Sunitha
AS the first step to build KRAs for HR,
YOU must visit
YOUR COMPANY'S
*VISION STATEMENT
*MISSION STATEMENT
*CORPORATE OBJECTIVES
*CORPORATE STRATEGY
*CORPORATE BUSINESS UNITS/ DEPARTMENTAL PLANS/STRATEGY.
AND COULD CHANGE YEAR BY YEAR AS PER THE BOARD DIRECTIVES.
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Then review your own job description.
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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.
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Value
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
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Description
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).
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EXAMPLE
HR [ KRAs]
CORE KRAs
-RECRUITMENT/ SELECTION
-WORKFORCE PLANNING/ DIVERSITY
-PERFORMANCE MANAGEMENT
-REWARD MANAGEMENT
-WORKPLACE MANAGEMENT AND RELATIONS
-SAFETY AND HEALTH WORKPLACE
-BUILDING CAPABILITIES AND ORGANIZATION LEARNING
-EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
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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
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.
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.THE CHOICE OF HR KPI WILL VARY FROM YEAR TO YEAR,
SUBJECT TO COMPANY'S
-STRATEGIC PLANNING
-CORPORATE STRATEGIES
-CORPORATE OBJECTIVES
WHICH IN TURN AFFECTS THE HR'S
-HR STRATEGIC PLANNING
-HRM STRATEGIES
-HRM OBJECTIVES
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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.
EXAMPLES
-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
etc
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.
EXAMPLES
-time taken to fill vacancies
-cost per recruitment promotions
-absenteeism by job category
-accident costs
-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.
-turnover rate
-attrition rate
etc
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
EXAMPLES
-compensation and benefits per employee
-sales per employee
-profit per employee
-cost of injuries
-HR expenses per employee
-turnove cost
-employee '' workers compensation costs''
etc
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.
EXAMPLES
-employee perception of the HRM
-employee perception of the company , as an employer
-customer/market perception of the company, as an employer.
etc
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.
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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
Acceptance Rate
Average Cost per Hire
Absence Rate
Turnover Rate
Resignation Rate
Human Investment Ratio
Compensation & Benefits/Revenue
Average Remuneration
Time taken per recruitment
Cost per recruitment
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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]
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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]
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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]
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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]
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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 ]
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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 ]
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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]
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KRA 8 - EFFECTIVE HR MANAGEMENT SYSTEMS , SUPPORT AND MONITORING
KPA 1- HRIS [ KPI = finalize the software . RS 1.2 million capital budget]
regards
LEO LINGHAM