Linking KRA to Reward Systems

Category: Education

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THE GRID THEORY : THE GRID THEORY R1 (Resources) + R2 (Relationships) = R3 (Results) Resources products & services, infrastructure, finance, people, systems & tools Relationships dominant & back-up leadership styles Results MBR system

MANAGEMENT BY RESULTS : MANAGEMENT BY RESULTS Widely used system to plan, set, measure and reward performance Each KRA must have: Principal thrust Maximum of 5 goals / milestone goals Optimum activity to goals ratio Current, basic & outstanding levels to be defined Joint accountability Weightages Scoring methodology Each goal MUST be achieved for KRA to be valid

Performance Linked to KRA : Performance Linked to KRA What KRAs to choose? Types of KRAs Organisation KRAs Individual KRAs Workgroup KRAs Typical KRAs Performance Recognition Scheme

KEY WORDS TO REMEMBER AND UNDERSTAND : KEY WORDS TO REMEMBER AND UNDERSTAND Objective Goal Activity Accountability Responsibility Line Function Staff Function Milestone Goal Workgroup Key Result Area Key Indicators Principal Thrust Premises Jt Accountability Weightage Basic Performance O/S Performance Range WACS

OBJECTIVE : OBJECTIVE Long range corporate aspiration and end result of a company towards which the resources and efforts of the businesses are directed Responsibility of the Chief Executive to clearly articulate and maintain

GOAL : GOAL A Short term (usually a year) significant and measurable target which will contribute to a result Key Result Area

ACTIVITY AND RESULT : ACTIVITY AND RESULT Activity can be anything an individual does Result is the fulfillment of a goal or objective which can be measured and has a positive short or long range effect on the earnings of the Company

ACCOUNTABILITY : ACCOUNTABILITY Is a means of encouraging commitment from an individual to achieve an expected accomplishment by making him answerable for the accomplishment and by giving him personal recognition

RESPONSIBILITY : RESPONSIBILITY A Delegated requirement to accomplish something. Can be assigned downwards from a Manager to his subordinates

LINE FUNCTION : LINE FUNCTION Any individual who get results directly or through other individuals reporting to him Eg. Manufacturing and selling

STAFF FUNCTION : STAFF FUNCTION An individual who gets results through someone who does not report to him Eg. Finance, personnel, administration, Quality assurance etc

MILESTONE GOALS : MILESTONE GOALS Are accomplishments that are absolutely necessary to finally reach the overall result sometime in the future, not simply an activity to be completed Results are long term oriented

WORKGROUP : WORKGROUP A functional team working for a common cause and result Eg. Production, commercial, accounts etc

KEY RESULT AREA : KEY RESULT AREA A short term significant accomplishment which contribute to the achievement of long range corporate objectives Should be Measurable Should focus on the achievement of results and not merely on list of activities to be performed

PRINCIPAL THRUST : PRINCIPAL THRUST The most important direction of the job for the coming year Check point for setting the KRAs The one area which of the highest value to the company and which optimizes future profitability Short and sweet

PREMISES : PREMISES Assumptions beyond the control or influence of the individual or his business unit Consistent with that of superior and not necessarily same Discussions to take place as the changes occur

JOINT ACCOUNTABILITY : JOINT ACCOUNTABILITY Most results are achieved through co-operative efforts of two or more people Each has a strong influence on the result and has a contribution to make towards its successful achievement Eg. Staff Managers and line managers ; planner and doer;

WEIGHTAGE TO KRAs : WEIGHTAGE TO KRAs Set weight in terms of % Total of all KRAs equals to 100% Represents the ‘value’ or degree of importance All KRA’s are important Forces better planning Gives better understanding

BASIC LEVEL : BASIC LEVEL Just minimum acceptable performance It is usually below what an average employee is expected to accomplish The Basic level of a manager’s KRA should be more than the summation of basic levels of all immediate subordinates Nothing great in achieving this

OUSTANDING LEVEL : OUSTANDING LEVEL Achievement of results with stretch The manager’s outstanding level will be lower than the summation of outstanding levels of subordinates Sense of Achievement and thrill

RANGE : RANGE 50% - 65%of the gap between basic and outstanding levels A range allows outstanding employee to get good credit even with some reverses Most people will go above basic and many will push towards towards outstanding, while majority will be up in range.

KEY INDICATORS : KEY INDICATORS Measurement points of performance Will always have two levels … Basic and Outstanding Cumulative or average measurement Periodic review on the status Corrective/Preventive actions in case of deviations

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