Ever wondered about the new job, its roles and responsibilities, etc.? This is a common psychologically ingrained attitude of newly hired employees after onboarding to get a clear insight into the business objectives and their specific parameters that would add to the success of the organization as well as enhance their own productivity.
To clarify the confusion and provide employees with a clear picture of the description of their job role and the time assigned to achieve it, KRA (Key result areas) are designed. Further to keep a check on the leading indicators of performance metrics KPIs (key performance indicators) are evaluated.
For a business to grow it is extremely vital for the management to frame KRA of different employees and evaluate KPIs for measuring and tracking success. Now that a lot about KPI and KRA has been mentioned let us understand what KRA and KPI mean and how is it framed.
What Is KRA?
KRA the ‘Key result areas’ denotes the business performance metric, parameters, or objectives set for an employee according to their job position, role, and designation assigned, to achieve the overall business goals of the organization.
The KRAs are quantifiable and measurable values that help employees understand their roles and responsibilities clearly without perplexities and contribute to the success of the company in the long term.
The Key result area of different employees varies as per their job profile, location, business objectives, other strategic factors such as time zone, resource availability, employees performance metrics, etc.
KRAs are basically the expectations of management from the new employees as well as persisting employees. The internal promotion rate and appraisals are highly reliant on the accomplishment of quantifiable and measurable tasks drafted in the KRAs of different employees.
Furthermore, the business operations of the entire organization are heavily dependent on the appropriate framing of KRA as it not only gives an insight into the associated tasks but also highlights prioritized assignments to be completed within a particular time frame.
KRA serves as a blueprint for the employees irrespective of their designation or department to conduct their tasks efficiently with a clear vision hence discarding complexities.
What Is KPI?
KPIs focus on the key performance indicators which is used to measure the progress towards achieving the organizational goals. It measures the performance of individuals, teams, or groups by evaluating the perceptible and quantifiable metrics of measurable tasks assigned as per the KRA.
KPIs can be expressed using numbers, numeric values, percentages, ratios, currencies, indices, counts, and other units. The key activities that have quantifiable and measurable values are evaluated in key performance indicator to get an insight into employee performance in accomplishing business goals.
By documenting KPIs, employees can understand their job roles and areas of greys efficiently as well as combat inefficiencies with adequate training. KPI helps in tracking the progress of employees, making informed tailored decisions as per the company’s requirement, helps in evaluating the company’s operational efficiency, financial efficiency, and more.
Some other most critical KPI that measure the performance of key responsibility areas metrics include:
- Sales volume
- Customer Acquisition rate
- Attribution rate
- Profit margin
- Return on Investment
- Innovation Index
- Employee satisfaction index
- Employee engagement score
- Individual KPIs of employees
- Track progress of new product induction in the market.
- Risk Exposure and more.
Difference Between KRA And KPI
The key differences between KPI and KRA are significant as KRA is a strategic concept of framing tasks whereas KPIs measure performances. Let us understand it in brief.
|Key Results Ares||Key Performance Indicators|
|It frames responsibilities that an individual or groups are accountable to perform. KRA for different employees varies as per their job roles and responsibilities.||These are measurable metrics used to evaluate performances. These are specific parameters which are set prior to the beginning of the task for evaluation at the end.|
|KRAs are usually qualitative in nature as it details the involves measures such as communication, teamwork, leadership qualities etc, which is challenging to express in quantitative terms.||KPIs are quantitative in nature as it is used to measure or evaluate performances of employees which require numeric or graphical representation for clarified reports.|
|Broader in scope||Narrower in scope|
|Provides framework for measuring performances as well as clarity to employees to perform tasks without confusion.||Evaluates how efficiently organization performs in alignment to their goals.|
|Example: KRA of sales manager ➔ To create leads.||Example: KPI of sales manager ➔ To evaluate the number of converted leads.|
|It focuses on long-term goals of the organization, as the KRA is planned by considering the organization’s long-term objectives.||It changes as per the change in business circumstances and other factors such as market drifts, resource availability, financial health of the organization and uncertain shifts in business operations.|
|The aim of KRA is to provide assistance to employees in performing tasks with appropriation||The aim of KPI is to measure the performances of employees. This helps organizations in framing informed decisions. KPI are usually framed on the KRAs.|
How to Set KRA for Employees?
For setting up efficient KRA for employees, it is essential to take a few factors into consideration that would contribute to the business’s success.
The KRAs of different companies vary as per their location, company size, and policies yet there are some generic parameters and steps that are taken into consideration while drafting KRA for employees which include:
1. Profound Knowledge of Organizational Goals
The first and foremost parameter to set up KRA is to get a profound and brief knowledge of the goals of the organization. There can be long-term and short-term goals of the organization which should be analyzed accurately to frame KRA as per tasks precedence.
Identifying the key activities for goal accomplishments makes it easier for the HR manager to create, modify, rectify, or alter KRA as per the requirement of strategic goals hence, aligning the KRA with the overall target of the company.
2. Analyze Job profile
Next in a row is analyzing the job profile of the employee to get an insight into the strengths, weaknesses, profile scope, and job description details. This gives a clear picture of employees’ job roles and capabilities as well as helps draft KRAs which would keep up well with employees’ satisfaction.
Eccentric KRAs are vital reasons for employee turnover, negative growth, and an increase in attribution rates at the company. So, it is essential to analyze the job profile of employees before describing their key responsibility area.
3. Resource Availability
Scrutinizing the financial and non-financial metric or resources available in an organization that is required for the goal accomplishments of employees needs a thorough introspection before framing KRA.
Possibilities of maladministration arise when resource availableness doesn’t match with the KRA expectations, hence affecting the employee satisfaction index and the entire organization’s growth.
Measuring success of the organization depends on the KRA accomplishments so, checking the availability of resources is an important metric to frame the key measurable values.
4. Use SMART Technique
SMART technique denotes a comprehensive analysis of the workflow and workforce potent and key measurable values that affect or benefit the KRA of employees. It is vital to frame KRA keeping the SMART technique in consideration.
Setting specific roles for employees without overloading them with redundant tasks.
The KRA drafted for employees should be measurable in terms of performance metrics, team performance indicators, customer satisfaction, key performance indicators KPIs, and more.
The KRAs to be set should be realistic and not fictional, unreal, or irrelevant to an employee’s capability and capacity.
The scope of KRA should match the skills and job profile of the employees.
The KRA’s for every employee should come up with an adequate time frame for tasks accomplishments to achieve business objectives and avoid missing deadlines.
5. Identify Possible Challenges
The next stride is to identify possible threats or challenges that can arise due to specifying KRAs and to prepare reinforcement to combat challenges in the future.
Business objectives are subject to uncertainties and unforeseen circumstances so while preparing KRAs of employees it is vital to evaluate the threats to keep their efficiency steady during a crisis.
Change is the only constant, business operations are dependent upon several factors such as sales volume, team performance, revenue generated, income sources, average order value of a particular product, better customer service, net promoter score, sales qualified leads, and more.
These factors do not stay constant throughout rather they take a toss with alterations in the market or degradation in employees’ performances. So, KRA should be kept flexible enough to review regulations, alter the scope, and make necessary alterations as per the suitability of circumstances to achieve business goals.
7. Employees Suggestions
Welcome suggestions from employees regarding their KRA this would not only add value to the KRA draft but also enhance employee satisfaction.
Employee feedback program highlights the challenges faced by an employee while adhering to the KRAs and provides management insight into the improvement areas.
It is a strategic factor in retaining the workforce as well as enhancing employee connection and reducing employee turnover.
How to Set KPIs for Employees?
The most critical factors that are considered to set the key performance indicators KPIs for employees include multiple parameters. Let us take a look at the steps
- Goals Alignment: While KPIs align with the business goal it is subject to alterations as per the prevailing market condition.
- Identify the Key factors
- Set Specific Measures
- Measures or units for measuring the performance.
- Quantify Data: For creating meaningful KPIs it is an important metric to make it measurable by using quantitative numeric data for representation. The objective analysis of quantitative data makes it more authentic and of high value.
- Equilibrate Qualitative & Quantitative Parameters: There are different types of key performance indicators so creating a balance between the two key measurable values, qualitative and quantitative parameters will benefit the organization. Quantifiable and measurable values will allow trend identification, performance comparison, etc. While qualitative parameters will allow contextual understanding of ‘how’ and ‘why’ behind the numbers.
- Implication of Leading and Lagging Technique: This evaluates the ‘future’ and ‘past’ outcomes. Leading indicators indicate proactive and predictive future performances. Whereas, Lagging indicators are the historical performances that have already occurred. This gives an insight into employees’ performances.
- Offer training and resources
- Rewards and recognition to valuable and productive employees
- Continuous monitoring and feedback for performance betterment and uncovering the lacking areas to work on.
KRA And KPI Examples
Both KPI and KRA have the common objective of achieving organizational goals. A few examples of KPI and KRA are as follows:
➔ KRA and KPI of Human Resource Manager
|Enhance employee experience||
|Diversity & Inclusion||
|Employee Engagement & Development||
|Compensation & Benefits||
➔ KRA and KPI of Finance Manager
|Cash flow management||
|Financial Report Analysis||
➔ KRA and KPI of Marketing Manager
➔ KRA and KPI of Operations Manager
➔ KRA and KPI of Sales Manager
|Sales team management||
FAQs (Frequently Asked Questions)
1) What is the full form of KRA?
KRA refers to ‘Key Results Areas’ are crucial specific tasks or responsibilities that are essential for goal achievement in the organization.
2) What is KPI vs KRI vs KRA?
KRA: KRA refers to key results areas which are strategic concepts used to define the responsibilities of individuals, groups, or organizations to achieve the business’s success and goals.
KPI: Key performance indicators (KPIs) is used to measure performance of individuals, teams, groups, or organization as a whole to achieve specific goals and targets.
KRI: Key Risk Indicators are used to evaluate metrics to identify potential risks that can affect the organization’s future contingency.
3) What is KRA for employees?
The type of employees varies as per their job roles and departments. KRA for different employees differs accordingly. A few Generic KRAs for employees include:
- Targets accomplishments
- Prompt and on-schedule task completion
- Enhance efficiency
- Elevate productivity
- Compliance adherence and more.
4) What are the KRA in HR?
The key results areas in HR include:
- Talent Acquisition & Recruitment
- Employee engagement and development
- Training, development, and mentorship of employees
- Maintaining a healthy work environment
- Diversity and inclusion
- Performance management and more.
5) Why is it important to define KRAs?
It is vital to define KRA to get a clear picture of specific tasks that are important for the accomplishment of organizational success and goals. It helps keep the workforce of the organization away from perplexities and confusion.