KPIs, KRIs, OKRs Oh My!
There are good reasons why everyone talks about these things. When done properly they really work! You are what you measure.
When a measure becomes a target, it ceases to be a good measure.
Yet, there’s truth in Goodhart’s Law. It comes from the misunderstanding the difference between a KPI and an OKR.
Goodhart is talking about Key Performance Indicators and the dangers inherent in someone’s ability to game the numbers. The mistake comes from assigning the responsibility of a KPI to an individual.
Far better to assign responsibilities in the form of results. Objective and Key Result. OKR.
The organization as a whole has KPIs. Individuals have OKRs. Both are needed to keep the business tracking to the ultimate goal.
Setting Your Goals
Key Performance Indicators
The important word is “Key” not performance, and not indicator. The one number you can check that tells you it’s working. It’s the one number you track over time that accurately forecasts the future.
Key Risk Indicators
In most businesses people have secondary indicators that help support the KPI. These other measures provide the diagnostics into the behaviour of the main KPI. It’s the KRIs where we do our deep analysis periodically to correct an underperforming KPI.
Objective and Key Result
The “I will accomplish _______ as measured by _______ “ formula provides a rudimentary template for setting your OKR. But in order for this to work you first need to know your Strategy and Tactics. Only then can you set an OKR that properly aligns with the business and its Goals.
How does it work?
First you start with a deep understanding of the dynamics of your organization. What is the ultimate goal?
When you know your goal you can begin to define the strategy and tactics that get you there.
Somewhere near your Goal you’ll find your KPIs. Below that, supporting the goal, you have strategic KRIs. And the tactics you employ will be expressed as your OKRs.
Goal Setting Services
We’ll guide you through the process and show you how to bring the team to see the value in performance tracking.
A typical engagement follows this form:
1. Evangelism
Introducing a new performance system like OKRs is a big culture shock. Your role as the leader is to share the vision and create consensus around the Goals.
We’ll show you how to do that.
2. Training
Few people on the team and in the ranks will have heard of this idea. In order to get meaningful results you’ll need to help guide people on how to set OKRs.
We provide that training and show you how to come up to speed fast.
3. Dashboards and Leader Boards
A commitment to being driven by KPIs, KRIs and OKRs is a commitment to measurement. Your best results come when the data collected is visible to all so that they can see the impact of their work on the company’s goals.
We’ll show you how to set that up and make it part of your routine.