From the corner office to the point of service, performance management is a key factor in determining an organization’s success. As a CEO, you need to ensure everyone in your organization is focused on the right objectives and delivering results. To do this, you must understand how to leverage OKRs (Objectives and Key Results) and KPIs (Key Performance Indicators).
By linking the KPIs of each role within the organization to specific organizational OKRs, you can deliver superior performance management by better-monitoring success metrics. In this article, we’ll look at how CEOs can use OKRs and KPIs to enhance performance throughout their organizations.
The Basics: What are OKR and KPI?
The acronym OKR stands for “Objectives and Key Results.” It is a system used to set, track, and measure goals within an organization. In this system, objectives are high-level goals that define the purpose of your team or project. These objectives can be strategic, operational, tactical, or anything else related to the specific area you are measuring. Once you have established your objectives, you define key results which are measurable indicators that signify progress toward achieving the goal. When these key results are met, it means that the objective has been achieved.
KPIs are “Key Performance Indicators” which measure progress towards objectives in an organization. They provide insight into performance by tracking certain metrics such as customer satisfaction ratings or sales figures over time. KPIs help organizations gauge how well they are doing in terms of meeting their goals. By tracking KPIs regularly, executives can identify areas where changes need to be made in order for their teams to reach their desired performance levels.
How To: Establish Objectives & Key Results (OKRs)
Setting OKRs starts with understanding the objectives your organization wants to achieve. If you have already completed a strategic plan, your organizational objectives are documented there. If not, you will need to think strategically about what a successful organization looks like to you. This will help you align with the key results (metrics) you need to see across the organization. These metrics are often measured quarterly and become the benchmarks of organizational performance. Boards LOVE a CEO who knows what performance looks like and how to measure their progress to get there.
Activate Your OKRs: The Power of Key Performance Indicators (KPIs)
For every OKR set within an organization, there should be a corresponding KPI associated with it in order to track progress over time. This helps executives, middle, and front-line management better understand if their teams are reaching their desired outcomes or if certain strategies need tweaking along the way in order for them to meet their overall objectives. When leaders communicate role expectations using KPIs, it provides a framework that gives employees more clarity. This helps them understand how their daily tasks contribute to organizational success as a whole, a proven way to boost morale across all departments within a business.
Tracking Metrics: Tying It All Together
By combining OKRs and KPIs with thoughtful management strategies and quarterly measurement of success metrics, CEOs can create an effective framework that will not only increase productivity but also motivate employees at all levels of the organization Furthermore, with clear objectives linked directly back to measurable outcomes, performance management becomes much easier. Executives have an easier time identifying both successes and areas for improvement. This aids them in making timely decisions geared toward the achievement of bottom-line results. With this combination, CEOs can ensure sustainable success throughout their entire organization
How to Get Started
Performance management requires strategic planning and thoughtful execution in order for it to be successful. Understandably many executives may feel overwhelmed when first implementing such systems. That’s where What Works Consultants comes in. Our OKR/KPI service extracts OKRs from your strategic plan and executives. We help you identify success metrics, build a system for tracking them and work with your CHRO or COO to communicate aligned KPIs to the field level. Schedule a complimentary Discovery Session now to learn more.