AS the first step to build KRAs for HR,
YOU must visit
*CORPORATE BUSINESS UNITS/ DEPARTMENTAL PLANS/STRATEGY.
AND COULD CHANGE YEAR BY YEAR AS PER THE BOARD DIRECTIVES.
THEN REVIEW YOUR HR DEPARTMENT'S
ALIGN IT WITH CORPORATE OBJECTIVES/ STRATEGIES
UNDERSTAND THAT THE ,
KRA AND KPA
Key Result Areas
“Key Result Areas” or KRAs refer to general areas of outcomes or outputs for which a role is responsible. A typical role targets three to five KRA.
Identifying KRAs helps individuals: · Clarify their roles · Align their roles to the organisation’s business or strategic plan · Focus on results rather than activities · Communicate their role’s purposes to others · Set goals and objectives · Prioritize their activities, and therefore improve their time/work management · Make value-added decisions
Key result areas (KRAs) capture about 80% of a work role. The remainder of the role is usually devoted to areas of shared responsibility (e.g., helping team members, participating in activities for the griptionood of the organisation).
HR [ KRAs]
-WORKFORCE PLANNING/ DIVERSITY
-WORKPLACE MANAGEMENT AND RELATIONS
-SAFETY AND HEALTH WORKPLACE
-BUILDING CAPABILITIES AND ORGANIZATION LEARNING
-EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
KEY PERFORMANCE AREAS [ KPA ]
These are the areas within the ORGANIZATION FUNCTIONS, where an
individual or group, is logically responsible / accountable
for the results.
To manage each KRA, a set of KPA / KPI are set .
KPA and hence KPI is attributed to the person who
can have effect on the business results and is
self measured where applicable
EXAMPLE OF HR
KRA = RECRUITMENT / SELECTION
KPA 1 = RECRUITMENT
KPA 2= SELECTION
YOU SELECT A KPI FOR EACH KPA,
WHICH WOULD ENABLE THE INDIVIDUAL TO
IMPROVE PERFORMANCE TO ACHIEVE THE OBJECTIVES.
KPi for KPA 1= reduce the recruitment cost per head by 10%.
KPi for KPA 2 = finalize selection in 5 weeks for each individual position.
.THE CHOICE OF HR KPI WILL VARY FROM YEAR TO YEAR,
SUBJECT TO COMPANY'S
WHICH IN TURN AFFECTS THE HR'S
-HR STRATEGIC PLANNING
The HR Balanced Scorecard is the measurement tool. It provides the management with a tool and a process to measure the performance of people practices and the HR function from multiple perspectives:
1. Strategic Perspective — the results of strategic initiatives managed by the HR group. The strategic perspective focuses on the measurement of the effectiveness of major strategy-linked people goals. For instance, the business strategy called for major organizational change programs as the business faced major restructuring and multiple mergers and acquisitions. In this context, the organization’s change management capability will be a key factor in the success or failure of its execution. Therefore, measuring the ability of the business to manage change effectively is the core measure of the effectiveness of HR and will be a key strategic contribution to the future success of the business.
-change management capability of the organization
-organization compensation and benefit package with respect market rate.
-organization culture survey
-HR BUDGET / ACTUAL
-HR COSTS BENCHMARK EXTERNALLY
-HR annual resource plan.
-skills/ competency level
2.Operational Perspective — the operational tasks at which HR must excel. This piece of the Balanced Scorecard provides answers to queries about the effectiveness and efficiency in running HR processes that are vital to the organization. Examples include measuring HR processes in terms of cost, quality and cycle time such as time to fill vacancies.
-time taken to fill vacancies
-cost per recruitment promotions
-absenteeism by job category
-accident safety ratings
-training cost per employee
-training hours per employee
-average employee tenure in the company
-lost time due to injuries
-no. of recruiting advertising programs
-no. of employees put through training.
3.Financial Perspective — this perspective tries to answer questions relating to the financial measures that demonstrate how people and the HR function add value to the organization. This might include arriving at the value of the human assets and total people expenses for the company. HR
-compensation and benefits per employee
-sales per employee
-profit per employee
-cost of injuries
-HR expenses per employee
-employee '' workers compensation costs''
4.Customer Perspective — this focuses on the effectiveness of HR from the internal customer viewpoint. Are the customers of HR satisfied with their service; are service level agreements met; do the customers think they can get better service elsewhere? Conducting an HR customer survey might typically arrive at this.
-employee perception of the HRM
-employee perception of the company , as an employer
-customer/market perception of the company, as an employer.
All four components of the scorecard are used to define and measure the effectiveness of people-management activities and how the HR function executes them. This provides a strategic measurement and management process to show the connection between a company’s business strategies and goals and its HR strategies, activities, and results. The Balanced Scorecard can provide an ideal approach to measure the contribution that human resource management makes to business success.
With the HR Balanced Scorecard in place, it can assist organizations to easily monitor the workforce indicators that are key to their business success. Such solutions enhance HR’s ability to provide counsel to line management and deliver results that make a difference to the achievement of their goals and strategy and thereby to shareholders.
The apparent and inherent values that the HR Balanced Scorecard brings include:
Measurement provides the data and facts to support business decisions, giving credibility to HR recommendations and initiatives;
Collecting and using data to make decisionsregarding retaining and motivating the
workforce, giving the organization a competitive advantage in the marketplace;
The right mix of lead and lag measures helps the business assess its strategic
alignment and progress towards its objectives;
HR will be proactive in identifying potential improvements and bringing suggestions
to the business that improve bottom-line results; and
A business and linked measurement framework focuses activity on those tasks
that contribute to organizational success. This process lifts the role of HR from being viewed purely as a cost centre to that as strategic business partner.
HR Key Performance Indicators
Frequently used HR Key Performance Indicators include:
[[ FTE = full time employees ]]
Revenue per Employee (FTE)
Assets per FTE
Training Hours per FTE
Training Costs per FTE
HR Department Cost per FTE
FTEs per HR Department FTE
Average Cost per Hire
Human Investment Ratio
Compensation & Benefits/Revenue
Time taken per recruitment
Cost per recruitment
EXAMPLES of KRAs / KPAs / KPIs
KRA 1 -RECRUITMENT/ SELECTION
KPA 1- RECRUITMENT [KPI= average time taken per employee 2 months]
KPA 2 -SELECTION [ KPI = average cost per new employee RS 10,000]
KRA 2 - WORKFORCE PLANNING/ DIVERSITY
KPA 1 - ANSENTEEISM [ KPI = absent rate at 5%]
KPA 2- TURNOVER [ KPI = turnover rate at 7%]
KPA 3- DIVERSITY [ KPI = 3 FEMALES TO BE INDUCTED INTO MANAGEMENT CADRE]
KRA 3- PERFORMANCE MANAGEMENT
KPA 1 - PERFORMANCE APPRAISALS [KPI = all staff to be appraised at least once annually]
KPA 2 -SUCCESSION PLANNING [ KPI = 8 POTENTAL staff to be identified and talent managed]
KRA 4 - REWARD MANAGEMENT
KPA 1- MARKET ORIENTED SALARY STRUCTURING [ KPI = total compensation to sales 12%]
KPA 2 -BENEFITS PLANNING [ KPI = 6% of total salary bill]
KRA 5 - WORKPLACE MANAGEMENT AND RELATIONS
KPA 1 -JOB EVALUATIONS [ KPI = 600 lower staff , below grade 4 to be evaluated]
KPA 2 - EMPLOYEE COMMUNICATIONS [ KPI = 4 newsletter on intranet,one per quarter ]
KRA 6 - SAFETY AND HEALTH WORKPLACE
KPA 1 - SAFETY [ KPI = accident safety ratings, benchmark with industry]
KPA 2 - HEALTH [KPI = actual health expenditure vs budget ]
KRA 7 - BUILDING CAPABILITIES AND ORGANIZATION LEARNING
KPA 1 - TRAINING [ KPI = average training hours per employee annually= 24 hours]
KPA 2 - MANAGEMENT DEVELOPMENT [ KPI =average MD cost per employee annually= 16000 RS]
KRA 8 - EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
KPA 1- HRIS [ KPI = finalize the software . RS 1.2 million capital budget]
HERE ARE SOME COMMON EXAMPLES.
FOR EACH ELEMENT, YOU CAN SET YOUR OWN
THRESHHOLD, BASED ON YOUR COMPANY
STRATEGY/ HR STRATEGY.
1.ABSENTEEISM PER EMPLOYEES [DAYS]
2.AVERAGE RECRUITMENT TIME [DAYS]
3.EMPLOYEE TURNOVER [ % ]
4.EMPLOYEE SATISFACTION [ LEVELS ]
5.AVERAGE EMPLOYEE TENURE [ YEARS]
6.INDUCTION TRAINING [ % OF NEW EMPLOYEES]
7. TRAINING WORKSHOP [ % ] CONDUCTED/PLANNED
8. TRAINING AT EXTERNAL COURSES [ %] ACTUAL / PLANNED
9.PERFORMANCE APPRAISALS [ NOS.] AGAINST TOTAL EMPLOYEES.
HERE ARE SOME
PROBABLE HR METRICS IN COMPENSATION ONLY
1.ANNUAL TOTAL COMPENSATION INCREASE RATE [%] [this year vs last year]
2.ANNUAL TURNOVER RATE.[this year v s last year]
3.COMPENSATION &BENEFITS AS A % OF SALES.
4.COMPENSATION & BENEFITS AS A % OF OPERATING EXPENSES.
5.COMPENSATION & BENEFITS PER EMPLOYEE [ this year vs last year]
6.COMPENSATION & BENEFITS COMPETITIVENESS INDEX.
7.INCENTIVE PAYMENT AS A % OF TOTAL COMPENSATION & BENEFITS.
8.BENEFITS SPEND AS A % OF TOTAL COMPENSATION & BENEFITS
9.COMPENSATION & BENEFITS BY LEVELS OF STAFF
-senior mgnt/ executives/middle mgnt/ junior mgnt/supervisors/staff etc.
10.NEW COMERS COMPENSATION & BENEFITS AGAINST TOTAL FOR THE YEAR.
11.% OF EMPLOYEES SATISFIED WITH CURRENT SYSTEM [ SURVEY ]
12.MEDICAL BENEFITS EXPENSES TOTAL [ THIS YEAR VS LAST YEAR]
13.MEDICAL BENEFITS EXPENSES PER EMPLOYEE.
HERE ARE SOME STANDARDS METRICS
1 HR UTILIZATION % TOTAL PAYROLL $ / TOTAL SALES $
2. HR PRODUCTIVITY % TOTAL EMPLOYMENT COST $/TOTAL
PRODUCTION VOLUME IN $ X 100
3. HR BUDGET % ACTUAL $ / BUDGET $ X 100
4'. ACCIDENT COSTS % CURRENT ACTUAL $ / LAST YEAR $ X 100
5'. ACCIDENT SAFETY % CURRENT ACTUAL $ / LAST YEAR $ X 100
6'. EMPLOYEE % EMPLOYEE BENEFITS $ / TOTAL PAYROLL $ X100
EMPLOYEE BENEFITS $ /TOTAL SALES $ X 100
7'. HR BUDGET % ACTUAL HR EXPENSES $ / TOTAL SALES $ X 100
8'. HR EXPENSES $ TOTAL HR EXPENSES $ / TOTAL NO. OF EMPLOYEES
9'. HR EXPENSES % HR EXPENSES $ / TOTAL EXPENSES $ X 100
10'. NO.OF COURSES % ACTUAL CONDUCTED / PLANNED X 100
11. NO. OF SAFETY % ACTUAL CONDUCTED / PLANNED X 100
12. TRAINING DAYS % ACTUAL TRAINING DAYS / PLANNED X 100
13. EMPLOYEES % ACTUAL TAKING PART / PLANNED X 100
involvement in train
14. SICK DAYS nos. TOTAL SICKDAYS TAKEN/ TOTAL EMPLOYEES
15. STAFF orientation % NO. OF NEW STAFF LEAVING IN THREE MONTHS/
EFFECTIVENESS TOTAL NO. OF NEW STAFF ORIENTED
16. TIME TO FILL AN NO.DAYS TOTAL NO OF DAYS / TOTAL NO positions filled
17. TURNOVER BY % TURNOVER / TOTAL RECRUITMENTS X100
BY EACH SOURCE
18. TURNOVER BY % TURNOVER / TOTAL EMPLOYEES BY EACH
EACH JOB CATEGORY
CATEGORY X 100
19. WORKERS % ACTUAL $ / PLANNED BUDGET $ X 100
20. HR STAFFING NO. TOTAL HR STAFF / TOTAL EMPLOYEES
-please review the job profile
-define the FUNCTIONAL role of the individuals
-then allocate KRAs, in consultation with THE BOSS.
-then the KPAs
-then the KPI
THE LEVELS ARE IMPORTANT BUT ALSO THE
FUNCTIONAL ROLE AS WELL THE COMPANY
OBJECTIVES/ STRATEGY IN DECIDING
-KRAs / KPAs / KPIs.
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M.Peer Mohamed Sardhar
following are the sample KRAs of various key positions:
HR & Administration:
KRA 1: Recruitment & Selection
Recruitment: Reduce Average time taken to fill vacancies by 15%. Reduce Average cost per recruit by 10%
Selection: Finalize selection in 5 weeks for each individual position
KRA 2: Workplace Management
Labour Turnover: Reduce the labour turnover by 20%
Benchmark total HR costs externally.
Reduction in absenteeism per employees
Increase in employee satisfaction
Talent retention and turnover ratio.
KRA 3: Safety and Health Workplace
Reduce workplace accidents by 10%
KRA 4: Building capabilities and organizing learning
All workforces below middle management should receive a minimum of 4 days training.
Maximize induction training. Maximize training workshops
Training needs analysis & Competencies development.
KRA 5: Performance Management
Managing Employees through KRAs
Achieve 100% performance appraisals against total employees.
KRA 6: Reward Management
KRA 7: Effective HR management systems, support & monitoring
KRA 8: Monitoring employee deployment
KRA 9: Compensation and benefits.
KRA 10: Employee Relations
Employee satisfaction index
KRA 11: Statutory Compliance
KRA for Administration:
KRA 1: Records Management
KRA 2: Filing
KRA 3: Administrative Support
KRA 4: Internal Customer relations
KRA 5: Equipment maintenance
KRA 6: Scheduling
KRA 7: Project Support
KRA 8: Safety & Health Management
KRA 9: Vehicle Management
KRA 10: Visitor Protocol
KRAs for Manufacturing /Production:
KRA 1: Delivery
Minimize downtime. Timely completion of jobs.
Meet annual production target as per expected cycle time.
KRA 2: Resource Utilization / Review resource requirements
Maximizing quality of product, efficiency of production and maximize production rates. Compliance of corporate policy norms.
Maximize plant efficiency through teamwork and innovation
KRA 3: Operational costs.
Reduction in operating costs.
Minimize the inventory levels. Minimize the scarp level/wastage reduction. Control overhead expenditure. Stock Control.
KRA 4: Implementation of best manufacturing practices / quality control programmes, newer management techniques such as ISO, TQM, Six Sigma, etc. Application and acceptance of new technology. Shop floor improvements.
KRA 5: Customer Satisfaction
KRA 6: Good working conditions / House keeping / Safety – Health environment. People Management & Labour relations.
KRA 7: Product development.
KRA 8: Preventive maintenance of the plant.
KRA 9: Productivity: Improvement of process. Per Employee productivity increase initiatives.
KRA 10: Record Keeping.
KRAs for MMG (Purchase/Stores):
KRA 1: Reduce on-hand inventory to the lowest feasible levels consistent with customer service objectives. Planning delivery of indigenous and imports items to minimize the inventory cost like casting, fabrication, sub assembly, etc.
KRA 2: Reduce materials costs to the lowest levels consistent with quality objectives. Cost saving budgeting and targeting.
KRA 3: Develop statistical methods to estimate future materials requirements.
Assessing project material requirements and designing purchase schedule.
KRA 4: Purchasing policy and planning.
Development & implementation of key procurement strategies.
Formulating budget for timely procurement of spares & materials.
KRA 5: Outsourcing strategy / development / management
KRA 6: Zero production losses due to material shortages.
Timely delivery of goods at the respective sites.
KRA 7: Stock audit to ensure reconciliation of physical stocks.
KRA 8: Developing & negotiating with suppliers for obtaining timely procurement of materials at favourable commercial items.
KRA 9: Assessment of performance of the vendors.
KRA 10: Logistics operations.
KRA 11: Introducing innovative initiatives in operations.
KRAs for Sales & Marketing:
KRA 1: Order booking & Target achievement
Revenue: Achieve & exceed revenue targets.
KRA 2: Net profitability by various products
Increasing the profit margin of company.
KRA 3: New Customer development / developing new markets
Increase market share from ___% to ____ %.
Increase market penetration from ___% to ____ %.
Increase customer satisfaction from ___% to ____%.
New Business acquisition
KRA 4: Customer service / diversification. Customer retention.
Retrieve customers, which have been lost by the company.
KRA 5: Plan and implement marketing strategy, including advertising and PR.
Monitor and report on market and competitor activities.
Organizing exhibitions and special sales promotion events.
Liaison with design agency for management and implementation of collateral / promotional objectives.
Promotional strategy – Innovative promotional techniques.
KRA 6: Reduce outstanding from x days/months to y days/month.
Reduce bed debts at least Rs._______.
KRA 7: Budget preparation / sales expenditure.
KRA 8: Oversee product marketing.
KRA 9: Territory Management.
KRA 10: Sales forecasting. Market research.
KRA 11: Agency Relations.
KRAs for F&A:
KRA 1: Costing: Cost of production, tooling costs, man hour rate
KRA 2: Recovery of outstanding
KRA 3: Standard Audit policy, Internal Audit.
KRA 4: Preparation / operation of budgets. Revenue / capital budget.
KRA 5: Statutory Company Administration (CS roll)
Statutory books. Regulatory reporting.
KRA 6: Manages the financial performance of each unit.
Funds management, working capital & cash management.
KRA 7: Direct and Indirect taxes.
KRA 8: Variance analysis to determine difference between budgeted figures & actual expenditure and implementing corrective actions.
KRA 9: Accounts & Finance: Physical verification and reconciliation of stock. Consolidation of RO / sites accounts in time.
KRA 10: Implementation of ERP systems.
KRA 11: Banking operations
KRA 12: Management Information
KRA 13: Cash flow forecasting
KRA 14: Financial records.
KRAs for Quality:
KRA 1: Minimization of rejection & rework.
KRA 2: Standardization for goods and work inspection.
Inspection activities within the reasonable time frame.
KRA 3: Customer’s acceptance.
Establish quality standards & implementing quality control requirements of the customers.
KRA 4: Develop and implement quality management strategy and plans.
Quality related business initiatives like ISO, Six Sigma, OSHAS, etc.
Implementation of quality plan for RM, WIP, FG, etc.
Develop quality plan for new products.
KRA 5: Validation of process, instruments, methods, etc.
KRA 6: Quality assurance for the projects and the manufacturing set up.
KRA 7: Evaluation of new suppliers and vendors.
KRAs for Site Engineering – Project Management:
KRA 1: Vendor Management
KRA 2: Contract Management
KRA 3: Managing Resources
KRA 4: Process engineering and service improvement.
KRA 5: Cost Control
Ensure targeted net profits on Projects.
KRA 6: Project implementation within set time and cost budget.
Deliver projects with the required quantity.
KRA 7: Planning of projects and evacuation infrastructure from concept to commissioning.
KRA 8: Detailed engineering and documentation for projects.
KRA 9: Customer relation.
KRA 10: Collections.
KRAs for Plant Head:
KRA 1: Production target optimizing man and machine.
KRA 2: New Project implementation.
KRA 3: Cost reduction
KRA 4: People & performance management
KRA 5: Review resource requirements
KRA 6: Increasing the market share and overall growth of the company.
KRA 7: Formulating annual business plan of the organization.
KRA 8: Development of new products / market.
KRA 9: Increase plant capacity.
KRA 10: Profitability accountability: achieving the set target and assuring profitability by managing sales, stock and increasing performance level.
KRA for R&D / Product development:
KRA 1: Minimize purchasing costs.
KRA 2: New Product development & Testing.
KRA 3: Value engineering & innovative solutions
KRA 4: Preparation of SOP’s. Authorize all documents for development of new product. Preparation of technical documentation and resolve product problems.
KRA 5: Define specifications of all the instruments & research materials for conducting the experiments.
KRA 6: Evaluate competitors offerings technically & commercially.
KRA 7: Working out on budget (manpower and machineries required for department).
KRA 8: Analysis of customer requirements.
KRA 9: Plan and estimate development activities. Hold reviews to validate designs & analysis.
KRA 10: Coordinate with the factory and suppliers for product development.
KRA for General Management:
KRA 1: Internal operations.
KRA 2: Market development
KRA 3: Profitability
KRA 4: Organizational structure
KRA 5: Assets & Liability management
KRA 6: Board of Directors relationship
KRA 7: Productivity
KRA 8: Financial Strategy
KRA 9: Business Development
KRA 10: Technology
KRA 11: Customer satisfaction
KRA 12: Community relations
KRA 13: Regulatory compliance
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