Great team leaders create a simple governance environment that embodies the rules and practices which define the team’s performance culture.
The simpler and clearer these rules and practices, the stronger the performance culture’s foundation. Clear terminology that’s consistently used can solidify the team by creating an insider’s sense of belonging.
Here’s today’s consideration.
Are KPIs and Key Results the same thing?
They are both metrics. And they can be defined in similar ways.
But I use these phrases to mean two different things. Subtly different, perhaps. But this difference supports other important distinctions when creating a fully fleshed-out governance environment. Here’s my recommendation about KPIs and Key Results.
I use the phrase Key Performance Indicators (KPIs) when describing ongoing system metrics. Is your shift supposed to produce 500 widgets per week? That’s an easy and direct measurement. If you produced 550, that 10% above the KPI. Congrats!
I use the phrase Key Results to describe metrics that support change and innovation. These are part of the idea behind “Objectives and Key Results”. If you’re not familiar with OKRs, it’s easy to research. And worth your time.
Key Results are often about intermediate steps that you’re taking with the intention that these key results will lead to the larger (often strategic) objective.
For instance, if you’re hoping to grow sales by 50% within twelve months, there’s little strategic insight in simply tracking that sales went up 3% one month, down 1% the next month, etc. That says nothing about the underlying strategy and whether it will deliver results twelve months down the line.
However, if you’re tracking intermediate key results that support your strategy you have much stronger oversight. Maybe one of these intermediate key results is the hiring of 20 new sales reps because, according to your growth strategy, this is critical. You can track this key result. If this metric shows you’re not able to find any qualified sales people after six months, you may need to change your larger strategy. But, if you’re not tracking this key result you lose the opportunity to adjust your strategy while there’s still time.
So my suggestion is to use the phrase “KPIs” to describe ongoing metrics that align with established processes. They use the same measurement as the larger strategic goal.
And I use the phrase “Key Results” to describe metrics that (presumably) will lead to a strategic goal. They are not the same measurement as the larger objective, but rather intermediate measurable goals. Their advantage is that they provide actionable metrics early in the process, allowing for adjustments to the strategy if necessary.
But they are both measurable. They can both be dashboard items. And they’re both about identifying deviations from expected results.
They just measure different things.
What do you think? Does your organization use either of these terms? And do they draw a distinction?
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