Dear all,
Mr Raosaheb Kangane, is Administrator of the WA group called HR Federation of India. In his group, a member has raised questions for discussion on KRAs. These are as below:
Q. 1 How many Companies have adopted KRA culture?
Q. 2 Up to what level KRA is applicable?
Q. 3 Whether KRA are linked with Appraisals & Salary revisions?
Q. 4 How seriously KRAs are respected by Employees and Management?
Q. 5 Why employees & Managements start disbelieving in KRAs?
I have given the replies and these are as below:
Dear Mr Raosaheb Kangane,
The replies to the memberís questions are as below:
Q. 1 How many Companies have adopted KRA culture?
Reply: - It is difficult to segregate the companies on the lines of KRA culture. In fact, KRA culture is a misnomer. Right phrase should be Performance Culture. Overall most of the public limited companies have performance culture. Nothing can be said about private limited companies as owners of these companies rely on business acumen which they claim to have in their DNA.
Q. 2 Up to what level KRA is applicable?
Reply: - KRAs are applicable to all the levels from ordinary workers to the MD of the company. However, monitoring the performance of the worker is sometimes easy and sometimes difficult and time-consuming too. Therefore, companies need to devise the mechanism so that the performance of the team or shift in which they work is measured. Organisations need to identify various ratios and costs associated with each department and further assign these to the HOD. However, it is much easier said than done as many organisations do not measure the costs scientifically. For example, how many manufacturing organisations have measured Inventory Carrying Cost scientifically?
Q. 3 Whether KRA are linked with Appraisals & Salary revisions?
Reply: - Yes professional companies do that. However, many companies have yet to follow this route wherein very systematically the appraisal is carried out. They are clinging to the Performance Appraisal followed during the days of Personnel Management.
In addition to the salary revision, KRAs should be linked to the employee training and recruitment also. While interviewing, the important consideration should be whether the candidate can meet the KRAs of the position for which he/she has applied.
Each training programme should be KRA-based. KRA before and after the training would be the training effectiveness. Employees who attend the training programmes should be told well in advance why this training is expected, what they are expected to increase or decrease and when this measurement of increase/decrease will take place.
Q. 4 How seriously KRAs are respected by Employees and Management?
Reply: - Measurement is essence of running a business. We must measure how we perform. Those who have belief in measurement they respect the KRAs. But then those who inherit the business or have belief for having business in their blood, may give short shrift.
HR plays vital role in creation of a culture of performance. But then how many HRs take up Human Capital Return on Investment (HCROI) as their KRA? How many HR honchos show clearly what was the HCROI when they took over as Head HR and by what units it was increased when they left the company?
If HR themselves do not show seriousness about their own function, why other will show seriousness?
The second example is of Sales Department. In the manufacturing companies, Inventory Carrying Cost of Finished Goods should be assigned to them. But how many companies do that? Their performance is just on the sales target that they achieve. This is completely fallacious and facetious too.
Lastly, about management. Balance sheet of the company should be the source of the performance measurement. However, talk to HR Head or even MD and then they start grumbling on ratios like Return on Assets (ROA), Return on Capital Employed (ROCE), Return on Net Asset (RONA) and so on. This happens because top bosses are too obsessed with the day-to-day administration rather than worrying about the organisationís performance.
Q. 5 Why employees & Managements start disbelieving in KRAs?
Reply: - They start disbelieving for the following reasons:
a) When the measurement is not scientific. When there is no proper mechanism to measure the score. IT infrastructure is required so that the various ratios or costs are measured without spending too much time.
b) No proper records of the measurement are maintained. It is difficult to measure where the system is manual.
c) When HODs are required to appraise too many subordinates. Suppose particular HOD has 25+ subordinates then it is impossible to measure the performance with due seriousness. Casualness is bound to creep in such circumstances.
d) When KRAs are assigned to the HOD or department, but it is not linked to the salary increase or promotions. If the scores are kept independent of these two, then why HOD should break his/her head in attaining the score?
e) When the frequency of measurement is too high. Few companies measure the KRA score monthly. Lot of time is spent in counting the performance. The high frequency turns Performance Appraisal into rigmarole.
Dinesh Divekar
P.S.: - I provide the consulting services to establish comprehensive Performance Management System (PMS). My few statements may appear authoritative but then this averment stems from my experience of association with various companies on this count. It need not be construed as my over-bearing pride.
22nd July 2018 From India, Bangalore
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