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 areas for
managing/ evaluation. These sub-sections of KRAs are called KPA
For example
KRA = Recruitment / Selection
KPA 1= Recruitment
KPA 2 = Selection

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 strategy-
linked 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 Target
1 Improves Financial Performance of Account US$ 500,000 per quarter for the
Executives. To ensure that all sales executive under whole team.
him meets/exceed the sales targets provided to
them. Track the performance of sales and guides the Conduct 2 Sales Training per
salesmen to improve their skills to ensure more month.
sales.
2 Development of Sales Action Plans Renew and Renovate the Plan
Conducts market research and develops solid sales every quarter.
plans. Sales plan must be reported every quarter to
management team for analysis and approval.
3 Reporting to Management about Performance of Complete Reports to be send by
Sales Team -Create and send the monthly reports 7th of Every Month.
with accuracy and time to management. Reports
should clearly indicate the strengths and weaknesses
of the sales team.
4 Negotiates with prospective customers in order to Average Selling Price: US$
maximize the profits Sales manager should 10,000 or above
ensure that all salesmen are pitching most
competitive and profitable rates to the clients.

5 Create and conducts proposal presentations and All Proposals to be submitted to

presentationsReply to Request for Proposals, Tender management for review 2 days
Notices, and Price Quotations in Time. prior and to customer as on date.
6 Adhere to company policies and procedures - Ensure 90% attendance in Sales
that all teams members attend the weekly sales meet Meetings.
and present their report.

7 Collections of Due Revenues Target: 80% of the due invoices

Sales Manager should assist the Accounts Receivables to be collected within 30 days/
manager in collecting all due invoices in time. He/She ad agreed in Purchase Order.
should ensure that customer has accepted the
delivery of the product and the Invoice.