KPI & OKR
Managing performance and analysing results
What's a KPI ?
KPI stands for "key performance indicator". As the name suggests, it literally means that you are analyzing the principal indicators of performance that you set up earlier. With these analytical tools, you will be able to effectively demonstrate the achievement of objectives pursued by you and your team. KPI can be specific or global, focused on one subject or many, but in every case, they need to be SMART :
- Specific (about one subject)
- Measurable (quantifiable)
- Achievable (realistic)
- Relevant (useful)
- Time-Bound (measured at specific intervals)
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Examples of KPI :
- On-time delivery
- On-budget delivery
- Budget adherence
- Quality of data
- Return on experience
- Condition fulfillment​
What's an OKR ?
OKR stands for "objective and key result". As the name implies, it is used to define and track your objectives and their outcomes. It helps teams focus on the same objectives, following five characteristics :
- Alignment (same goals)
- Focus (prioritize)
- Transparency (shared)
- Ambition (challenging)
- Time-Bound (short deadlines)
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OKR consist of two parts :
Objectives : Clearly defined goals that are ambitious, qualitative, and time-bound.
They answer the question : "What do we want to achieve ?"
Key results : Specific, achievable, and measurable outcomes that contribute to achieving the objectives. They answer the question : "How will we know if we are making progress toward our objective ?"
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Examples of OKR :
Objective : Improve the project time rate
- Key Result 1 : Increase the efficiency of risk management by 25%
- Key Result 2 : Reduce response time between teams and clients by 50%
- Key Result 3 : Identify bottlenecks in old projects and prepare to adapt new projects to any situation
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Objective : Improve team agility
- Key Result 1 : Ensure each person is on track to achieve their work in daily meetings and achieving goals increase by 10%
- Key Result 2 : Keep the client informed and manage the project scope to prevent sudden changes
- Key Result 3 : Record every step and improve the backlog visualization, increasing team satisfaction and work efficiency by 20%
How to Manage KPI :
With a defined process :
- Set objectives
- Define KPIs around objectives
- Analyze data
- Communicate results for improvement
- Act to improve results
- Review results weekly or monthly and keep improving
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How to Manage OKR :
With a defined process :
- Set objectives
- Ensure everyone is aligned with those objectives
- Define OKR around objectives
- Analyze data
- Communicate results
- Adjust OKR for improvement
- Review results weekly or monthly and keep improving
How to Work with Both KPI and OKR ?
As discussed, both KPI and OKR share quite similar processes to be functional, which means they can work together effectively. Here’s my proposed approach :
- Understand current objectives : Begin by understanding the current objectives of your company
- Define high-level KPI : Set high-level KPI at a strategic level
- Define OKR based on KPI : Develop OKR based on these high-level KPI
- Analyze data and communicate results : Analyze the data and communicate the results to your teams, highlighting areas needing improvement
- Adjust accordingly : If a KPI is underperforming, find the root cause using OKR. If OKR are overperforming, set more ambitious quantitative objectives
- Ensure accessibility : Make sure everyone can access the results and that they are easy to read
- Continuous improvement : Keep improving based on the insights gathered