an unattainable mission. And, of course, celebrate victories with your team, through public shout outs, or, better yet, some sort of in-person or remote victory event.

KPIs as Key Results

Good Key Results are specific and measurable. Using quantifiable targets for these steps easily checks these boxes; it is one way to eliminate the ambiguity for you, your team, and outside observers on when each step of your OKR has been completed.

KPIs within Key Results can also be the force of change in your activities required to push meaningful improvements. Let’s refer back to the Aspirational OKR we have used throughout our articles as an example (also repeated in an abbreviated form below).

Objective:	Reduce weekly time for the Accounts Payable run by at least 45 minutes by converting entirely from check to electronic ACH payments	Target Date
Key Result 3	​Initiate email outreach sequence to at least 25% of users on the platform focused on driving usage (Account Success)	9/30/22

Building email sequences as a low-cost, scalable method for motivating engagement had sat on our ever-growing to-do list for some time. We ran some minimal beta programs, but never seemed to commit to any widespread testing of messaging across different customers and types of end users. Setting a quantitative target that far exceeded our activity levels thus far imposed a definitive commitment for our Account Success department during this period. We were stretching for amazing in each step along the way and felt accountable for a level of activity beyond what we had previously conducted.

Your Turn!

Most of the principles discussed in this article aren’t new - instead, we’re just taking the measurement value of well thought out KPIs and the change agent tool of OKRs and bringing them together like Voltron (shout out to my favorite Peloton instructor for reminding me how much I loved Voltron as a kid) to save your quarter’s performance.

Once your team has been trained on OKRs, and you are confident in the usefulness of your KPIs, then there are just a couple final steps.

1) Try to include a targeted KPI improvement in the first draft of each OKR you write.

It won’t always work. Some OKRs are just projects that need to be completed. But make this your default. You and your team leads will develop this muscle by always trying to identify a measurable benefit to the actions that are being proposed.

If you find that the first drafts of Objectives look more like Key Results, as we encountered above, and aren’t KPI-driven Objectives, then your responsibility is to put on your Ted Lasso hat and get curious. This is particularly important if you’re managing a new department, or a function in which you may not be the expert.

The question I posed to each manager was “if you do this, and it works, what happens? How will you know things have improved” This can take a few rounds of questions - I occasionally end up with the manager looking at me like I’m a kindergartener asking “why” over and over again. The answer is obvious to them - they have a clear picture of what “good looks like” for their department. But you should keep pushing until the benefit is more clearly articulated as “if it works, this is the KPI that gets better.” Ours often end up in this format:

Change the result of [KPI] to [Target Number] through [Description of Initiative].

Then your key results are simply the steps to get there.

2) Track your KPIs Along the Way

OKRs and KPIs have two things in common.

1. They are more valuable when you regularly monitor and discuss progress; and

2. The letter K.

Hopefully you’re already conducting weekly OKR status meetings. These shouldn’t take more than 15 minutes (often less). Information on progress against the Key Results is shared by whoever is leading the OKR for that period, as well as her department team members, as appropriate. A regular cadence ensures that team members are consistently reviewing what was accomplished and making commitments for their activities in the coming week.

Good news: you don’t need a separate meeting. Use these exact same conversations to formally track progress against the KPIs incorporated within the OKR. Referring to the example above, once the outreach emails are initiated, the percentage of total users contacted should be updated in each meeting, as information is available, until the goal is achieved.

Similarly the percent growth in activity per user should be reported each month. During early efforts for the OKR, we wouldn’t expect much of an improvement in this metric; after all, we would have barely started on the Key Results that will lead to growth. However, it remains valuable to remind all team members on the ultimate goal being pursued, and as improvements start to take hold, the growth in that KPI becomes motivating.

3) When in Doubt, Begin: Apply this to your next planning cycle.

Don’t wait. You have the KPIs. You’re already writing OKRs. To make headway faster, share this article with your department heads or team leads and set the expectations for KPI-driven Objectives.

As always, if you get stuck, reach out - I’d love to help you think through your OKRs and reach your target performance more quickly.