What are metrics and how do they work?

Deriving their name from ancient Greek, metrics are units of quantitative assessment that we use, in order to gauge, compare and evaluate performance, production, success or failure.

Metrics can be used in any area of life. They are compatible with any industry, functional area or specialization. They are versatile enough that they can be used to track our health, our abilities or to assess matters that are independent of our activities, such as natural phenomena.

At a base level, metrics can mean anything, from the number of employees, the cost of fiduciary benefits or the amount of conflicts arising during a project, to the number of available beds in a hospital, the percentage of clean water available for general use or the amount of fire hydrants up and running.

At a more complex level, over time, metrics have been divided into several types – KPIs, KRIs and in recent years, OKRs.

KPIs

Key Performance Indicators – KPIs, represent metrics used not only for the sake of measurement and bookkeeping, but for performance evaluation. The giveaway is in the title – these metrics are used to gauge whether a company has or has not achieved its desired level of results/performance, in a specific area of interest.

While all of the above-mentioned metrics can become KPIs on their own, for clarity’s sake, here are a few indicators which are definitely considered KPIs: # Management-to-staff ratio, # Hours lost due to absenteeism, % Overdue project tasks, $ Sales per unit area, $ Revenue per successful call.

KRIs

Key Risk Indicators – KRIs, are metrics that provide an early warning system against increased risk exposure in certain areas. Risk indicators are assigned to those elements which have to be constantly measured in order to not cause a problem. KRIs offer an opportunity to companies and individuals alike to engage in proactive risk management activities, in order to avoid crisis management. In short, KRIs measure risk and how risky certain matters may be.

Examples of KRIs are the following: $ Economic downturn, # Regulatory changes, % High staff turnover, % Low staff satisfaction, # System failures, # IT security breaches.

OKRs

Objectives and Key Results represent a different form of performance measurement methodology from KPIs, drawing its nature from MBO – Mangement by Objectives. The main purpose of OKRs is to provide a simpler, more streamlined & flexible way of gauging success, by focusing on 3 key questions which have to be answered:

• Where do we need to go?
• How will we know we are getting there?
• What will we do once we get there?

In addition to this, OKRs differ from KPIs through the fact that they provide value creation – all key results have to focus on the impact of one’s activities, they engage all members of staff – everyone has to be an active participant in the creation of their specific OKRs, and they represent stretched, quarterly objectives – OKRs have to be challenging, longer-term, inspirational goals, not immediate, operational ones.

Examples of OKRs: Objective – Simplify & clarify our product, messaging and the presentation of our activities | Key Results – 25 on-site user-testing sessions to understand key product misunderstandings, 10 tests of our recent infographics and slide decks for customer understanding.

Objective – Improve internal employee engagement and job satisfaction | Key Results – Conduct 3 monthly Fun Friday all-hands meetings with motivational speakers, Interview 50 employees on their needs for improving work culture, Reach a weekly employee satisfaction score of 8 points out of 10.

As we can see, metrics come in many shapes & sizes, and can be assigned to a plethora of activities, projects and measurable elements in general. Based on whatever our needs are, they can be adjusted and moulded, so as to fit our performance goals, business objectives or to provide a safeguard against an ill-fated future.

If you’re interested in learning more about how your company may reap benefits from using such metrics, you may draw a lot of usefulness out of the various options available to you either in an online format or as live courses. If you want a business professional certification or to attend a professional certification program, you can find ones on either KPIs, OKRs, KRIs, or even business strategy in general. For those who would prefer a short video experience, like a lecture, you may find webinars to be a good source of information.