Source: Getting started: Combining OKRs and KPIs
Author: Allan Kelly
Section: 5 — Conclusion: Key principles for KPIs and OKRs
Reading time: 1 minutes
Tags: kpi-okr-principles fewer-kpis-better kpi-definition-clarity performance-measurement-cadence okr-kpi-summary kpi-elimination staff-understanding measurement-tracking organizational-health management-practice
Summary: Kelly summarizes the key principles: understand what type of KPIs you have before deciding on OKRs, fewer KPIs are better than many, KPIs must be clearly defined so all staff understand them, and truly key indicators need proper tracking at an appropriate cadence. The essay concludes that using OKRs, KPIs, or BSC as routine management practice improves operations regardless of the specific framework chosen.
While you could transition from type 1 or type 2 KPIs to type 3 KPIs with OKRs, and even if I might prefer this model, there is no reasons to have all everything. Using OKRs, or KPIs, or BSC as a routine part of management practice will probably make you a better company, it should improve operations and help employees understand what is important.
Conclusion
The key to combining OKRs and KPIs is to understand your KPIs and how you are using them. Once you understand your KPIs then you can decide if you need OKRs or whether you KPIs are already doing the job. When KPIs are fulfilling a health monitoring role then adding OKRs to bring more action makes sense.
Still, some things are always true.
Fewer KPIs are better than many: seek to ensure that your KPIs really are key and eliminate ones that aren’t.
KPIs need to be defined and defined in such a way that staff can understand them. If KPIs are going to be improved, or even just maintained, then it is important that everyone understand where they come from.
Once you have your truly key, well defined, performance indicators, they need to be calculated, tracked and monitored at a cadence that fits with your businesses.
References
Kaplan, Robert S., and David P. Norton. 1992. “The Balanced Scorecard—Measures That Drive Performance.” Harvard Business Review, no. January-February.
Kelly, Allan. 2023. Succeeding with OKRs in Agile. 2nd ed. LeadPub / Software Strategy. Parmenter, David. 2020. Key Performance Indicators. Wiley.