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KRA and KPI -Concepts and Differences Explained

Key Result Areas (KRA) and Key Performance Indicators (KPI) help companies set goals for their employees and measure performance based on those objectives.

Successful companies split the overall organization’s goals into various  KRAs. KPIs are then created and mapped against the KRAs.

Management needs both KPI and KRA for a fair evaluation of their employee’s work. A successful KPI & KRA framework also helps an employee understand where their work and performance fit into the overall scheme of things in the organization.

What is KPI

Key Performance Indicators (KPI) are metrics used by organizations to measure their employees’ efforts and suggest improvements. Every company gives their employee a fixed number of tasks at the beginning of their evaluation period. It is essential to evaluate their performance against those duties during or after the completion of that period. It also helps the management understand their employees’ contribution to overall organizational goals and suggest course correction if needed.

Types of Key Performance Indicators for Organizations

Companies used different types of KPIs to evaluate their own performance. These organizational KPIs are shared both with internal and external (Example: Shareholders) stakeholders. Examples of Organizational KPIs could be financial metrics like profit and loss, revenues, cost, or sales volume. It could also be based on customer-centric issues like Customer lifetime value, satisfaction, and retention or customer feedback. Product/service issues like quality concerns, customer feedback on changes in product/ service, or Human Resource indicators like employee satisfaction and productivity, employee turnover, etc. are also important KPI metrics for companies.

Types of Key Performance Indicators for Employees

The KPIs for employees depends mainly on two factors – their job role and the department to which they belong. Eventually, the growth of an employee depends on both fulfillment of department goals and scores against individual KPIs. A KPI-based evaluation framework helps companies reward top performers and also provide meaningful feedback.

What is KRA

Key Result Areas (KRA) are a set of goals and objectives that each organization assigns for their employees at the beginning of their evaluation period. They are expected to perform a fixed number of tasks based on which their performance evaluation is conducted. An employee’s KRAs depend on their department and functional role. They also help employees direct their efforts solely towards achieving predetermined goals while also helping the company fulfill its business objectives.

Difference between KPI and KRA

The KRA vs. KPI debate obfuscates a basic fact. While both are dependent on each other, there are key differences between KRA and KPI, which are highlighted below:

  • KRA helps outline the company’s overall scope and product/service, while KPI measures the success against organizational and individual goals.
  • KRA is qualitative, while KPI focuses on the quantitative aspects
  • KRA is a strategic tool used for goal setting, while KPI is a performance evaluation metric

Few Examples of KPI and KRA

The following examples will help showcase the usefulness of KPI vs. KRA:

  • Suppose a company is hiring 30 sales representatives in a year. The KRA would focus on their recruitment and training, while the KPI would look at the Return on Investment (ROI) per employee for the organization.
  • The management introduces an employee feedback program. The KRA will look after addressing employee grievances, while KPI will evaluate the effectiveness of the feedback program.

Frequently Asked Questions of KRA and KPI

How Do you Define KRA and KPI?

KRA (Key Responsibility Areas) is a set of goals and objectives that needs to be accomplished for a job. KPI (Key Performance Areas) are the criteria by which the accomplishment of KRIs is measured.

What is KRA and KPI Example?

Suppose a company is hiring 30 sales representatives in a year. The KRA would focus on their recruitment and training, while the KPI would look at the Return on Investment (ROI) per employee for the organization.

What is the Difference between KRA and KPI?

KRA helps outline the company’s overall scope and product/service, while KPI measures the success against organizational and individual goals.

What is Employee KPI and KRI?

Employee Key Performance Indicators (KPI) are metrics used by organizations to measure their employees’ efforts and suggest improvements. Employee Key Result Areas (KRA) are a set of goals and objectives that each organization assigns for their employees at the beginning of their evaluation period.

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