In Business, success depends on Performance. To ensure success, performance standards are set at various levels based on KPI.
Performance Management System enables you to track and monitor the performance of individual employees, departments and the whole organization based on KRA and KPI. It uses business objective and measurable criteria for assessing the performance.
Performance management essentially involves measuring, reporting and managing progress in order to improve performance at an individual and organization level. When properly designed and implemented, performance management techniques enable an organisation to monitor, manage and improve strategy execution and the delivery of results.
Performance management, therefore, is one of the most critical factors for increasing the productivity and profitability of any organisation. It helps organisations to become more successful and stay ahead of the competition.
Importance of Performance Management :
- Evaluation of employees
- System of giving feed-back to employees
- Knowing whether performance is up to the mark or not
Generally, at the start of an performance evaluation cycle, each employee is made aware of his Key Result Areas (KRA) and Key Performance Indicator (KPI).
What is KRA?
KRA stands for ‘Key Result Areas’. KRA is the area of performance which outlines the profile of the employee. It outlines the tasks that the employee has to perform and defines the work that is expected out of him.
An analysis of key result areas (KRA) can help employees develop a personal strategic plan for career development and serve as the basis for employee performance evaluation. A good KRA includes ongoing tasks and activities of the position, purpose and desired results of performing those tasks.
KRA is set to fulfil the responsibilities and achieve your business goals. It is a tool to help align each employee’s day-to-day responsibilities with the higher-level strategy of the organization.
Role of KRA :
- Tool for overall organizational development and performance
- Fair system
- Appraisals based on measurable value
KRA enables you to
- Have clearly defined and achievablegoals
- Identify areas ofdevelopment and manage the skills
- Obtain timelycommunications and feedback that will allow to stay aligned and change direction when needed
- Promote an environment of alignment and self-management
- Contribute to the company’s wealth creation
Why KRA based Performance Management ?
- Better monitoring with growing times
- Bench mark against global standards
- Focused growth path
- Scientific methodology of evaluation towards standardization
Steps for setting up KRA :
- Go through the Job Description of the employee
- Try to find out exactly what the employee is supposed to achieve in their job
- Make a list of the functions and responsibilities that are critical to the job
- Write a short self-explanatory definition of each Goal
- Make sure you mention a measurable target and a realistic timeframe based on your business plan
Don’t measure yourself by what you have accomplished, but by what you could have accomplished with your ability…
Love them or hate them, KPI is everywhere nowadays. We hear about KPI in businesses. Indeed, many of us have KPI targets in our jobs and have to report on it, but
What really is a KPI ??
Measuring of performance against key business objectives.
Most people would know that the acronym stands for Key Performance Indicators, but if someone is asked to explain what it actually is, it’s likely to hear many different definitions.
Key Performance Indicator (KPI) is a measurable value used to evaluate the achievement of an objective. It helps the organization to achieve organizational goals through the definition and measurement of progress. It provides the performance information that enables organisations to understand whether or not the organisation is on track toward its stated objectives. It demonstrates how effectively a company is achieving key business objectives.
It is now becoming a trending measure as many of the companies have started using for their respective departments. Careful attention should be given in defining each of these core strategic planning and management elements.
How to write and develop KPI ?
KPI is defined after identifying the Key Result Area (KRA) of the employee and needs to be defined according to the core business objectives. Following steps you need to consider when writing a KPI :
- Write a clear objective
- Review on a weekly or monthly basis
- Make sure it is actionable
- Evolve the KPI to fit the changing needs of the business
- Check to see that it is achievable
- Update its objectives when needed
Being SMART about your KPI
One way to evaluate the relevance of a KPI is to use the SMART strategy :
Management should evaluate the following questions after deciding the KPI :
- Is it well linked with the strategic objectives ?
- Is it easy to manipulate ?
- Can it be easily explained ?
- Can actions be taken to improve the performance ?
Organizations should use it at multiple levels to evaluate their success at reaching targets. Each department should define its own KPI according to company policies and the focus of the results should be on each employee’s performance. Generally, HR department reviews and measures it periodically or as when required.
What makes a KPI effective?
To be effective, a KPI must :
- Be well-defined and quantifiable
- Be communicated throughout your organization and department
- Be crucial to achieving your goal
- Be applicable to your department
Once you have selected your key business objectives, you will require some real-time reporting tool to define and track the KPI. Do you have any tool that gives analysis of the KPI report ??
factoHR is the perfect tool of HR and Payroll software for your organization that directly links KPI with the Payroll. It defines KPI based performance. It visually depicts the performance of an individual, specific department or organization. Employer can also set multiple reviewers to see the KPI. It centralizes businesses data and simplifies real-time reporting to give you a competitive edge. It gives your entire organization insights into the current performance.
You can download sample format of KPI from the below link : https://factohr.com/download/kpi-sample-format/
To know more about factoHR – HR & Payroll software, please contact +91 782 000 3100 or visit www.factohr.com
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