What does it all mean???
KPO – Key Performance Objectives – Usually a goal or action that is based around an outcome or performance (something that is measurable). Eg: Staff should have 98% safety training at all times, to ensure they and their co-workers stay safe at work.
KPI – Key Performance Indicators – Metrics defined by your organisation and used to track the organisations performance. Eg: Increase revenue by 20% vs last year.
OKR – Objectives and Key Results – Goals that are aligned and communicated using objectives (what you want to achieve) and metrics so you can measure how you are achieving the objective. Eg: Design and deliver 100% of products from recycled material to reduce environmental carbon impact by 3% vs last year.
Metrics – the measurement of something so you can review
Is it clear yet? Don’t worry – books have been written on this, many youtube resources are out there (some listed at the end).
What is important, for your organisation is to understand where you want to be – what is your goal (see the link to strategy there?). Now work backwards, into bitesized pieces.
Depending on the size of your business, metrics may be sufficient to track performance, and how you are moving forward with your strategy. In larger businesses, as you communicate the strategy, and the breakdown of milestone tasks, the review can be made with metrics. But revenue increase might not make sense to a coder or team member – so switch it around, would they understand reduced client complaints, or client satisfaction as a metric? These can impact revenue through repeat purchases, and are more understandable to team members.
I am biased. I am an engineer, so I like numbers and metrics. I find KPO too fluffy, and I find that no matter the level of an employee, if you communicate a relevant target to them they will work towards it. Its how you communicate the relevance of that target that differentiates for me between a KPI and a OKR. If the target is part of the strategy and communicated as such, then OKR work, if its just to grow the business then stick to KPI.
What metrics to chose can be a confusing exercise, and really is quite dependent on the type and size of your business.
The list goes on, what is important is to have a few (5-8) and track them. They should be customised and RELEVENT to your business – generic metrics just don’t work.
How and Where to Capture and Review?
Once you have decided which metrics are important and aligned with your strategy, you need to track and review them. This is just as important with those metrics which you agree with your leadership team and employees as KPI or OKR. Where can they see them, so they know they are on track or not?
There are a heap of different ways to do this, below I will review some of them for you… I have used each other below myself and definitely recommend Tableau or PowerBI