Depending on how your organization chooses to define them, key performance objectives (KPOs) are often used to refer to outcomes for your team, or measurements that determine how well they’re performing. Sometimes, this phrase is used interchangeably to refer to OKR goals, but here we’ll clarify the differences.
Goals can be based on either outcomes or performance. An outcome could be a specific measurement you’re trying to achieve, such as sales volume. Performance objectives, however, could help you excel in how you reach outcomes. For instance, if you hit your sales goals through in-house tactics instead of spending money on costly trips, that could be an example of using a key performance objective (KPO) to achieve an outcome.
Key performance indicators (KPIs) are the metrics your company uses to measure and track company success. Examples of KPIs might include gross profit margin, company revenue, and new customer acquisition. They are automatically encompassed in your goals when you use an approach like OKR goal setting (i.e., “Grow new customer acquisition by 40% by the end of Q2.”).
OKRs stand for Objectives and Key Results. They’re simply a way of setting goals and aligning them throughout your organization by using Objectives (what you want to achieve) and a set of accompanying Key Results (metrics to measure how you’ll achieve the Objective). They align everyone to the top company goals to ensure all teams move in the same direction, have clarity and focus, and stay connected to your mission.
In order to achieve both improved performance and important business outcomes, you must look at both KPOs and KPIs. That’s why organizations are choosing to use goal setting solutions like OKRs to make sure they’re improving performance and achieving top-priority outcomes by aligning goals across the entire organization.