When you start a new job, one of the first things your manager might talk about is your KRA and KPI. These two terms sound similar, but they mean very different things in the workplace. Understanding what KRA means and how it differs from KPI can help you perform better at your job and understand what your company expects from you.
Whether you’re an HR professional, a manager, or an employee, knowing what is KRA for employee roles and what is KPI will make your work life much clearer and more organized. In this guide, we’ll break down everything you need to know about KRA and KPI in simple language so you can use this knowledge right away.
What Is KRA (Key Responsibility Area)?
KRA’s full form stands for Key Responsibility Area. Think of it as a job description that tells you exactly what you’re responsible for doing in your position. It’s like a roadmap that shows you where you need to go and what you need to accomplish.
A KRA is basically a list of the most important things you need to do in your role. It includes the main tasks, duties, and goals that your company expects you to complete. For example, if you’re a sales manager, one of your KRAs might be “Generate 100 qualified leads every month” or “Increase customer retention by 15%.“
Key Features of KRA:
1. KRAs are specific and clear
They tell you exactly what your job is about. When you know your KRA, you won’t feel confused about what your boss wants from you.
2. KRAs are measurable
You can count or track your progress. This means you know if you’re doing a good job or if you need to improve.
3. KRAs align with company goals
Your KRA isn’t random. It connects directly to what the company wants to achieve. When you do your KRA well, the whole company benefits.
4. KRAs are set for individuals and departments
Every person in a company has their own KRA based on their job role.
Why Do Companies Use KRA?
Companies use KRAs because they help organize work. Without KRAs, employees might not know what they should focus on. Instead of doing random tasks, everyone works toward goals that matter for the business.
What Is KPI (Key Performance Indicator)?
KPI’s full form stands for Key Performance Indicator. If KRA tells you what to do, then KPI measures how well you did it.
A KPI is a number or score that shows how well an employee or team is performing their job. KPIs are always numbers they could be percentages, dollars, units sold, or any measurable result. For example, a KPI might be “50 sales closed this month” or “90% customer satisfaction rating.“
Key Features of KPI:
1. KPIs are always numbers
You can measure them with data. A KPI might be “3% improvement in productivity” or “50 new customers acquired.”
2. KPIs measure results
They show if someone actually completed their KRA well. KPIs are the proof of performance.
3. KPIs can change
Unlike KRAs, KPIs might change based on market conditions, company needs, or business challenges. If the company’s goals change, KPIs can change quickly too.
4. KPIs are tracked regularly
Companies check KPIs weekly, monthly, or quarterly to see how employees are doing.
Why Do Companies Use KPI?
Companies use KPIs to understand if their employees are meeting expectations. KPIs give managers clear numbers to review, making it fair and objective when deciding on promotions, bonuses, or performance reviews.
What Is the Difference Between KRA and KPI?
KRA and KPI work together, but they have important differences. Let’s understand how they’re different:
| Feature | KRA | KPI |
| Full Form | Key Responsibility Area | Key Performance Indicator |
| Purpose | Defines the main responsibilities and areas of focus for an employee; outlines what you should do in your role | Measures the performance or success in achieving the set responsibilities; evaluates how well you did it |
| Type of Information | Qualitative, focuses on tasks, roles, and responsibilities that may not be directly measurable | Quantitative, focuses on measurable results, numbers, and data-driven outcomes |
| Scope | Broader, covers overall job duties and core responsibilities | Narrower, focuses on specific results and performance metrics |
| When It’s Set | Usually defined at the beginning of the job or updated annually | Set for specific time periods like monthly, quarterly, or annually, depending on business goals |
| Nature | Long-term and relatively stable; remains consistent unless the role changes | Can change based on business priorities, targets, or projects |
| Measurement | Harder to measure directly; often evaluated through observation or qualitative assessment | Easy to measure with numbers, percentages, or other quantifiable metrics |
| Example | “Manage customer relationships” | “Increase customer satisfaction to 85%” |
Simple Example to Understand the Difference:
Let’s say you’re a teacher:
- Your KRA: Teach students math concepts, create lesson plans, grade assignments, help struggling students improve, and make learning fun.
- Your KPI: 90% of students pass the math test, average class score is 75%, 95% attendance rate, and students show 20% improvement from their previous score.
Your KRA tells you your job responsibilities. Your KPI shows how well you’re doing those responsibilities with numbers.
What Benefits Do KRA and KPI Offer to Organizations?
When a company uses KRA and KPI together, good things happen. Let’s look at the main benefits:
Benefits of KRA for Organizations
1. Clear Direction
Employees know exactly what they should focus on, which reduces confusion and wasted time.
2. Fair Performance Reviews
Since everyone knows their KRA, managers can evaluate fairly. No one can say “I didn’t know what I was supposed to do.”
3. Better Resource Planning
Companies can assign tasks based on each person’s strengths. A person good with numbers might handle budget tasks.
4. Employee Motivation
When people understand their role and how it helps the company, they feel more motivated and satisfied.
5. Reduced Duplication
Without KRAs, different people might do the same work twice. KRAs prevent this waste.
Benefits of KPI for Organizations
1. Measurable Success
Companies can see exactly if goals are being met. There’s no guessing, just data.
2. Quick Problem-Solving
If KPIs show someone isn’t performing well, managers can help them improve right away.
3. Informed Decisions
Managers can make fair decisions about bonuses, promotions, and training based on KPI numbers.
4. Increased Accountability
When people know their performance is being measured, they usually work harder and smarter.
5. Alignment with Goals
KPIs help ensure that individual work connects to company success.
Importance of KRAs and KPIs in HR
HR (Human Resources) departments are responsible for managing people in a company. KRAs and KPIs are super important for HR because they help with several critical tasks:
1. Performance Management
HR uses KRAs and KPIs to decide if someone deserves a raise, promotion, or bonus. Instead of guessing who’s doing well, they have clear data and goals to review.
2. Employee Development
When HR sees a KPI that’s low, they know an employee might need training or support. This helps employees grow and improve in their roles.
3. Hiring and Matching Roles
HR can look at job KRAs to find the right person for each position. They can match the job requirements to each candidate’s skills.
4. Employee Engagement
When employees understand their KRA and see their KPIs improve, they feel more engaged and satisfied at work. This reduces people leaving the company.
5. Fair Rewards System
KRAs and KPIs make the reward system fair. Everyone can see what’s expected, and rewards are given based on actual performance, not favoritism.
6. Building Company Culture
When everyone is working toward clear KRAs and tracking KPIs, the whole company works like a team. Everyone knows how their work helps others.
How to Setup KRA and KPI?
Setting up KRA and KPI isn’t hard, but it does need careful planning. Here’s a step-by-step guide:
Step 1: Understand Your Company’s Big Picture
Before setting anyone’s KRA, you need to understand what your company wants to achieve. What are the company’s goals for the next year? What problems is it trying to solve? Write these down.
Step 2: Break Down Goals by Department
Once you know the company goals, break them down by department. What does each department need to do to help reach company goals? For example, if the company goal is “Increase sales by 20%,” the sales department’s goal might be “Get 500 new customers.”
Step 3: Create KRAs for Each Job Role
For each job position, create 3-5 main KRAs. These should be the most important things that person needs to do. Keep them specific, measurable, achievable, realistic, and time-bound (this is called SMART goals).
Step 4: Define KPIs for Each KRA
For each KRA, create 2-3 KPIs that measure success. Remember, KPIs must be numbers or percentages.
Example:
- KRA: Improve customer satisfaction
- KPI: Achieve 90% customer satisfaction score / Reduce complaint response time to 24 hours
Step 5: Talk with Employees
Before finalizing KRAs and KPIs, discuss them with the employee. Ask for their input. Do they think these goals are realistic? Do they have better ideas? This conversation makes employees more committed to their goals.
Step 6: Document Everything in Writing
Write down all KRAs and KPIs clearly. Both the employee and manager should sign this document. Keep a copy for future reference.
Step 7: Share and Explain
Make sure the employee fully understands their KRA and KPI. Answer their questions. Give them any tools or training they need to succeed.
Step 8: Track Progress Regularly
Throughout the year, check in on KPIs. Have monthly or quarterly reviews. Celebrate when someone does well, and offer help when someone struggles.
Tips to Remember While Setting KRAs and KPIs
Setting KRAs and KPIs can be tricky. Here are some smart tips to make sure you do it right:
1. Keep Them SMART
Make sure every KRA and KPI is Specific (clear about what), Measurable (can be tracked with numbers), Achievable (possible to reach), Realistic (matches the person’s abilities), and Time-bound (has a deadline).
2. Make Them Challenging but Possible
Goals that are too easy won’t motivate anyone. Goals that are impossible will frustrate people. Find the sweet spot, goals that are a bit challenging but definitely possible to reach.
3. Align with Personal Goals Too
It’s not just about company goals. Try to connect personal career goals with company KRAs. This makes employees more excited and committed.
4. Prioritize KRAs
Most people have too much to do. Help employees understand which KRAs are most important. Maybe there are 5 KRAs, but 2 of them matter more. Say this clearly.
5. Be Flexible
Business changes. Markets change. Sometimes you need to adjust KRAs and KPIs mid-year. This is normal and okay. Don’t stick to goals that no longer make sense.
6. Use Numbers When Possible
The more specific with numbers you are, the clearer it is. Instead of “Improve sales,” say “Increase monthly sales by 15%.”
7. Consider Resource Availability
Before setting a KRA, think about whether the employee has the tools, time, and support to achieve it. A great goal becomes frustrating if the person doesn’t have what they need.
8. Celebrate Achievements
When someone hits their KPI, acknowledge it! This builds motivation and shows that hitting goals matters in your company.
Things to Know After Assigning KRAs and KPIs
Once you give employees their KRAs and KPIs, your job isn’t done. Now you need to manage them and make sure everything works smoothly. Here are the 6 most important things you need to know:
1. Check Progress Often
Don’t wait until the end of the year to see how employees are doing. Look at their KPI numbers weekly or monthly. When people know you’re watching, they stay more focused and work harder. Use a simple tracker like a spreadsheet or app where both you and employees can see progress anytime.
2. Be Ready to Change Goals
Business changes quickly. If the market gets worse or the company’s focus shifts, you might need to adjust KPIs mid-year. This is normal and okay. Don’t stick to goals that no longer make sense just because you set them at the start.
3. Help People Who Are Struggling
If you notice someone’s KPI numbers are dropping, talk to them soon. Don’t wait. Find out why they’re struggling. Maybe they need training, better tools, or more support. Help them improve instead of just judging them.
4. Give Feedback Regularly
Tell employees how they’re doing often, not just at the end of the year. Share good news when they hit targets. Also gently point out areas where they need to improve. Make it a friendly conversation, not just criticism.
5. Celebrate When People Succeed
When employees hit their KPI targets, acknowledge their success. Say thank you and recognize their hard work. It doesn’t have to be money. Sometimes just saying “Great job” in a team meeting is enough. This shows that hitting goals matters and keeps people motivated.
6. Use Software to Track KPIs Automatically
Tracking KPIs by hand using spreadsheets takes too much time and causes mistakes. Use a performance management system that automatically tracks numbers and creates dashboards. This saves time and helps everyone see their progress clearly anytime.
Conclusion
KRA and KPI are two essential tools that help companies organize work and measure success. KRA tells you what to do, while KPI measures how well you did it. Together, they create a clear system where employees understand expectations and managers can fairly evaluate performance.
Understanding KRA (Key Responsibility Area) and what is KRA for employee roles helps everyone work better. The same applies to what is KPI, it makes performance measurement objective and fair.
Whether you’re an employee, manager, or HR professional building a performance system, remember that good KRAs and KPIs are clear, fair, measurable, and connected to company goals. When set up well and tracked consistently, they lead to happier employees, better performance, and a more organized workplace.
To implement a robust KRA and KPI system in your organization, consider using HR management software like Savvy HRMS. Savvy HRMS simplifies goal-setting, performance tracking, and employee management, making it easier to align individual KRAs with company objectives and monitor KPIs in real-time. Start today by reviewing your current KRAs and KPIs and if you need a tool to streamline this process, Savvy HRMS is here to help you build a high-performing organization.
