In order for an organization to meet its goals, it is necessary to organize the process for achieving the goals and set up indicators. In this context, KPI is an indicator for goal achievement. In this article, we will explain the outline of KPI, its differences from KGI and OKR, and points to note.
What exactly is KPI?
KPI, which means Key Performance Indicators, is an abbreviation for Key Performance Indicators. To explain it in simple terms, it is an intermediate target to achieve the final goal.
The key point is that KPIs are set in numerical values in order to measure the degree of achievement of goals as intermediate indicators. By measuring them with concrete figures such as the number of sales or sales compared to the previous year, it is clear how close we are to our goals.
As an intermediate indicator, KPI is characterized by the fact that it clarifies in numerical terms what the organization should be aiming for; it sets the direction of the organization and makes it possible to stay on target until the end.
However, it is not enough to just set numbers. In order to set meaningful KPIs that serve as intermediate indicators for the final goal, it is necessary to set numbers that are logical and objective.
What is the difference between the similar terms “KGI” and “OKR”?
What is the difference between KPI and KGI, and what is the difference between KPI and OKR will be explained.
What is KGI?
KGI is an abbreviation for Key Goal Indicator, which is the same as KPI in the sense that both KPI and KGI are target indicators.
What is different is the point at which the indicator is set. KPI represents intermediate indicators while KGI represents final indicators of an organization It may be easier to understand if we think of KGI as the result of progress toward KPI.
KPI, which is an intermediate indicator, and KGI, which is the final indicator, are often both set to show the direction that a company should aim for. However, since they are similar in that they are set at different points, it is important to note that mixing KPI and KGI may lead the final goal in the wrong direction.
What is OKR?
OKR stands for Objective and Key Result. It means Objective and Key Result. It has become well known because some of the world’s largest companies have adopted it.
The difference is that while KPIs and KGIs are intended to be achieved, the goals set in OKRs are high goals that are difficult to achieve.
While KPIs and KGIs are suitable for managing goals for each organization, OKRs are set in a tree-like manner so that individual goals can be connected to the goals of the organization.
Introducing Points to Consider When Setting KPIs
KPIs, which are intermediate indicators of goals, are, as mentioned above, important indicators that correct the direction of goals and lead to the final goal. Here are two points to keep in mind when setting KPIs.
Break it down to actionable indicators
No matter how many KPIs you set, if they are not actionable, they will not be effective. No matter how many KPIs are set, if they are not actionable, they will not be effective because it is unclear what action should be taken.
For example, if you want to increase the number of new customers in the next month, you should set some KPIs that will help you increase the number of new customers. The trick is to set KPIs by breaking down each action into elements that will enable you to achieve the intermediate goal.
In addition, it is good to set KPIs that are both actionable and a little high. Higher indicators are useful for maintaining motivation.
Beware of misalignment of KPIs to ultimately achieve KGI
As mentioned above, KPI and KGI are often set together. The problem is when KPI and KGI do not correspond well: KGI is easy to set because it is a final indicator, but KPI, which is an intermediate indicator, should not be considered alone but should be set with KGI in mind.
It is easy to explain in words, but it is difficult to set KPIs when various factors are taken into consideration and KGIs are also taken into account; if KPIs are set excessively, not only will the KPIs themselves, which are recommended to be 100% achieved, not be reached, but the goal itself may be unintentionally misaligned.
In order to achieve the final goal, it is important to keep in mind that KPIs may deviate, and to set KPIs appropriately.
As mentioned above, KPI as an intermediate indicator, KGI as a final indicator, and OKR can be used as methods of goal management. However, there are some points to note when setting these goals.
If you want to manage your goals effectively, there is GKA, which is based on the concept of OKR and allows for more flexible goal management.
The internal SNS type Goalous not only manages goals using GKA, but also activates communication among members through its SNS function. In addition to goal management using GKA For more information on goal management, please visit Free seminars on goal management are also held, so why not attend?
In this article, I have explained about KPIs, a goal management method suitable for use within a department or team as an intermediate indicator to achieve the final goal. However, KPIs can become a skeleton if they are not set properly at the setting stage, such as the possibility of deviating from KGI.
If you are thinking about goal management, you can use GKA, which is a higher level version of OKR, as a base Goalous.