Imagine, you have a new recruit in your start-up business and he/she has spent just a couple of weeks in the new organisation. The new employee is unclear on the expectations you as an employer have from him/her. With no clarity on the goals and job responsibilities, you may envision the state of mind of the newly hired employee. The ambiguity may cause needless stress and result in demotivation and a feel of being directionless before the actual start of the journey. In such a scenario, clarity on the goals, better known as KRAs (Key Responsibility/Result Areas) shall bring stability of thoughts for the new employee. The KRA setting shall help to regain the confidence of the employee in the employer and validate his/her decision of joining the particular organisation. Thus, we can say that clarity on work/task responsibility will make provision to organise the work better for each and every employee.
KRAs stands for ‘Key Result Areas’ or Key ‘Responsibility Areas.’ And, both these terms are used interchangeably. KRAs are the parameters that an organisation fixes/sets for a specific role. It defines the Job profile of the employee. Thus, providing a better clarity to employees as in what is expected from him or her in their respective role.
Who sets the KRAs?
An employee hires the employer as much as the employer hires the employee. This statement is very much true as having a role clarity is crucial for an employee as well as for the organisation the individual is employed in. The need for clear goals and expectations from the employee is not different in small than in large organisations. Even a small business or start-up will have a Sales, Finance, Human Resources and Information technology department and setting KRAs means setting goals or responsibility to each and every employee in these various areas/departments.
The Human Resources Management (HRM) takes the initiative of setting up a process around the ‘Key Result/Responsibility Areas. They share an initial outline with the respective department heads or managers who in-turn discuss and support the individuals in the team to set up the KRAs. KRAs in some organisations may also be known by a different name called ‘Objective Key Responsibilities’ i.e. the OKRs.
Just like SMART Key Performance Indicators (KPIs), the Key Results/responsibility Areas (KRAs) or goals should also be SMART.
How do you define or write KRAs?
One size does not fit all! The saying is true for KRAs as well. Every company is unique and each role and reasonability will differ as the role demands. Being aware of the goals to achieve is very different from converting them into a written form. Just like SMART Key Performance Indicators (KPIs), the Key Results/Responsibility Areas (KRAs) or goals should also be SMART. Let us understand what SMART shall comprise of, in this context:
Specific: KRAs should be clearly stated as in what and how to do the job?
Measurable: Clarity on how the performance for a particular goal shall be measured.
Achievable: Ensure the set KRAs/goals are achievable, a discussion with the employee or manager shall take place.
Relevant: The selected KRA must be relevant to the job.
Time Bound: The KRAs to be achieved shall be time bound to attain the desired goal. Therefore, making the KRAs relevant and resulting in the improved productivity and efficiency of the employee.
Now, how to write them means following specific steps to document them effectively:
Step 1: Go through the Job description for a particular role or designation of an employee.
Step 2: In case, the job description for a particular employee is not updated, the Human Resources (HR) Personnel must discuss the same with the respective team managers.
Step 3: Figure out what the employee has to achieve. What is expected from the employee in that particular role?
Step 4: Based on the above stated points, list the critical functions and responsibilities in the Job role.
Step 5: Divide the responsibilities or functions into further two categories. For instance, what all can be measured either in numbers or in percentages? Also, what all cannot be measured in numbers or cannot be calculated?
Step 6: Based on the categorisation, the critical responsibilities or functions that can be measured in numbers or percentages shall be converted into the KRAs/goals.
Step 7: Write the self-explanatory definition of each goal or KRA.
Step 8: KRAs/goals can also be categorised into the various sections like customer, financial, business process, learning or growth.
Step 9: Define each KRA and ensure to mention a measurable target to be achieved and attach a realistic timeline to the defined KRA/goal.
Step 10: Review the set KRAs at regular intervals with the employee.
Please note it is important the employee and his/her manager are aligned with the decided KRAs before employees get a review on them for their performance.
What are the KRAs for Human Resources (HR)?
The KRAs of the HR department can be divided under various headings. Let us take a look at some of them in the below section:
Employee Relations, Training and Development: It is one of the primary roles and responsibilities of an HR personnel to train or facilitate the training and mentoring sessions for the employees in various departments on periodic intervals to improve their skill set with changing business requirements. Also, addressing any people management issues or concerns regarding any policies and culture code of the organisation.
Performance Management: Setting up simple and performance drive compensation strategies and policies. It is one of the primary goals of the HR team to ensure the performance of each and every employee is assessed as per the performance review cycle set in the organisation and its timely closure with the respective managers and the employees.
Financial Resources: The budget allocation of different activities and for different departments is handled by the HR team.
Strategic Goal: Driving strategic planning, Leadership Quality System and Employees’ Competences, Organisational Development and Increasing Technology and Information System.
Functional Goals: Customer Satisfaction, Communication (timely response, understanding and perceiving things correctly). Build friendly corporate culture and drive employee engagement. Also, creating an environment to recognise top talents and top performers in an organisation.
Key Performance Indicator (KPI) indicates the performance whereas KRA indicates target value in a set timeline.
How are KRAs different from KPIs?
Just like KPIs, KRAs play an equal and an important role in an organisation. Key Performance Indicator (KPI) indicates the performance whereas KRA indicates target value in a set timeline.
An effective KPI is quantifiable i.e. it is expressed in numbers, aligned with the goal of an organisation. It indicates the performance with the time in number effectively, and confirms the direction of the movement towards the goal. KPIs are created at Organisational level and Departmental level. Organisational KPIs are created by the CEO or executive team and they reflect the goal achievement. Whereas Departmental KPIs are established by the Head of the departments or managers of concerned departments and they are aligned with the organisational KPIs. KPI depends on the KRA and measures it.
KRA means a set target that has to be achieved to a certain extent or percentage in a given or set time frame. For instance, the target is to increase the revenue of an organisation by 15 per cent by the end of 2021 can be understood by the below statements:
- What: To increase the revenue
- How Much: 15 per cent of the current value
- Time Frame: by the end of 2021
All these factors combined together form the KRA.
Why are KRAs required?
Key Result Areas (KRAs) are critical for the success of any organisation. They are essential areas of business that require exceptional performance to obtain the desired result/outcome. KRAs set for a particular employee means the employee takes the complete ownership to complete the tasks basis which his/her performance shall be measured.
The employee should have a clear understanding of his/her role in an organisation. Thus, KRAs is a way to provide that clarity to an individual employee or a group of employees in the organisation and finally meet the key objectives and goals of the organisation.
Employee’s KRAs shall be aligned with the department’s objectives. Thus, finally aligning entire team’s or groups KRAs with the organisational objectives and that further need to be achieved as a part of the organisational goals. For instance, KRA for a team leader or business manager would be:
- Managing day-to-day- operations/activities
- Develop and implement a timeline to achieve targets
- Motivate team to achieve departmental and organisational goals
- Organise and conduct trainings relevant for the process/department to maximise potential of the employees
- Delegate tasks to the team members as in when required
Conclusion: How do KRAs decide the success of an organisation?
Start-up entrepreneurs or small business owners must understand the importance of engaging and define clear and smart goals/KRAs for its newly hired employees. You would not like to imagine a state where the employees are disengaged or disinterred in their role before they actually start their journey. This would be detrimental for growth of both the employee and the employer. KRAs are important in any business or start-up because the clarity of Job role and responsibility will add productivity and performance of the hired employee in a defined time frame and it would not be a point of contention during the performance review of the employee.
KRAs are the major missions. They shall save a lot of time to revisit every-time one needs to know what all tasks have to be completed by the employee or team. Thus, with the structured and targeted approach, the employer shall keep the workforce motivated and focused to make the employee, the team, department and the entire organisation successful.