by Definition: Key result areas or KRAs refer to the general metrics or parameters which the organization has fixed for a specific role.
Key Result Area can be understood as the fundamental areas of the outcome, for which a department is accountable. It is the strategic factor, implicit or explicit to the firm, from where favourable outcomes can be attained, to reach the final goal and take a step ahead towards the organization’s vision.
In human resource management, KRA implies the metrics set by the organization for a specific role. Therefore, it highlights the scope of the job profile. It helps the employees in understanding the role and responsibilities, in a better way. So, it needed to be clearly determined and quantified, so that the employee can line up their role with that of the aim of the firm.
Description: Key result areas (KRAs) broadly define the job profile for the employee and enable them to have better clarity of their role. KRAs should be well-defined, quantifiable, and easy to measure. It also helps employees to align their role with that of the organization.
KRAs are broad categories or topics on which the employee has to concentrate during the year. For example, an employee who is working at a managerial level in a manufacturing company would have a different KRA than somebody who is in a technology firm.
A manager who is working in a manufacturing firm would have to focus on maintaining the budget of the department, safety of the employees, coordination with different departments, training, reporting as well as introducing new technologies to improve productivity.
The next step is to define objectives and standards for each KRA which should be easily quantifiable. The employee should have a clear understanding of his/her KRAs to perform his/her tasks efficiently.
Key result areas are those areas in which you have to take complete ownership. The first step is to list out daily activities which could be part of the KRAs. In some organization even a team meeting everyday is part of a manager’s KRA.
So, KRAs could be vary from organization to organization and from one work profile to another. There are no set rules to define KRAs, but broadly they sum up the job profile as well as the key impact areas on which the employee is expected to deliver.
Definition of KPI
Key Performance Indicator, as the name signifies, is the financial and non-financial metric used by the firms to gauge and fortify the success, towards the goals of the organization. After the ascertainment of the organization’s mission, identification of stakeholders and determination of goals, the progress towards the goal is evaluated through key performance indicator.
The key performance indicator is used at different levels by an enterprise to track the progress of the firm in the realization of targets. It plays the role of a compass that helps in understanding whether the company has chosen the right way to reach the final aim or not.
Different types of organization have different performance indicators, such as the KPI of a business entity can be income percent. Likewise, the pass out rates of the students is the key performance indicator of a school. Therefore, it can be anything like profit, cost, turnover, consumer satisfaction, customer base, customer attrition, employee turnover ratio, employee satisfaction and so forth.
Key Differences between KPI and KRA
The points given below are substantial, so far as the difference between KPI and KRA is concerned:
- Key Result Area can be described as the essential areas of business that requires excellent performance to obtain the favourable result, to survive and grow in the industry. On the other hand, Key Performance Indicator, or otherwise called as KPI is a performance metric, used by the organization to ascertain how effectively the firm is performing.
- Key result area is a strategic business unit, wherein great efforts are needed to achieve success. As against, the key performance indicator is a metric that gauges the level to which business goals are achieved.
- KPI is a quantifiable measure, meaning that it gauges the performance of a product, service or the business unit in the market, in quantitative terms. On the contrary, KRA is qualitative in nature, in the sense that it determines the areas that can help in attaining high value for the organization.
- The key result area is used to find out the scope of a particular product or unit. In contrast, key performance indicator measures the success of the organization towards goals at various levels.
By and large, the business entities work continuously for the achievement its mission. However, it is difficult to ascertain that how far the business has worked towards the realization of goals. Key Performance Indicator acts as a tool to determine the achievement of an objective, while KRAs are those areas that require a high level of performance to gain a competitive position in the market.
