KRA, KPA, KPI
KRA: Key Result Areas
KPA: Key Performance Areas
KPI: Key Performance Indicators
Process:
1. Review the job profile
2. Define the FUNCTIONAL role of the individuals
3. Allocate KRAs, in consultation with THE BOSS.
4. Then the KPAs
5. Then the KPI
Note:
The levels are important but also the functional role as well the company
objectives/ strategy in deciding - KRAs / KPAs / KPI.
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KEY RESULT AREAS (KRA)
As the first step to build KRAs, KRAs are also known as key work outputs (KWOs).
KRA IS GUIDED / LINKED BY THE
1. YOU must visit your company's
VISION STATEMENT
MISSION STATEMENT
CORPORATE OBJECTIVES
CORPORATE STRATEGY
CORPORATE BUSINESS UNITS/ DEPARTMENTAL PLANS/STRATEGY.
***And could change year by year as per the board directives.
2. THEN REVIEW YOUR HR DEPARTMENT'S
HR OBJECTIVES
HR STRATEGIES
ALIGN IT WITH CORPORATE OBJECTIVES/ STRATEGIES
3. KRA refers to general areas of outcomes or outputs for which a role is responsible.
A typical role targets three to five KRA
STRENGTHS OF KRA
Value
Identifying KRAs helps individuals, Clarify their roles • Align their roles to the organization’s business or strategic plan.
Focus on results rather than activities.
Communicate their role’s purposes to others.
Set goals and objectives.
Prioritize their activities, and therefore improve their time/work management.
Make value-added decisions
Description
Key result areas (KRAs) capture about 80% of a work role.
The remainder of the role is usually devoted to areas of shared responsibility (e.g., helping team members, participating in activities for the griptionood of the Organisation).
WEAKNESSES OF KRA
-highly selective, and hence some areas could be neglected.
-too focused, less development of other areas.
-normally, it only makes 80% of the total job.
- Less emphasis on process.
OPPORTUNITIES OF KRA
-Increased focus on the outcomes
-improve the competencies of KEY RESULT AREAS.
-FOCUSED RESPONSIBILITES
-BEING MADE ACCOUNTABLE
-RESPONSIBLE FOR THE DELIVERABLES
-FINE TUNING OF THE MEASURABLES MORE EFFECTIVELY
THREATS OF KRA
-POORLY DEFINED JOB DESCRIPTION
-MULTI ROLE JOB
-REPORTING TO TWO BOSSES
-ROLE AMBIQUITY
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Example
HR [KRAs]
CORE KRAs
1. Payroll Management
2. Benefits Management
3. Statutory Admin
4. Employee Relations
5. Recruitment/ selection
6. Workforce planning/ diversity
7. Performance management
8. Reward management
9. Workplace management and relations
10. Safety and health workplace
11. Building capabilities and organization learning
12. Effective HR management systems, support and monitoring
Here are some examples:
MANAGING DIRECTOR ' S KRA
-sales revenue
-gross profit.
-net profit.
-% rise in share price
-productivity improvement %
etc etc
SALES MANAGER 'S KRA
-sales growth %
-market share growth %
-no. of new customers
etc etc
KEY PERFORMANCE AREAS [KPA]
These are the areas within the ORGANIZATION FUNCTIONS, where an individual or group, is logically responsible / accountable for the results.
***To manage each KRA, a set of KPA / KPI are set.
KPA and hence KPI is attributed to the person who can have effect on the business results and is self measured where applicable
Example: 1
KRA = Recruitment / Selection
KPA 1 = Recruitment
KPA 2= Selection
Example: 2
KRA = Employee Benefits
KPA = providing all statutory benefits (ESI, PF…)
KPA = providing all other benefits provided by company.
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KEY PERFORMANCE INDICATORS (KPI)
Select a KPI for each KPA, which would enable the individual to
improve performance to achieve the objectives.
Example
KPI for KPA 1 = reduce the recruitment cost per head by 10%.
KPI for KPA 2 = finalize selection in 5 weeks for each individual position.
***The Choice of HR KPI will vary from year to year under…
SUBJECT TO COMPANY'S
STRATEGIC PLANNING
CORPORATE STRATEGIES
CORPORATE OBJECTIVES
In HR turn affects like
-HR STRATEGIC PLANNING
-HRM STRATEGIES
-HRM OBJECTIVES
Frequently used HR Key Performance Indicators include:
[[FTE = full time employees]]
Revenue per Employee (FTE)
Assets per FTE
Training Hours per FTE
Training Costs per FTE
HR Department Cost per FTE
FTEs per HR Department FTE
Acceptance Rate
Average Cost per Hire
Absence Rate
Turnover Rate
Resignation Rate
Human Investment Ratio
Compensation & Benefits/Revenue
Average Remuneration
Time taken per recruitment
Cost per recruitment
EXAMPLES of KRAs / KPAs / KPIs
KRA 1 - RECRUITMENT/ SELECTION
KPA 1 - RECRUITMENT
KPI 1 - Average time taken per employee 2 months
KPA 2 -SELECTION [ KPI = average cost per new employee RS 10,000]
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KRA 2 - WORKFORCE PLANNING/ DIVERSITY
KPA 1 - ANSENTEEISM [ KPI = absent rate at 5%]
KPA 2- TURNOVER [ KPI = turnover rate at 7%]
KPA 3- DIVERSITY [ KPI = 3 FEMALES TO BE INDUCTED INTO MANAGEMENT CADRE]
=====================================
KRA 3- PERFORMANCE MANAGEMENT
KPA 1 - PERFORMANCE APPRAISALS [KPI = all staff to be appraised at least once annually]
KPA 2 -SUCCESSION PLANNING [ KPI = 8 POTENTAL staff to be identified and talent managed]
===================================
KRA 4 - REWARD MANAGEMENT
KPA 1- MARKET ORIENTED SALARY STRUCTURING [ KPI = total compensation to sales 12%]
KPA 2 -BENEFITS PLANNING [ KPI = 6% of total salary bill]
============================================
KRA 5 - WORKPLACE MANAGEMENT AND RELATIONS
KPA 1 -JOB EVALUATIONS [ KPI = 600 lower staff , below grade 4 to be evaluated]
KPA 2 - EMPLOYEE COMMUNICATIONS [ KPI = 4 newsletter on intranet, one per quarter ]
===========================================
KRA 6 - SAFETY AND HEALTH WORKPLACE
KPA 1 - SAFETY [ KPI = accident safety ratings, benchmark with industry]
KPA 2 - HEALTH [KPI = actual health expenditure vs budget ]
========================================
KRA 7 - BUILDING CAPABILITIES AND ORGANIZATION LEARNING
KPA 1 - TRAINING [ KPI = average training hours per employee annually= 24 hours]
KPA 2 - MANAGEMENT DEVELOPMENT [ KPI =average MD cost per employee annually= 16000 RS]
============================================
KRA 8 - EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
KPA 1- HRIS [ KPI = finalize the software . RS 1.2 million capital budget]
HERE ARE SOME COMMON EXAMPLES
FOR EACH ELEMENT, YOU CAN SET YOUR OWN THRESHHOLD, BASED ON YOUR COMPANY STRATEGY/ HR STRATEGY.
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1.ABSENTEEISM PER EMPLOYEES [DAYS]
2.AVERAGE RECRUITMENT TIME [DAYS]
3.EMPLOYEE TURNOVER [ % ]
4.EMPLOYEE SATISFACTION [ LEVELS ]
5.AVERAGE EMPLOYEE TENURE [ YEARS]
6.INDUCTION TRAINING [ % OF NEW EMPLOYEES]
7. TRAINING WORKSHOP [ % ] CONDUCTED/PLANNED
8. TRAINING AT EXTERNAL COURSES [ %] ACTUAL / PLANNED
9.PERFORMANCE APPRAISALS [ NOS.] AGAINST TOTAL EMPLOYEES.