Although the two are almost similar since they both help to create and achieve objectives for the growth of the organization with the active use of metrics and key results to monitor and gauge the organization’s success in achieving their prospects. Nevertheless, there are distinctive differences between the two management frameworks, which companies have failed to realize in their comparisons.
What are OKRs?
OKR simply stands for objectives and key results. It is a goal and objective-setting management methodology that helps teams and organizations set achievable goals for the organization’s future growth and measure or track those objectives.
They are the perfect and effective tool for assessing what your team or organization seeks to achieve and measuring their progress toward accomplishing such goals. OKRs are popular among international and world-leading companies to engage and create strategies to structure an objective plan for the companies.
Whether working on organization goals, office operations, nonprofits, or company objectives, OKRS performs the same function for setting goals and monitoring them for desired results. Moreover, OKRs can also be used for personal purposes when one is actively working towards a goal. OKRs allow individuals to enact strategies and engage those objectives.
What are Balanced Scorecards?
In a balanced scorecard management framework, objectives and their results or external outlooks are monitored by identifying and improving the internal business performances and functions. The balanced scorecard is a management performance framework that uses metrics to identify and track a company’s goals by measuring the performance level of the company or organization.
The balanced scorecard is commonly engaged by companies and organizations in the United Kingdom, United States, Japan, etc.
A balanced scorecard is a performance metric used to identify and set goals for the performance of the company or organization, which in turn allows the owner to effectively identify the various functions in the company, and the allocations generated to improve the functionality and the prospects of the company.
How are OKRs Different from Balanced Scorecards?
Although it would seem that both methodologies have a lot in common, there are also important distinctions between them, including;
1. BSCs are mostly used to establish and evaluate objectives for about a year, while OKRs are only created to achieve short-term goals.
2. BSCs have more structure in the process of goal-setting. While OKRs employ a flexible and freestyle way of setting objectives and achieving them for the company.
3. OKRs simply identify items that are very important for the company’s growth in a given quarter, set objectives, and track them to completion. However, BSCs operate with categories where objectives fall under distinct categories.
4. In ascertaining the growth and prospect of a company or organization, OKRs introduces the use of ‘stretch goals’ that allow companies to plan and set ambitious goals that the company may not reach or achieve. However, BSCs manage expectations and monitor them without encouraging companies to build long-term prospects.
5. OKRs are open, flexible, and responsive in setting goals and the measures to be taken, while BSCs are rigid and structured.
6. BSCs are simply created and drafted to be used in a company for a minimum of a year; hence, they tend to be annual. Meanwhile, OKRs are drafted to stay with an organization for the period of its use, one cycle, which is usually a quarter or a month before new OKRs are designed.
In the true sense, both management methodologies have their pros, and both tend to support significant achievements when used together. However, OKRs facilitate a broader sense of outreach and accountability. It is hardly restrictive and encourages organizations to be ambitious in setting goals and achieving them by targeting key items in the organization. Due to the use duration, it allows companies to constantly review and draft their prospects and achievements.
Additionally, industries are constantly evolving and adapting. Hence, OKRs are created and reviewed more regularly and traditionally as opposed to BSCs, which are annual.