What is KRA and KPI? What’s the difference between them?

KRA, Key Responsibility Areas 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 needs 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 and KPI and how to write KRAs and KPIs along with their example and Benefits.

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 on 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.

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How to write KRAs?

While writing a KRA, here are some things to keep in mind:

1. Since these are based on job descriptions, go through the JD of the employee thoroughly. Discuss with their manager and them if need be.
2. Find out exactly what the employee is supposed to achieve and how they would contribute to the organization’s progress.
3. Note down all measurable critical responsibilities to be carried out on the job. These include things that can be measured in numbers, percentages, etc.
4. Set goals based on these responsibilities, and write self-explanatory descriptions of every goal.
5. When describing these goals, ensure that measurable and realistic targets and timeframes are set.

How to write KPIs?

While writing a KPI, here are some things to keep in mind:

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. Suppose you have a KRA of bringing in the 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 is 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.

The Following are KRA Examples & Benefits for all Management:

1. KRA helps state things very clearly, such as what to do and how to go after it.
2. It represents how the Performance will be measured.
3. With the help of KRA, it becomes effortless to align with the Job Role and Working environment.
4. KRA helps to set a realistic time-bound based on the Organization’s business plans.
5. It helps to look into critical roles and responsibilities in various sections of the Organization.
6. Gives fair performance reviews of the Employee’s work.
7. KRA helps to get the right employee who can fulfill the organization’s needs.

The Following are KPI Examples & Benefits for all Management:

1. KPI allows the manager as well as the Organization to measure and manage the target and goals
2. Keeping the right set of people within the Organization who cope with the business KPI performance.
3. Intuitive records of performing against the Goal of the Organization.
4. KPI helps the metrics visible to everyone, such as who is performing better and who is not at all performing.
5. When an employee comes to know that he is been measured, his behavior automatically improves towards the Performance.
6. This Improves the decision-making skills that are entirely based on the data available through KPI.
7. Provides a complete overview of the Progress in regards to the Goal of the Organisation.

Frequently Asked Questions of KRA and KPI

1. What is basic KRA?

Key Result Areas (KRAs) are specific, critical areas where an individual or organization must achieve results to meet their objectives. They focus on key tasks and responsibilities, aligning with overall goals. KRAs help in setting clear expectations, monitoring performance, and ensuring accountability, making them essential for effective performance management.

2. What is the Difference between KRA and KPI?

• KRA (Key Result Area) defines the specific goals and responsibilities of an individual or team, focusing on what needs to be achieved.
• KPI (Key Performance Indicator) measures the effectiveness and success in meeting those goals, providing quantifiable data on performance.

3. What are KRA and KPI Examples?

KRA (Key Result Areas) and KPI (Key Performance Indicators) are vital for tracking performance. Suppose you are a recruitment agency.

• KRA: Sourcing quality candidates, client satisfaction, and timely placement.
• KPI: Number of candidates placed per month, client feedback scores, and time-to-fill positions.

These metrics help track and enhance performance in meeting client needs and recruitment goals.

4. What is KRA and KPI for Employees?