Check out the following example, hope it will help u in undersatnding KRAs.......
KRA stands for Key Result Area. Key Result Areas are set of activities derived out of short term objectives. KRAs refer to general areas of outcomes or outputs for which the department's role is responsible.
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.
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 Cheif 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, machinaries 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 Chiefs 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. Simlarly, 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 (Fianace), Manager (Finance), CFO, Dy. Manager (Training), Manager (Training), and CPO, COO, and CEO.
10th April 2008 From India, Hyderabad