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KPIs and KRAs (3).pptx
1. It is impossible to improve at
managing people if you do not
measure the results of your work.
If you do not define what ‘good
performance’ looks like
how you can measure it,
how will you find out if you’re doing
well?
3. key performance indicators (KPIs).
A KPI is a quantifiable measure used to
evaluate how effective a company is in
achieving key business objectives.
NOTE:
PERFORMANCE =ACHIEVEMENT/ATTAINMENT
4. KPI
• Key Performance Indicator is the financial and
non-financial metric used by the firms to
gauge and fortify the success, towards the
goals of the organization.
• After the ascertainment of the organization’s
mission, identification of stakeholders and
determination of goals, the progress towards
the goal is evaluated through key performance
indicator.
5. KPI
• The key performance indicator is used at
different levels by an enterprise to track the
progress of the firm in the realization of
targets.
• It plays the role of a compass that helps in
understanding whether the company has
chosen the right way to reach the final aim or
not.
7. KPI
• Different types of organization have different
performance indicators, such as the KPI of a
business entity can be income percent.
Likewise, the pass out rates of the students is
the key performance indicator of a school.
Therefore, it can be anything like profit, cost,
turnover, consumer satisfaction, customer
base, customer attrition, employee turnover
ratio, employee satisfaction and so forth.
8. KPI
This doesn’t mean that everything that you can
measure is a KPI in HR.
KPIs are strategic metrics. Only metrics that
have a direct link with the organizational
strategy can be called KPIs.
9. Example
• Dodgers is an organization trying to innovate
in a very competitive landscape.
• For this reason, the board of directors decided
that they will cut costs everywhere except in
the product innovation department.
• The question is, how will this goal be
translated into HR KPIs?
10. Example
• The entire organization needs to save money,
including HR. This reduction could apply to
recruitment cost, for example.
• The cost is currently at $500,000 and needs to
be reduced to $400,000
11. Example
• . In this case ‘Recruitment cost in Dollars’ is
the KPI, the current score is $500,000 and the
target for this KPI is $400,000.
• A second HR KPI could be ‘innovative
behavior’ which is measured in the annual
engagement survey.
• Its score on a 10-point scale is currently 6.2.
The target is set at 7.5 or higher.
12. KEY RESULT AREA
key result area (KRA) can be described as the
major areas, that requires exceptional
performance, so as to survive and obtain a
competitive position in the market.
• NOTE:
• RESULT=OUTCOME/END/CONSEQUENCE
13. KRA
• Key Result Area can be understood as the
fundamental areas of the outcome, for which
a department is accountable.
• It is the strategic factor, implicit or explicit to
the firm, from where favorable outcomes can
be attained, to reach the final goal and take a
step ahead towards the organization’s vision.
14. KRA
• In human resource management, KRA implies the
metrics set by the organization for a specific role.
• Therefore, it highlights the scope of the job
profile.
• It helps the employees in understanding the role
and responsibilities, in a better way.
• So, it needed to be clearly determined and
quantified, so that the employee can line up their
role with that of the aim of the firm.
16. Key Differences Between KPI and KRA
The difference between KPI and KRA is concerned:
• Key Result Area can be described as the essential
areas of business that requires excellent
performance to obtain the favourable result, to
survive and grow in the industry.
• On the other hand, Key Performance Indicator
(KPI )is a performance metric, used by the
organization to ascertain how effectively the firm
is performing.
17. KRA Vs KPI
• Key result area is a strategic business unit,
where in great efforts are needed to achieve
success.
• As against, the key performance indicator is a
metric that gauges the level to which business
goals are achieved.
18. KRA Vs KPI
• KPI is a quantifiable measure, meaning that it
gauges the performance of a product, service
or the business unit in the market, in
quantitative terms.
• On the contrary, KRA is qualitative in nature,
in the sense that it determines the areas that
can help in attaining high value for the
organization.
19. KRA Vs KPI
• The key result area is used to find out the
scope of a particular product or unit. In
contrast, key performance indicator measures
the success of the organization towards goals
at various levels.
20. Role Product Manager
Goal Ensuring delivery of quality
product within schedule
KPIs
• Maintaining good working condition in plant
• Optimum resource utilization
• Process improvement
• Safety and Prevention planning and control
• Working within the company policies
KRAs
• Customer satisfaction
• Product Management
• Operational Cost Control
• Quality Check
• Record Keeping
21. KRAs and KPIs Example
KRAs and KPIs for Sales Representatives
Examples of KRAs for sale representatives include the
following:
• Increase number of sales from previous period.
• Increase sales revenue from previous period.
• Increase outreach to prospective customers.
Examples of KPIs for sales representatives include the
following:
• Number of new sales contracts signed
• Dollar value for new sales contracts
• Growth or decline, in net sales from previous period
• Monthly outreach contacts
22. KRAs and KPIs Example
KRAs and KPIs for Human Resources Managers
Examples of KRAs for human resources managers include the
following:
• Improve job vacancy by advertising to attract more qualified
candidates.
• Increase rate of acceptance for job offers made.
• Decrease HR costs per new hire.
• Decrease employee turnover.
Examples of KPIs for human resources managers include the
following:
• Qualified applications received per advertised job vacancy
• Rate of acceptance of job offers
• Total HR costs per hire
• Employee turnover rate
23. KRAs and KPIs Example
KRAs and KPIs for Finance Managers
Examples of KRAs for finance managers include the following:
• Increase company revenue over previous period.
• Increase profitability of company over previous period.
• Increase cash flow.
• Increase operational efficiencies within the company.
Examples of KPIs for finance managers include the following:
• Net profit margin
• Growth in revenue for the current period compared to the previous
period
• Debt to equity ratio for company
• Accounts receivables collection rates
• Return on equity rates
