IOD has initiated Knowledge Sharing Session, a new informal venue for IOD’s members to meet and share views about interesting topics. This session on “KPI & OKR” was inspired by chats in the Independent Directors Group on “Line” app.

The session was held at IOD Member Space on Ms. Nataya Ouivirach and Dr. Tanai Charinsarn led the discussion, aiming to provide better understanding about OKR concept. Key contents from the session can be summarized as follow:

KPIs or Key Performance Indicators are indicators set by management to evaluate key performances of employees whether they achieved their preset goals. They are also used as bases to determine remuneration and year-end promotion. Most Thai organizations are quite familiar with KPIs.

OKR or Objective Key Result is the determination of objectives to assess organizational success. It comprises of
1.) Objective: Qualitative objective that needs to be achieved.
2.) Key result: Quantitative result that will measure whether the objective is achieved.

One key difference between KPI and OKR is that KPI is set in the top-down manner while the setting of OKR requires engagement of people in the organizations and involves top-down, bottom-up, and sideways participation.

The objective setting under OKR concept should emphasize on issues that are “passions” of the organizations and its personnel. It should be challenging so that people in the organization will work together to seek ways to change the way they do things or find new ways to achieve such objective. This is the stepping stone for initiation of new work process or innovation.

In practice, OKR can be used in conjunction with KPI by setting KPI as minimum requirement that must be achieved while setting OKR objective as extra additional goal.

At present, many organizations adopt OKR concept together with KPI while some even replace KPI with OKR. Key reasons that make OKR more attractive are new challenges in the fast changing business landscape from both technology and consumer behavior.

Dr. Tanai said “organizations must be capable to change their strategies and continuously find new business opportunities. In this regard, KPI will not do the trick” because the setting of KPIs are based on job description of each employee and their existing tasks. They do not provide room for employees to change the way they perform their duties or initiate new things. They merely requires employees to do things they way they did to achieve their KPIs. Meanwhile, OKR is suitable for business expansion, seeking future business opportunity, or improve work process of existing businesses.

“OKR allows us to think big. Once we think big, then we have the courage to try new things. Once we tried, we will know within three months if it works or not. If not, we can keep on trying other things which will allow us to turn to new form of business and achieve greater success,” said Dr. Tanai.

However, in order to successfully adopt OKR, employees must have adequate capability and ready to participate in determination of objectives as well as explore idea and propose ways to achieve the objectives. Thus, any organization may start adopting OKR concept at certain departments that are ready before applying the new tool with the rest of the organization.