Hello friends,
As you are already aware, KRA stands for Key Result Area. Actually, in the true sense, KRA is a concept that is usually very difficult to implement. Let me try to explain how it works. Firstly, the Board of Directors (BOD) decides upon the objectives of the company and sets a specific target for a period. This target becomes the KRA of the CEO. Then it gets divided until it reaches the bottom-most rung. The KRA of each person is linked, and the fulfillment of KRAs will lead to the fulfillment of the objectives set by the BOD. Therefore, if one person fails, it will hamper the attainment of the desired result.
Let me provide an example: Suppose the company sells PCs. If the objective decided by the Board is to make a profit of 500 crores in 3 years, the KRA of the CEO is to attain a 500 crore profit in 3 years. The CEO decides to achieve this by making 400 crores by selling PCs, 50 crores by investing in stocks, and 50 crores by improving the production cycle. The KRA of the Chief Marketing Officer will be to sell PCs that will generate a 400 crore profit in 3 years. They will then set the KRAs for their subordinates in such a way that this target is achieved. The Chief Operating Officer has the KRA of improving the productivity cycle and producing PCs by which 400 crores can be achieved. The Chief Finance Officer will have the KRA of looking after investing in stocks and providing finance for the purchase of raw materials, machinery, and others so that both Operations and Marketing can achieve their KRAs.
The Chief People Officer (HR) generally faces difficulty in setting or implementing KRAs since they are essentially a support function, but in some cases, it is done. The CPO, as part of KRA, will have to provide for manpower and maintain a harmonious industrial relationship to ensure there is no disruption in production or marketing. They are also responsible for providing training to improve skills for better productivity cycles and framing a compensation benefit structure to retain efficient employees. The Chiefs then further divide the KRAs to their subordinates. For example, the KRA of the Manager (Training) under CPO will be to provide adequate training to the workforce.
Hence, if the Manager (Training) fails, it will be reflected in the KRAs of the CPO, COO, and CEO. Similarly, if the KRA of the Assistant Manager (Training) is to locate the training institutes that can impart quality training and they are unable to achieve it, this failure will reflect in the KRAs of the Manager (Training), CPO, COO, and CEO. For instance, if the Deputy Manager (Training) is supposed to conduct the training programs but could not do so because the funds for training, which were supposed to be arranged by the Deputy Manager (Finance), were not available, this failure will reflect in the KRAs of the Deputy Manager (Finance), Manager (Finance), CFO, Deputy Manager (Training), Manager (Training), and CPO, COO, and CEO.
Key Result Areas - The measure of employees' main positive results.
Regards,
Akhilesh Dubey
From India, Indore
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184As you are already aware, KRA stands for Key Result Area. Actually, in the true sense, KRA is a concept that is usually very difficult to implement. Let me try to explain how it works. Firstly, the Board of Directors (BOD) decides upon the objectives of the company and sets a specific target for a period. This target becomes the KRA of the CEO. Then it gets divided until it reaches the bottom-most rung. The KRA of each person is linked, and the fulfillment of KRAs will lead to the fulfillment of the objectives set by the BOD. Therefore, if one person fails, it will hamper the attainment of the desired result.
Let me provide an example: Suppose the company sells PCs. If the objective decided by the Board is to make a profit of 500 crores in 3 years, the KRA of the CEO is to attain a 500 crore profit in 3 years. The CEO decides to achieve this by making 400 crores by selling PCs, 50 crores by investing in stocks, and 50 crores by improving the production cycle. The KRA of the Chief Marketing Officer will be to sell PCs that will generate a 400 crore profit in 3 years. They will then set the KRAs for their subordinates in such a way that this target is achieved. The Chief Operating Officer has the KRA of improving the productivity cycle and producing PCs by which 400 crores can be achieved. The Chief Finance Officer will have the KRA of looking after investing in stocks and providing finance for the purchase of raw materials, machinery, and others so that both Operations and Marketing can achieve their KRAs.
The Chief People Officer (HR) generally faces difficulty in setting or implementing KRAs since they are essentially a support function, but in some cases, it is done. The CPO, as part of KRA, will have to provide for manpower and maintain a harmonious industrial relationship to ensure there is no disruption in production or marketing. They are also responsible for providing training to improve skills for better productivity cycles and framing a compensation benefit structure to retain efficient employees. The Chiefs then further divide the KRAs to their subordinates. For example, the KRA of the Manager (Training) under CPO will be to provide adequate training to the workforce.
Hence, if the Manager (Training) fails, it will be reflected in the KRAs of the CPO, COO, and CEO. Similarly, if the KRA of the Assistant Manager (Training) is to locate the training institutes that can impart quality training and they are unable to achieve it, this failure will reflect in the KRAs of the Manager (Training), CPO, COO, and CEO. For instance, if the Deputy Manager (Training) is supposed to conduct the training programs but could not do so because the funds for training, which were supposed to be arranged by the Deputy Manager (Finance), were not available, this failure will reflect in the KRAs of the Deputy Manager (Finance), Manager (Finance), CFO, Deputy Manager (Training), Manager (Training), and CPO, COO, and CEO.
Key Result Areas - The measure of employees' main positive results.
Regards,
Akhilesh Dubey
From India, Indore
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KRA and Performance Management Policy.doc