All You Need to Know about KRAs and KPIs

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What-Is-KRA
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Correlations between employee satisfaction and productivity weren’t established until the 1900s. After Elton Mayo measured the relationship between productivity and the work environment in 1920, the government also contributed to improving employee satisfaction in 1950. The Performance Rating Act and Incentive Awards Act were introduced by them. Aubrey Daniels was the one to coin the term ‘performance management’ a couple of decades after that. After a series of evolutionary steps, performance management finally came online in the 2000s.

Performance management can get complicated. A list of things need to be kept in mind while reviewing an employee’s performance and providing feedback. For this reason, KRAs and KPIs are designed for every employee to measure their performance in a mannerly form. Here’s what you need to know about what is KRA & KPI and how to write KRAs & KPIs.

WHAT IS KRA?

KRA, or Key Responsibility Areas, are based on the job description of a person and are used when assigning tasks that they are expected to perform. Employees are solely responsible for the specific KRAs assigned to them. KRAs are a larger goal. For example, as a content writer, your KRA would be to produce content that performs and ranks well.

What is KPI?

KPIs, or Key Performance Indicators, are a subset of KRAs. This would mean that a person’s performance would be measured based on the results shown. KPIs can be exactly measured. Following up to the previous example, a content writer’s KPI would be when a particular feature or article about their company ranks in the top 3 search results. If you offer coworking spaces, your KPI would be your space showing up in the top 3 results for something like “coworking spaces in Mumbai”.

How to write KRAs?
  1. As mentioned previously, KPIs are subsets of KRAs. Once you have a KRA in place, you can get a definitive and measurable KPI.
  2. Supposed you have a KRA of bringing in 1cr worth of revenue in a year.
  3. To achieve this, your KPI could be bringing in revenue through 60% of new business, 30% renewals, and 10% via other methods.
  4. After having a large goal, smaller goals to contribute to the achievement of the larger goal will be your KPI. Thus, your KPI depends on your KRA.

Timely reviews can help in improving an employee’s performance. The shorter the period between reviews, the better it is. Performance reviews and generally conducted on a monthly, quarterly, half-yearly, or annual basis, based on the company policy. Keeping track of every employee’s review cycle can be tricky. Managing these via email and setting reminders are time consuming, and can result in complications.

To solve this issue and make performance reviews easier, performance management systems were introduced. With a performance management system, you can automate the entire process. Review cycles can be customized and created as per policies and the requirement. These systems also provide you with feedback forms, and generate reports and graphical analysis of the review.

This was blog post was written by Ankkita Chauhan and was originally posted on the SumHR blog.  

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