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Dinesh DivekarDear Mahendra,
It appears that the cause of your post is fundamental misconceptions on the concepts of KPI, KRa, PMS and so on. Anyway, paragraph-wise replies to your post are as below:
I am currently Re-designing the Performance Appraisal process of a MNC having approx. 550 employees. The company previously was assessing the KRA's and didn't had KPI's.
Reply: - You cannot have only the KRAs and not KPIs. Each KRA has to originate from KPI only. I request you to relearn both the concepts.
Now with the challenging situation with in the Industry , the company wants to Interlink the KPIs of all department and wants to quantify the KPI's.
Reply: - When you add the SMART principle in KPIs, these become KRAs. Therefore,
KRA = KPI + SMART Principle
Now coming to interlinking the KPIs of all the departments. The objective of setting the Performance Management System (PMS) is to institute various measures. Interlinking is not necessarily the objective. Yes, in some cases because of the nature of the work, the KPIs get interlinked. However, this process is natural and there is nothing to contrive.
May I request your guidance/inputs on above subject. More on how to interlink department KPIs.
Reply: - About interlinking the KPIs of the departments the reply has been given above.
Final Comments: - It appears that the system has been instituted in your company half-heartedly. You could have hired an external consultant. The essence of PMS lies in the measurement of the costs and ratios associated with each department and assigning these to the respective HODs. For example, the main KPI of the Purchase Department is "Inventory Turnover Ratio" (for the raw materials only) whereas for the sales department it could be "Sales Cost" or "Cost per (incoming) PO".
I have been giving replies on the subject of PMS, KPIs, KRAs and so on for the years together. You may click the following link to refer to one such reply:
In this link, there are several further links. Go through all the links patiently so as to get conceptual clarity of the subject.
From India, Bangalore
mahendra_tiwari_9Dear Mr. Divekar,
Thanks you for explaining the concepts in such a easy way.
I do understand the difference between KRA's & KPI's, unfortunately somewhere down the line the in our company it is more of a competency based or rather general KRAs and not KPIs.
To give you you an example :
For purchase the KRA set are "Should have good Negotiation skills" . For Sales "the employee should have good presentation skills".
However this are not measurable criteria's.
Further there is no accountability on delays with in the team and there is always a blame game. Hence we want to focuses and address the issue in best possbile way. Where in whole team will be accountable for Success or Failure.
Hence I requested the team to give reference or guide in case they have any good practice.
From India, Mumbai