Kra & Kpi

The success of an organization will depends on its ability to measure
accurately the performance of their employees and use it persuasively to

develop them as valuable resources.
The Performance Evaluation & Development process aims at being more

than a mere tool to evaluate performance and focuses on professional
performance development.
OBJECTIVE
· To identify the most important aspects of the job and base performance
measures on the same.
· To evaluate employees on their performance during the appraisal period.
· To facilitate employees in planning and management of their own work,

leading to enhanced performance.
· To facilitate career planning by determining appraisee’s potential for

taking on diverse roles and responsibilities.
· To provide training focused on specific developmental needs.
The Performance Evaluation & Development process has been designed to

allow a holistic view on the employee’s performance. It consists of the
following categories
1] Key Result Areas (KRAs)
Key Result Areas are critical functions of a job or a role, which makes its
distinct contribution to the achievement of the company’s goals. KRAs
require tasks to be performed by an employee in relation to his job. They
are critical areas of performance assessment and should be mutually agreed
upon and listed at the beginning of each appraisal period. Each KRA can be
further broken down into specific tasks.
The KRAs have to be:
a. SMART I.e. S- specific, M- measurable, A- agreed, R- realistic, T- time

bound.
E.g. 1. “To achieve a sales turnover of Rs.5 lakhs”.
E.g. 2. “To conduct Induction Training for all new recruits twice a month”.
b. There should be a minimum of 5 KRAs assigned to a person.
KRA = KEY RESULT AREA,

KPA = KEY PERFORMANCE AREA.
IT IS NOT OFTEN POSSIBLE TO EVALUATE KRA, AND HENCE IT IS SPLIT
INTO KPA’s.
KPA’s are more focused and easy to monitor/evaluate with KPI.
Key Result Areas
“Key Result Areas” or KRAs refer to general areas of outcomes or outputs

for which the department's role is responsible. A typical role targets three
to five KRA.
Value of KRAs.
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 of KRAs
Key result areas (KRAs) capture about 80% of the department's 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
good of the organization).
CORE KRAs of HR DEPARTMENT

-RECRUITMENT/ SELECTION
-WORKFORCE PLANNING/
-DIVERSITY MANAGEMENT
-PERFORMANCE MANAGEMENT
-REWARD MANAGEMENT
-WORKPLACE MANAGEMENT
-INDUSTRIAL RELATIONS
-SAFETY AND HEALTH WORKPLACE
-BUILDING CAPABILITIES AND ORGANIZATION LEARNING
-EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
KRAs [ KEY RESULT AREAS are managed by -KPA’s [ KEY PERFORMANCE
AREAS] -KPI’s [KEY PERFORMANCE INDICATORS]
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/ KPA’s, 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 IMPORTANCE AND WEIGHTAGE OF THESE ELEMENTS KRAs/KPA’s/

KPI’s ARE GUIDED BY THE
*VISION STATEMENT
*MISSION STATEMENT
*CORPORATE OBJECTIVES
*CORPORATE STRATEGY
*CORPORATE BUSINESS UNITS/ DEPARTMENTAL PLANS/STRATEGY, FOR
THE BUDGET PERIOD, WHICH IS USUALLY 12 MONTHS.
MANAGER LEARNING AND DEVELOPMENT
KRAs and KPI’s.
KRA 1-deliver relevant and targeted programs to the organization

employees.
KPI 1--EMPLOYEE SATISFACTION FEEDBACK THROUGH SURVEY
SATISFACTION LEVEL MINIMUM 70%.
KPI 2--% INCREASE IN TRAINING PROGRAMS
KPI 3--% INCREASE IN EMPLOYEE PARTICIPATION.
KRA 2-promote the programs/learning culture

KPI 1--EMPLOYEE SATISFACTION FEEDBACK THROUGH SURVEY.
SATISFACTION LEVEL MINIMUM 70%.
KPI 2--NUMBER OF DEPARTMENTS SATISFACTION LEVEL.
KPI 3--% INCREASE IN TYPES OF ACTIVITIES
KRA 3-provide lead in the provision of organization learning and

development service
KPI 1--NO. OF TRAINING DAYS % INCREASE
KPI 2--NO. OF EMPLOYEES PARTICIPATING % INCREASE
KPI 3--NO. OF INHOUSE PROGRAMS % INCREASE
KPI 4--NO. OF EXTERNAL PROGRAMS ATTENDED %INCREASE.
KPI 5--NO. OF EXTERNAL TRAINING PACKAGES BOUGHT %INCREASE.
KPI 6--% INCREASE IN COST.
KPI 7--% INCREASE IN RESOURCE REQUIREMENTS.
KRA 4-improvements in capabilities/capacities to deliver L&D.

KPI 1--PROGRAMS IMPLEMENTED ON TIME [ % ]
KPI 2--PROGRAMS IMPLEMENTED WITHIN BUDGET [ %]
KPI 3--EFFECTIVE USE OF PERFORMANCE MANAGEMENT SYSTEM FOR
DEVELOPMENT [ % ]
HR MANAGER KEY RESULT AREAS.
KRA 1 Recruitment / Selection

KRA 2 Workforce Planning and Diversity
KRA 3 Performance Management
KRA 4 Reward Management
KRA 5 Workplace Management and Relations
KRA 6 A Safe and Healthy Workplace
KRA 7 Building Capabilities and Organizational Learning
KRA 8 Effective HR Management Systems, Support and Monitoring
For the management trainer, key result areas could be:
Design of solutions
Delivery of solutions
Evaluation of solutions
Budgets
Client satisfaction
Innovation
General Management or Senior Executive KRAs include
Internal operations
Market development
Profitability
Organizational structure
Organizational vision and mission
Asset and liability management
Board of directors relationship
Productivity
Financial strategy
Business development
Technology
Customer satisfaction
Community relations
Regulatory compliance
Finance and Accounting KRAs include

Credit referencing
Management information
Capital expenditure
Security
Financial analysis
Cost control
Internal audit
Regulatory reporting
Credit control
Financial records
Payroll
Cashflow forecasting
Budgeting
Costing
Sales KRAs include
New business acquisition

Territory management
Customer care
Lead generation
Lead follow up (internal and external)
Account management
Customer retention
Interpersonal skills
Negotiating skills
Product knowledge
Sales forecasting
Manufacturing KRAs include
Stock control
Maintenance
Labour relations
Waste
Reworks
Productivity
Health and Safety
Quality control
Record keeping
Marketing KRAs include
Advertising
Promotional strategy
Pricing
Market research
Field support
Marketing materials
Media relations
Sales support
Agency relations
Secretarial, Clerical and Administrative KRAs include
Correspondence
Filing
Records management
Administrative support
Internal customer relations
Equipment maintenance
Forms administration
Scheduling
Supply maintenance and purchasing
Telephone coverage
Project support
Finally, key result areas for everyone in an organization are:
Personal development
Professional development
Internal and external customer satisfaction
Public relations
Communication - oral and written
Interdepartmental relations
Project management
KPI FOR THE VARIOUS KRAs should be
-quantity oriented
-quality oriented
-time oriented
-cost oriented
or a combination .
Quantity
Number of units produced/published /sent/received/processed/deadlines

Calls per hour/day/week
New products introduced
Grievances per 100 employees
Staff turnover
Customer complaints and compliments
Error rate or reworks
Returned goods
Sales increased
Profit increased
Increase in market share
Cost
Variance against budget

Rs spent
Profit
Waste
Overtime incurred
Speed
Time
Reduction in number of minutes/hours/days etc.

Deadlines and schedules met
Average call response time
Projects completed per week/month etc.
Number of minutes between customers
Therefore: example
Key Result Area = Sales

Objective = Sell x new product to customers
KPI = Number of units sold per new customer whilst maintaining
gross profit level of 25%
SUPPLY CHAIN MANAGEMENT
DEMAND PLANNING
-demand planning for core products

-demand planning for parts/accessories
-demand planning for critical items
-developing product life cycle trends
-product life cycle forecast for new products etc
KPI could be
-remove stock shortages[ by %]
-improve inventory levels.[ 98% max] etc
PROCUREMANT
-quicker stock replenishment

-continual stock replenishment
-reduction in lead time
-remove stock shortages[ by %]
-improving stock availability [100%]

-reducing cost [ 5%]
-reduction working capital [ 7%]
SUPPLY
-better supply coordination

-more effective communication with supplier
-faster / timely communication etc
KPI could be
-developing supplier profile [ all accounts]
-developing suppliers networking [ all accounts] etc
RAW--INVENTORY
-quicker replenishment
-customer focused inventory building
-logistical lead time reduction
-demand based inventory etc
KPI could be
-better material availability[100%]
-good/ usable inventory levels [ 98% satisfaction]
etc
MANUFACTURING
-elimination of wastages in production

-improving throughput efficiency
-process efficiency etc
KPI could be
-reducing back orders[ nil %]
-improving targeted delivery date [ 98%] etc
FINISHED --INVENTORY
-reduction in logical lead time
-full stock availability etc
KPI could be
-full total inventory[ 100%]
-full stock / range availability [ full range]
etc
ORDER SERVICE
-short--response time to query
-shortening order cycle time etc
KPI could be
-making targeted delivery date [ 100%]
-providing order status [ at all times]
etc
DISTRIBUTION
-order fill rate

-on time delivery
-backorder by age
-service/ parts availability
-targeted delivery date
-order completeness
-delivery reliability
KPI could be
-improve order fill rate [ 98%]
-improve on-time delivery [ 98%]
-reduce shipment delays[ 0%]
CUSTOMER SERVICE
-order status
-delivery reliability
-documentation integrity etc
KPI could be
-timely order status [ 100%]
-timely delivery status.[ 100%] etc
THE SUPPLY CHAIN MANAGEMENT KPI’s could include
-IMPROVING MATERIAL FLOWS

-REDUCE RAW MATERIAL INVENTORY LEVELS
-REDUCING PURCHASING COST
-REDUCE FREIGHT COST
-REDUCE OBSOLETE STOCK LEVELS
-IMPROVING WAREHOUSING OPERATIONS EFFICIENCY
-OPTIMISE STOCK LEVELS
-REDUCE LEAD TIME
-REDUCE TOTAL INVENTORY LEVELS
-REDUCE FINISHED STOCKS
-IMPROVE DEMAND FORECASTING
-IMPROVE MATERIAL RESOURCE PLANNING
OTHER KPI’s could be as follows
MANUFACTURING
- Unit volume level

- unit cost target
-production efficiency improvement
-productivity improvement
-quality improvement index
-capacity utilization
MARKETING
-market share %
-new product launches success
-profit contribution by product lines
SALES
-sales against last year

-sales against target
-sales coverage improvement
-market coverage
-customer coverage
-channel coverage
CUSTOMER SERVICE
-CUSTOMER SERVICE IMPROVEMENT

-CUSTOMER SATISFACTION ACHIEVEMENT
WAREHOUSING / TRANSPORTATION
-%ACHIEVED AGAINST ORDERS

-PICKING / PACKING RATE
-FINISHED GOODS INVENTORY LEVEL
-STOCK TURNOVER
FINANCE
-Cost of Capital USED

- Receivables level / against sales
-Bad-debt level
-Debt-equity ratio
PROCUREMENT / SUPPLY
-raw material inventory levels
-cost saving target

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The success of an organization will depends on its ability to measure

accurately the performance of their employees and use it persuasively to

The Performance Evaluation & Development process aims at being more

· To evaluate employees on their performance during the appraisal period.

· To facilitate employees in planning and management of their own work,

· To facilitate career planning by determining appraisee’s potential for

· To provide training focused on specific developmental needs.

The Performance Evaluation & Development process has been designed to

1] Key Result Areas (KRAs)

The KRAs have to be:

a. SMART I.e. S- specific, M- measurable, A- agreed, R- realistic, T- time

E.g. 1. “To achieve a sales turnover of Rs.5 lakhs”.

b. There should be a minimum of 5 KRAs assigned to a person.

KRA = KEY RESULT AREA,

KPA’s are more focused and easy to monitor/evaluate with KPI.

Key Result Areas

“Key Result Areas” or KRAs refer to general areas of outcomes or outputs

· 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

· Make value-added decisions

CORE KRAs of HR DEPARTMENT

KEY PERFORMANCE AREAS

To manage each KRA/ KPA’s, a set of KPI are set .

THE IMPORTANCE AND WEIGHTAGE OF THESE ELEMENTS KRAs/KPA’s/

MANAGER LEARNING AND DEVELOPMENT

KRAs and KPI’s.

KRA 1-deliver relevant and targeted programs to the organization

KRA 2-promote the programs/learning culture

KRA 3-provide lead in the provision of organization learning and

KRA 4-improvements in capabilities/capacities to deliver L&D.

HR MANAGER KEY RESULT AREAS.

KRA 1 Recruitment / Selection

For the management trainer, key result areas could be:

General Management or Senior Executive KRAs include

Finance and Accounting KRAs include

Sales KRAs include

New business acquisition

Manufacturing KRAs include

Secretarial, Clerical and Administrative KRAs include

KPI FOR THE VARIOUS KRAs should be

Number of units produced/published /sent/received/processed/deadlines

Variance against budget

Reduction in number of minutes/hours/days etc.

Key Result Area = Sales

SUPPLY CHAIN MANAGEMENT

-demand planning for core products

-improve inventory levels.[ 98% max] etc

-quicker stock replenishment

-improving stock availability [100%]

-better supply coordination

-elimination of wastages in production

-order fill rate

THE SUPPLY CHAIN MANAGEMENT KPI’s could include

-IMPROVING MATERIAL FLOWS

OTHER KPI’s could be as follows