Evaluate your performance – What are OKRs, KPIs, and KRAs?
Everything demands a result! Whether it’s your high school, a southern derby soccer match, or an introspection. Same demands living a corporate life. The company wants to know your progress. How well you are doing? And what is the result? Depending on the same, the metrics were found which calculate your work and they are OKR, KPI, and KRA. So, let us find out what are OKRs, KPIs, and KRAs.
Results are very important for you too! The reason is, that you can find out where you are lacking and where you are doing good. In this way, you find the areas you need to emphasize more and have scope for improvement. To find the results of the goals set, OKR, KPI, and KRA came into the role.
Today’s hyper-competitive business world requires you to think smarter, faster, and more strategically. If you want to thrive, you need to focus on the things that really matter and measure their impact. This blog post aims to help you understand what are OKRs, KRAs, and KPIs as they are all important business management metrics. Whether your company is just starting out or you’re an experienced CEO – reading this article will be useful for everyone. Keep reading to discover everything there is to know about these three essential metrics
The acronyms are as follows,
- OKR- Objective and Key Results
- KRA- Key Results Area
- KPI- Key Performance Index
Let’s find out what are these metrics for.
What are OKRs?
OKRs stands for Objectives and Key Results. These are popular management reporting metrics that help CEOs (and other managers) to set ambitious yet achievable goals, track progress towards them and take action when something needs to be changed. Objectives are the company-wide goals that have been identified as the most important for the coming period. For example, ‘Increase client retention by 10%’ or ‘Build a new product that has a $1 million lifetime value’ are examples of objectives. Key results are the specific, measurable, and time-bound metrics that are used to measure progress towards the objectives. For example, ‘Close 30% more leads every month’ or ‘Build the new product in 5 months are examples of key results. In a nutshell, OKRs are used to determine what’s important for the company and help them set goals to achieve it. The metrics that are used to measure the desired outcomes are called Key Results.
What are KRAs?
KRAs are KPIs that are specific to the departments or teams. They are metrics that help managers to measure how well their department is performing compared to the budgeted goals. KRAs are similar to OKRs but they are used at the team level instead of the company level. Managers use KRAs to set goals and measure the performance of their teams. The KRAs are different in each department, although sometimes they can be the same as the company-wide metrics. For example, in the sales department, the KRA is ‘Increase sales by 10%’, while in the marketing department it’s ‘Increase leads by 30%’.
What are KPIs?
KPIs are Key Performance Indicators that show whether the business is performing well or not. KPIs are usually used in a broader sense to refer to any business metrics. KPIs can be financial metrics like profit, revenue, net profit margin, churn rate, etc., but also non-financial metrics like revenue per customer, customer satisfaction, etc. This is why it’s important to track the metrics that are relevant to your business. While OKRs are used to track company-wide metrics, KRAs are used to track the metrics of departments and KPIs are used to track the metrics of the entire business.
Why Are These Metrics Important?
As we said, these are important business management metrics because they help you track your company’s performance and stay on track towards your goals. The metrics you choose should be relevant to your business, measurable, and achievable. After all, it’s difficult to improve what you don’t measure. These metrics will help you understand where you’re currently at and where you need to improve. To help you reach your goals, you need to know what metrics are important to track. The metrics that you choose to track will depend on the goals you have for your business.
How to Use These Metrics Together?
Your business goals and the metrics you track towards them will change over time. What you track now may not be relevant in a year or two. If you are just starting out, you probably don’t have any specific metrics yet. This is completely normal and it’s good to start with the basics. What are the core functions of your business? What drives your revenue? These are the metrics you should be tracking first. As time goes by and your company grows, you’ll most likely add, remove and change the metrics you are tracking. It’s important to keep monitoring what’s happening in your business and make changes when needed.
Bottom line
These three metrics are important for any business to track their performance and stay on the right track towards their goals. Depending on the goals you have for your business, you will choose different metrics to track. It’s important to keep monitoring what’s happening in your business and make changes when needed.
