American psychotherapist Russ Harris said, ‘Effective goal setting is a skill and it takes practice to learn it’. Setting the right goals is not an easy task in either the personal or the business world. It requires a huge amount of knowledge and experience, especially because setting the right direction is fundamental to the success of a business. The secret is to consciously set goals and to constantly monitor progress towards them. In this context, two basic concepts come into focus: KPI (Key Performance Indicator) and OKR (Objectives and Key Results). The former has been one of the most widely used metrics for decades, but more and more companies are realising that there are cases where OKRs are more appropriate.

Measuring performance within the company

Without measuring the company's performance, it would be impossible to track the direction and extent of progress. It is no coincidence that every company takes care to monitor it in one way or another. According to a survey by the Advanced Performance Institute and Actuate, 36% of companies regularly collect and analyse performance data, while 20% pay no attention or only very rudimentary attention. The survey also found that two-thirds of respondents track along KPIs. KPIs are indeed useful metrics, but in many situations, they are not relevant, they are too narrow in perspective.

Business success is not simply about increasing sales or maximising revenue. Real success lies in achieving well-defined goals, for which it is essential to recognise and appreciate the importance of performance measurement. The use of KPIs and OKRs allows us to have a clear picture of where we are now and what steps we need to take to move forward. Understanding this is essential for any organisation seeking long-term success in a volatile market environment.

OKR and KPI: targets and measurements

The corporate world is full of jargon, including OKR and KPI. Both are key to business success, but how do we define them and in what areas are they most useful?

What is OKR?

OKR, or the Objectives and Key Results framework, is a methodology that focuses on objectives and the process leading to their achievement. The OKR approach is based on setting clearly defined, ambitious objectives, the achievement of which can be measured by key results.

The OKRs for a digital marketing team could be, for example:

• Goal: Increase website traffic by 20% by the end of the coming year.
• Key results:
  • Increase the number of blog posts (plus 2 blog posts per week)
  • Increase the average length of page visits by 30%.

Application areas:

• Corporate strategy: OKR is an excellent tool for translating corporate vision and mission into an operational plan.
• Project management: can be used effectively to define the objectives and expected results of a major project.
• Personal development: can be used to formulate and support the achievement of individual career objectives.

What is a KPI?

KPIs are Key Performance Indicators (KPIs) that provide specific, measurable data on the performance of an organisation or part of an organisation over a specified period. KPIs help us to see how effectively a company is achieving its financial and non-financial targets.

For a sales team, a KPI can be:

• Increase the number of new customers by 7% per month.
• Increase average sales transaction value by 10% in a quarter.

Leverage across different industries:

• For example, in the financial sector, KPIs could be revenue growth, profit, and cost reduction.
• In retail, KPIs could be sales figures, inventory turnover rate, and customer satisfaction.
• In IT and technology, KPIs could be availability, system stability, and customer service response times.

The use of OKRs and KPIs enables companies to communicate clearly, measure their progress, and direct their resources effectively towards achieving defined goals. What are the benefits of one approach and the other?

Why has the KPI become so popular?

KPIs are an excellent tool for objectively measuring and tracking company performance. They allow companies to measure the extent to which they are achieving key objectives linked to strategic and operational goals. They thus provide opportunities for continuous improvement, increase accountability, and give a clear picture of performance.

However, over-use of KPIs or tracking the wrong indicators can lead to a lack of transparency, distracting from the real objectives and demotivating teams by setting unrealistically high expectations.

The perspective of the OKR

The OKR system encourages the formulation of inspiring objectives linked to concrete, measurable results. It promotes clarity of priorities, efficient allocation of resources, fosters transparency, and strengthens team spirit by ensuring that everyone knows what the common goal is. It also increases staff engagement and motivation.

It delivers more precisely where the KPI is weaker. It doesn't let you lose focus and get lost in a sea of indicators, because the point is nothing more than achieving the main objectives. It forges the whole company into a single entity by setting a common goal rather than milestones to be achieved by the individual units. This avoids the mistake of everyone in the company working at full speed, just in the opposite direction.

KPIs and OKR are not completely separate, they can work together very well. This is the subject of the next chapter.

Different approaches, common goal

The KPI and the OKR require a different approach. The OKR gives a bigger picture, a strategic perspective where the main focus is on setting corporate objectives. Here the aim is to inspire and motivate - a clear direction in which the company wants to go. KPIs, on the other hand, are the step-by-step, operational metrics that help us track how close we are getting to the goals we have set and ensure that all the conditions are in place to achieve them.

The real magic happens when these two tools are intertwined. OKR focuses on problem identification and goal setting, while KPIs provide support throughout the process, helping to measure results. The OKR helps us understand what we want to achieve, while the KPI shows us where we are in moving in that direction.

Together, the OKR and KPI can produce results that have a unique positive impact on the direction and performance of the company.

Interim managers and performance measurement

In the world of interim management, both KPIs and OKRs play an important role, but from a managerial point of view, the latter are more commonly used. When an interim manager arrives in a company, he or she starts working towards a set of objectives. As with the OKR approach, the focus is on the achievement of objectives, and all the steps and key results to be followed are taken in this spirit.

When we talk about interim managers, we often tend to forget the essential role they play in corporate structures and project management. These professionals do not just perform a specific task but often introduce fundamental changes. That is why monitoring their activities and results is particularly important - not only for their success but also for the future of the company as a whole.

Interim managers should be assessed not only on how they perform a given task but also on how they can bring value and positive change to the organisation. OKRs can help these types of leaders set a clear direction and set specific, achievable goals.

At Interim Ltd, we understand that tracking, monitoring, and controlling projects can sometimes be difficult, which is why each interim manager is supported by a senior advisor This is how we ensure proper progress towards the set goals.

More information about Interim Ltd. is on our website