KPIs or Key Performance Indicators are used to one degree or another by most businesses. Their brilliance and success comes from their simplicity.
OKRs benefit from a use of KPIs at the Company, Team and Individual level. The best way to think about OKR in the context of OKRs is as a scoreboard. A small collection (5 - 10) of KPIs acting as a scoreboard on Company, Team and Individual performance.
Once you have your scoreboards OKRS are free to do that they are intended to do. Focus on the wildly important things that you need to make progress on outside the BAU. Of course sometimes these things are KPIs, but not always.
So what are KPIs?
If KPIs are truly the metrics that matter most because they are most connected to performance, either in a leading or lagging way, then measuring them and focusing your efforts on improving them can only have one outcome. Performance improvement.
That said, there are common mistakes that are made which has lead to the creation of a simple set of guidelines for setting better KPIs and deliver the results you’re looking for.
KISS
Fewer easy to understand the KPIs are best. Sounds obvious but lots of KPIs that are not understood are not going to work. Try and distill the essence of performance at a company and team level down to a few simple to understand metrics.
Correlated
KPIs are selected because they correlate with business or team performance. If the desired outcomes are created KPIs will have a positive impact on performance. A bad KPI will mean that desired outcomes can be reached and there be no discernible impact on business performance.
Distributed
Distributed and transparent Company and Team KPIs are better than hidden, non-existent, or siloed KPIs. Consistency and transparency increases alignment, teamwork, trust and accountability.
Influenceable
Employees should know how they can influence the KPIs. How they influence them usually come in the form of Initiatives and Tasks. If Churn is a KPI, then the Employees should be able to suggest, prioritize, run, and assess the impact or influence of what was done on the KPI.
Owned & Maintained
KPIs have an owner and the owner can be asked about the KPI at any moment. They are responsible for its definition, source, calculation method, and updating, whether from an automated source like software or manual updates.
Aligned
KPIs are aligned from the top down and bottom up and don’t contradict or undermine each other.
Front of Mind
Keeping KPIs front and reduce attention activities that may be less influential. We can all get distracted and have a bias towards what we like to do vs what we should rationally be doing, or simple a blindspot to what we should be looking at because it’s not in-front of us on a daily basis. A form in inattentional blindness.