Business Advice 16 February 2022
HR Director KPIs v OKRs

As we transition into new hybrid ways of working, measuring performance of the business as a whole and individual workers will become ever more important. Hybrid working will make weak teams weaker and strong teams stronger, so work needs to be done to prevent small issues escalating into major problems and to turn challenges into opportunities. A well-defined and focused framework of measurements will provide a good structure for the challenges that lie ahead.

Key Performance Indicators (KPIs) are used to evaluate performance over time and provide a guide for managers on where to focus resources. They provide a target against which to measure performance, which can be at the organisation, departmental, individual or project level, but they tend to look backwards at what has happened and measure success or otherwise.

Objectives and Key results (OKRs) on the other hand provide a strategic framework with specific outcomes to track the achievement of ambitious and aggressive goals or objectives and are very much focussed on future achievement. OKRs are a simple goal setting technique, which is ideal for companies looking for high growth. They are always strategic, quantifiable, time based and able to be objectively scored on a numeric scale. Objectives are the ‘what’ and key results are the ‘how’, so the OKR framework defines what you need to achieve and how you will achieve it.

Undoubtedly, there is a place for both, but adopting a combined approach where specific KPIs form the key results used in an OKR framework has the benefit of tying KPI measurements into strategic objectives to provide a powerful framework of outcomes and measurements. Whilst the OKR framework is simplistic and based on tracking data, KPIs are single data points within that framework and provide a familiar means of measurement for most. Rather than it being OKRs versus KPIs, they are complimentary bed fellows, working perfectly together and providing real focus on what really matters to an organisation.

Whilst most organisations track many performance indicators across the business, when tying them into OKRs remember the work ‘key’ is used for a reason. Whilst there may be more than one objective, each objective should have no more than 5 key results. Remember this is being tracked at a strategic level, so only the measures that have the biggest impact and value to the organisation should be included.

Because OKRs are time based, they really force organisations to choose what is most important for the next 3,6 or 12 months, so creating a focus on initiatives that will provide an immediate benefit to the business whilst leaving the less important ones. This focus will be key to any successful implementation of hybrid ways of working, ensuring that employees are aligned with what the organisation is aiming to achieve, and the right outcomes are tracked. According to the Harvard Business review, companies with highly aligned employees are more than twice as likely to be top performers.

Popularised by the likes of Google and Intel, OKRs are always ambitious and push companies to achieve more. As Larry Page of Google said, ‘Id rather have the objective be to go to Mars and if we fall short, we’ll get to the moon. This is how you make moonshots’. Undoubtedly as we come through the pandemic and move to hybrid ways of working, we will be faced with multiple challenges, and the combined OKR and KPI framework gives a sound basis for companies to remain on track.

So why is a combined approach to OKRs and KPIs so important as we move to hybrid ways of working? Well, even in the traditional business model where you can easily meet and talk with colleagues, people can struggle for clarity on priorities. Add in the remote working effect and the need for clear and concise goals with related measures is multiplied, both in terms of ensuring productivity but also from an employee morale perspective. Remote workers need clarity on priorities and focus, don’t have such easy access to the simple interactions with colleagues that exist within the traditional work environment and consequently can really suffer when communication breaks down. A combined approach to OKRs and KPIs ensures that their priorities are clear, and they remain focussed.

The combined framework not only provides a simple goal-oriented approach, but also provides the measures required for effective performance management process and ensuring that remote workers are all pulling in the same direction and contributing to the delivery of the company strategy. Not only does it make the company’s priorities clear, but it sets out the parameters for achieving them by linking individual KPIs into the company objectives. Consequently, team management becomes more results focussed, tracking whether individuals are achieving their goals rather than the more traditional productivity focus which doesn’t lend itself well to remote working where it’s unlikely that employees will work in the same 9 to 5 way as they did when in the workplace. Tracking the achievement of key results improves the ability to manage performance without the need for micromanagement, which is clearly beneficial as we move to hybrid ways of working. They provide remote teams with a simple yet effective way of checking in on key priorities and team performance.

We all know that effective communication is more important than ever with remote teams and that when it falls down the fallout can be enormous. Combined OKRs and KPIs can prevent this happening as all team members will be clear on their priorities and will remain aligned with others who they may not be in regular contact with. The death of traditional workplace conventions which will result from hybrid ways of working will require the dovetailing of information within a simplistic framework for which OKRs are well known.

So, the benefits are clear to see, but in the world of HR where our focus is on developing employees to be the best they can be, how can we use the framework to improve their performance? By having aspirational and learning objectives which encourage teams to experiment and grow. Implementing combined OKRs and KPIs still needs sound leadership and a strong open culture without a fear of failure. They are not a magical fix-all, but a simple framework by which to manage the achievement of company goals and to maintain alignment across the business.