Key result areas KRA’s is an acronym for ‘Key Results Area’.
Having clearly defined Key Results Areas enables you to take ownership of your job and to accept responsibility for those areas in which achieving results are your responsibility. Key Results Areas enable you to: • Have clearly defined and achievable goals. • Measure your progress during the year in terms of identified targets. • Manage your skills development. • Identify areas for development (skills gaps which exist). • Obtain timely feedback that will allow you to change direction when needed. • Promote an environment of self-management. Key Performance Areas [KPA] When the key results area is large, it is broken into manageable managing/ evaluation. These sub-sections of KRAs are called KPA For example KRA = Recruitment / Selection KPA 1= Recruitment KPA 2 = Selection areas for
Key Performance Indicators [KPI] To manage each KRA/ KPAs, a set of KPIs are set. A key performance indicator is a financial and non-financial measure used to measure progress towards a stated organizational goal or objective (KPA / KRA). The benefits of measuring Key Performance Indicators • It can be a very quick way of seeing the actual performance of a goal or strategic objective. • Decisions can be made much quicker when there are accurate and visible measures to back them up. • Can allow management to see the company or department performance in one place. • A team can work together to a common set of measurable goals. Characteristics of KPI • KPI is always connected with the corporate goals. • A KPI is decided by the middle or top management. • It belongs to an individual who is accountable for its outcome. • A KPI leads to action. • Few in number. • They are indicators of performance desired by the organization. • Easy to understand. • It should be balanced not undermine each other. • Users can gauge their progress overtime. • KPI’s loses its value overtime so they must be periodically reviewed and refreshed.
Core KRAs of the HR Department 1. Recruitment/ Selection 2. Workforce Planning/ 3. Diversity Management 4. Performance Management 5. Reward Management 6. Workplace Management 7. Industrial Relations 8. Safety And Health Workplace 9. Building Capabilities And Organization Learning 10.Effective Hr Management Systems , Support And Monitoring KRAs are managed by KPAs and KPIs KEY PERFORMANCE AREAS These are the areas within the HR Department where an individual or group, is logically responsible / accountable for the results. To manage each KRA/ KPAs, a set of KPI are set. KRA and hence KPI is attributed to the department which can have effect on the business results and is self measured where applicable. The evaluation of HR Department can have four levels of perspective.
1. Strategic Perspective — the results of strategic initiatives managed by the HR group. The strategic perspective focuses on the measurement of the effectiveness of major strategylinked people goals. For instance, the business strategy called for major organizational change programs as the business faced major restructuring and multiple mergers and acquisitions. In this context, the organization’s change management capability will be a key factor in the success or failure of its execution. Therefore, measuring the ability of the business to manage change effectively is the core measure of the effectiveness of HR and will be a key strategic contribution to the future success of the business. EXAMPLES -change management capability of the organization -organization compensation and benefit package with respect market rate. -organization culture survey -HR Budget / Actual -HR Costs Benchmark Externally -HR annual resource plan. -skills/ competency level 2. Operational Perspective — the operational tasks at which HR must excel. This piece of the Balanced Scorecard provides answers to queries about the effectiveness and efficiency in running HR processes that are vital to the organization. Examples include measuring HR processes in terms of cost, quality and cycle time such as time to fill vacancies. EXAMPLES -time taken to fill vacancies -cost per recruitment promotions -absenteeism by job category -accident costs
-accident safety ratings -training cost per employee -training hours per employee -average employee tenure in the company -lost time due to injuries -no. of recruiting advertising programs -no. of employees put through training. -turnover rate -attrition rate 3.Financial Perspective — this perspective tries to answer questions relating to the financial measures that demonstrate how people and the HR function add value to the organization. This might include arriving at the value of the human assets and total people expenses for the company. HR EXAMPLES -compensation and benefits per employee -sales per employee -profit per employee -cost of injuries -HR expenses per employee -turnover cost -employee '' workers compensation costs'' 4. Customer Perspective — this focuses on the effectiveness of HR from the internal customer viewpoint. Are the customers of HR satisfied with their service; are service level agreements met; do the customers think they can get better service elsewhere? Conducting an HR customer survey might typically arrive at this. EXAMPLES -employee perception of the HRM -employee perception of the company, as an employer -customer /market perception of the company, as an employer. ………………………………………………………………………………………………………………………………………………………… Suppose the Corporate Objective for the organisation is to improve the company competitive positioning and productivity by 10%. The HR department’s objective for the period is to improve the productivity 10%. This means KRAs, KPAs and KPI [shown in brackets] for HR. KRA 1 -Recruitment/ Selection KPA 1- Recruitment [KPI= average time taken for recruitment per employee = 2 months] KPA 2 -Selection [ KPI = average cost per new employee = INR xyz ==================================== KRA 2- Performance Management KPA 1 - Performance Appraisals [KPI = all staff to be appraised at least once annually] KPA 2 - Succession Planning [ KPI = 8 Potential staff to be identified and talent managed] =================================================
KRA 3 – 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 4 - 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 DOLLARS] =============================================== 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 - 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 7 - SAFETY AND HEALTH WORKPLACE KPA 1 - SAFETY [ KPI = accident safety ratings, benchmark with industry] KPA 2 - HEALTH [KPI = actual health expenditure vs budget ] ============================================ KRA 8 - EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING KPA 1- HRIS [ KPI = finalize the software . $ 0.5 million capital budget]
Writing SMART Goals (also called KRAs) from Job Descriptions Knowing your Goals and writing them effectively is an all-together different game. To describe your Goals (KRAs) you need to have effective writing skills and sound knowledge of terminology. Unfortunately, some executives/ managers may not have a flair for writing and thus unable to write their Goals (KRAs). This is true for HR also. So here are some tips that will help you to write Goals (KRAs) from the Job Descriptions. SMART: A Smart Goal (KRA) is one which is: 1. Specific: Clearly stated what to do and how to do? 2. Measurable: States how the performance for this goal will be measured. 3. Achievable: It can be achieved by employees if they work really hard (You can draw this conclusion by talking to employee, manager or someone who has done this job successfully). 4. Relevant: The KRA (Goal) is relevant to the job and the performance on this goal will improve productivity of the employee. 5. Time Frame: States a time frame to achieve the goals. How to WRITE SMART Goals (KRAs)? Here are the steps how anyone can write Goals (KRAs) from Job Descriptions: 1. Go through employee’s Job Description. If Job Description is not updated talk to employee and his/her Manager or many be manager’s manager also. 2. Try to find out exactly what the employee is supposed to achieve. 3. Make a list of the functions and responsibilities which are critical to the employee’s job based on your reading and discussions, 4. Categorize these critical functions and responsibilities in two categories: • A : Which can be measured whether in numbers or percentages or yes/no. • B : Which cannot be measured in numbers and cannot be calculated. 5. ‘A’s are the one which can be converted to Goals (KRAs). 6. Make a list of all critical functions. 7. Write a self explanatory (1 sentence ) definition of each Goal (KRA). 8. If you plan to follow BSC (Balanced Score Card) Pattern, then categorize each goal into one of the following categories: Customer, Financial, Internal Business Process, Learning and Growth. 9. There after describe each Goal (KRA). Make sure you mention a measurable target to be achieved and time frame for achievement of the Goal (KRA). An Example Functions of a Sales Manager as per the Job Description • Develops a business plan and sales strategy for the market that ensures attainment of company sales goals and profitability. • Responsible for the performance and development of the Account Executives. • Prepares action plans by individuals as well as by team for effective search of sales leads and prospects. • Initiates and coordinates development of action plans to penetrate new markets. • Assists in the development and implementation of marketing plans as needed. • Conducts one-on-one review with all Account Executives to build more effective communications, to understand training and development needs, and to provide insight for the improvement of Account Executive’s sales and activity performance. • Provides timely feedback to senior management regarding performance. • Provides timely, accurate, competitive pricing on all completed prospect applications submitted for pricing and approval, while striving to maintain maximum profit margin.
• Maintains accurate records of all pricings, sales, and activity reports submitted by Account Executives. • Creates and conducts proposal presentations and RFP responses. • Assists Account Executives in preparation of proposals and presentations. • Controls expenses to meet budget guidelines. • Adheres to all company policies, procedures and business ethics codes and ensures that they are communicated and implemented within the team. • Recruits, tests, and hires Account Executives based on criteria agreed upon by senior management. After going through the above list you identify the following six functions that are critical to a Sales Manager’s job and can be measured quantitatively: Critical Measurable Functions of a Sales manager 1. Improvement in Financial Performance of Account Executives 2. Development of Sales Action Plans 3. Reporting to Management about Performance of Sales Team 4. Negotiates with prospective customers in order to maximize the profits 5. Create and conducts proposal presentations and presentations 6. Adhere to company policies. Writing Goals (KRAs) for Critical Functions: Here are the KRA (/Goals) based on above functions. First I wrote the definition for the KRA and then gave a description along with measure and time line. KRA Improves Financial Performance of Account Executives. To ensure that all sales executive under him meets/exceed the sales targets provided to them. Track the performance of sales and guides the salesmen to improve their skills to ensure more sales. Development of Sales Action Plans Conducts market research and develops solid sales plans. Sales plan must be reported every quarter to management team for analysis and approval. Reporting to Management about Performance of Sales Team -Create and send the monthly reports with accuracy and time to management. Reports should clearly indicate the strengths and weaknesses of the sales team. Negotiates with prospective customers in order to maximize the profits Sales manager should ensure that all salesmen are pitching most competitive and profitable rates to the clients. Create and conducts proposal presentations and presentationsReply to Request for Proposals, Tender Notices, and Price Quotations in Time. Target US$ 500,000 per quarter for the whole team. Conduct 2 Sales Training per month. Renew and Renovate the Plan every quarter. Complete Reports to be send by 7th of Every Month.
Average Selling Price: US$ 10,000 or above
All Proposals to be submitted to management for review 2 days prior and to customer as on date.
Adhere to company policies and procedures - Ensure that all teams members attend the weekly sales meet and present their report. Collections of Due Revenues Sales Manager should assist the Accounts Receivables manager in collecting all due invoices in time. He/She should ensure that customer has accepted the delivery of the product and the Invoice.
90% attendance in Sales Meetings. Target: 80% of the due invoices to be collected within 30 days/ ad agreed in Purchase Order.