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Key Result Areas or KRAs refer to general areas of outputs or outcomes for which the departments role is responsible.Key Result Area in simple Terms may be defined as Primary responsibilities of an Individual, the core area which each person is accountable for.WHAT IS KRA ?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.

KRA refers to general areas of outcomes or outputs for which a role is responsible. Defines the key area that the employee needs to produce in his specified field.Ex:- For HR manager one of the key result area Recruitment.Typically organization like to define a set of KRAs for each role in an company. So that everyone is clear on the exact areas that the role is responsible for and where they need to focus their attention.

How KRA works:At first the BOD (Board of Directors) decides upon the Objectives of the company and set a period specific target.This Target becomes the KRA of the CEO.Then it gets divided till it reaches the bottom most rung.KRA of each person is linked and fulfillment of KRA will lead to fulfillment of objective set by BOD. Hence, if one person fails it will hamper the attainment of the desired result.

Example: Company Name: XYZ.Business of the Company: sells PCs.Suppose the objective decided by the Board is to make a profit of 500 crores in 3 years.The KRA of CEO is to attain 500 crore profit in 3 years.The CEO decides to attain this by making 400 crores by selling PCs, 50 Crores by Investing in Stocks and 50 Crores by improving productive cycle.

Now the KRA of Chief Marketing Officer will be to sell PCs that will give the company 400 crore profit in 3 years. He will then set the KRAs for his subordinate in such a way that this target is achieved.The Chief Operating Officer has KRA of improving the productivity cycle and producing PCs by which 400 crores can be achieved.The Chief Finance Officer will as KRA have to look after investing in Stock and providing finance for purchase of raw materials, machineries and others so that both Operation and Marketing can achieve their KRAs.Chief People Officer (HR)[ Generally KRA are difficult or not done for HR since they are essentially support function, but in some cases it is done] CPO as his KRA will have the following to provide for manpower and maintain harmonious industrial relationship so that there is no disruption in production or marketing. To provide for training for improving the skills to attain better productivity cycle, and to frame a compensation benefit structure by which the efficient employees can be retained.

The Chief than divide the KRA further to their subordinates. For Example the KRA of the Manager (Training) under CPO will have a KRA which will be to provide adequate training to the workforce. Hence, if Manager (Training) fails that will get reflected in the KRA of both CPO and COO and CEO. Similarly, if the KRA of Asst. Manager (Training) is to locate the Training institutes which can impart quality training and he is not been able to achieve it. This will reflect in the KRA of Manager (Training), CPO, COO and CEO.Suppose, if the Dy Manager (Training) is suppose to conduct the Training Programs, which could not be carried since funds for training which were supposed to be arranged by Dy. Manager(Finance) could not be arranged. Now, you can see this failure will reflect in the KRA of Dy. Manager (Finance), Manager (Finance), CFO, Dy. Manager (Training), Manager (Training), and CPO, COO, and CEO.

KEY PERFORMANCE AREAS [KPA]

These are the areas within the ORGANIZATION FUNCTIONS, where an individual or group, is logically responsible / accountable for the results.Example: 1

KRA = Recruitment and selectionKPA 1 = Recruitment KPA 2= Selection

Example: 2

KRA = Employee BenefitsKPA1 = providing all statutory benefits (ESI, PF)KPA 2= providing all other benefits provided by company.KPA is the overall scope of activities that an individual on a job role has to perform.-KPAs can be inclusive of KRAsIn organizations, each role or job has a Job Description (JD) which consist of all the responsibilities the person on job has to perform. All the activities listed in JD falls in two categories:Category A List of functions and activities crucial or critical for the job role. These activities form theKRAof the job.Category B List of functions and activities associated with the job role but not truly critical for the role. These functions are important for overall performance of the team, department or organization as a whole and form theKPAfor the job

KPIs describe the indicators of performance or success for an employee. KPI also called as Key Success Indicators (KSI), help an organization define and measure progress toward organizational goals. Ex:- HR Manager who has Recruitment as one of their KRA's, a typical KPI for this HR Manager might be "Recruitment of Level 1 Positions in marketing dept within 3 months of notified vacancy and within 90% of budget".

Methods of Performance Appraisal Traditional methods or Past-Oriented methodModern methods/Future-Oriented methodPaired ComparisonsGraphic ScaleForce Choice MethodForced Distribution Critical Incident Essay and Confidential Report Straight Ranking Field Review Group Appraisal

Human Resource Accounting Management By ObjectivesBehaviorally Anchored Rating Scales (BARS) 360 degree performance management

PARIED COMPARISON METHODFor the TRAIT QUALITY OF WORKFor the TRAIT CREATIVITYAs compared to:ABCA++B--C-+As compared to:ABCA--B+-C++

Forced Choice MethodThe primary purpose of the this method is to correct the tendency of a rater to give consistently high or low ratings to all the employees. This method makes use of several sets of pair phrases or statement.

Force Distribution Method.This is similar to grading on a curve. With this method, you place predetermined percentages of rates onto performance categories. For example, you may decide to distribute employees as follows.10% excellent performers20% Good performers40% Average performers20% Below average performers10% Poor performers.

Critical Incident MethodWith this method of performance appraisal involved identifying and describing specific events or incidents where the employee did something well.

Field Review MethodThis is an appraisal by someone outside the assesees own department usually someone from the HR department. The outsider reviews employee records and holds interviews with the ratee and his superior. The method is primarily used to male promotional decision at the managerial level.

Group appraisal method: Employees are rated by a group of people comprising the immediate supervisor of the employee and other supervisor who have the knowledge of the employee work along with the concerned head of the department and a personnel expert. The evaluator gives the necessary briefing about his employees to the group members. The group then discusses the standards of performance for the job and the actual performance by the employees.

Behaviorally Anchored Rating Scale(BARS)In this rating scale points are determined by statements of effective and ineffective behaviors. They are said to be behaviorally anchored in that the scales represent a range of descriptive statements of behavior varying from the least to the most effective. A rater indicate which behavior on each scale best describes an employees performance.7

Process of Performance Appraisal

Copyright 2005 Thomson Business & Professional Publishing. All rights reserved.Difference Between Performance Management and Performance AppraisalsPerformance Management Processes used to identify, encourage, measure, evaluate, improve, and reward employee performance.

Performance AppraisalThe process of evaluating how well employees perform their jobs and then communicating that information to the employees.

POTENTIAL APPRAISAL Potential appraisal may be defined as a process of determining an employees strengths and weaknesses with a view to use this as a predictor of his future performance. This would help to determine the promotion of an individual to a higher position and help chalk out his career plan. Potential appraisal is part of performance appraisal.

NECESSITY FOR POTENTIAL APPRAISALTo enable the organization to draft a management succession programmeTo update training and recruitment activitiesTo advise employees about the work to be done to enhance their career opportunities.Potential Appraisal is another powerful tool of employee development People earn promotions on the basis of their past performance

Steps in Good Potential Appraisal SystemRole Descriptions: Organizational roles and functions must be clearly defined.Qualities needed to perform the roles: Besides job descriptions, it is necessary to have a detailed list of qualities required to perform each of these functions. These qualities may be broadly divided into four categories (1) technical knowledge and skills,(2)managerial capabilities and qualities,(3) behavioral capabilities, and(4)conceptual capabilities.Rating mechanisms: Besides listing the functions and qualities, the potential appraisal system must list mechanisms of judging the qualities of employees such as: Rating mechanisms Contd(i) Rating by others: The potential of a candidate could be rated by the immediate supervisor who is acquainted with candidates work in the past, especially his technical capabilities(ii) Tests: Managerial and behavioral dimensions can be measured through a battery of psychological tests(iii) Games: Simulation games and exercises could be used to uncover the potential of a candidate(iv) Records: Performance records and ratings of a candidate on his previous jobs could be examined carefully on various dimensions such as initiative, creativity, risk taking ability etc, which might play a key role in discharging his duties in a new job.

Organizing The System HR manager must set up a system that will allow the introduction of the scheme smoothly incorporating answers to some complex questions like:(i) How much weightage to accord to merit in place of seniority in promotions?(ii) How much weightage to accord to each of the performance dimensions technical, managerial, behavioral qualities?(iii) What are the mechanisms of assessing the individual on different indicators of his potential, and with what degree of reliability?FeedbackThe system should provide an opportunity for every employee to know the results of his assessmentEmployee should be helped to understand the qualities actually required for performing the role for which he thinks he has the potential, the mechanisms used by the organization to appraise his potential and the results of such an appraisal

FEEBACK Employee want feedback about their performance. Even those who constantly evaluate their performance cannot improve unless a team leader or manager takes the time to point out employee strengths and weakness. Team leader must provide with employee feedback, whether it is given during a formal annual review or informally by one-by-one meetings.

Importance of Performance FeedbackWeakness identificationStrength identificationPromotional opportunitiesStrengthening of goalsTraining Maintain quality workforceCommunication

Principles of Basic Feedback Feedback should be delivered in private.Feedback should be planned in advance. Feedback should be performance specific. Feedback should not pertain to personal life.Feedback should not be judgmental.Feedback should be focused on specific observations.Feedback should balance positive and negative comments. Feedback should benefit the receiver.

Types of Performance FeedbackFormal feedbackInformal feedbackPositive feedbackNegative feedback.Job Evaluation (Refer Chapter 2-Recruitment and Selection)