8/8/2019 Linking KRA to Reward Systems

1/22

www.CHRMGlobal.com

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

8/8/2019 Linking KRA to Reward Systems

2/22

www.CHRMGlobal.com

MANAGEMENT BY RESULTS

Widely used system to plan, set, measureand 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 bevalid

8/8/2019 Linking KRA to Reward Systems

3/22

www.CHRMGlobal.com

Performance Linked to KRA

What KRAsto choose?

Typesof KRAs

Organisation KRAs

Individual KRAs

Workgroup KRAs

Typical KRAs

Performance Recognition Scheme

8/8/2019 Linking KRA to Reward Systems

4/22

www.CHRMGlobal.com

KEY WORDS TO REMEMBER

AND UNDERSTAND Objective

Goal

Activity Accountability

Responsibility

Line Function

Staff Function

Milestone Goal

Workgroup

Key ResultArea

Key Indicators

Principal Thrust

Premises

JtAccountability

Weightage

Basic Performance

O/S Performance

Range

WACS

8/8/2019 Linking KRA to Reward Systems

5/22

www.CHRMGlobal.com

OBJECTIVE

Long range corporateaspirationand

end resultofa company towards

whichthe resourcesandeffortsof

the businessesaredirected

Responsibility oftheChief Executive

to clearly articulateand maintain

8/8/2019 Linking KRA to Reward Systems

6/22

www.CHRMGlobal.com

GOAL

A Shortterm (usually a year)

significantand measurabletarget

whichwill contributetoa result

Key ResultArea

8/8/2019 Linking KRA to Reward Systems

7/22

www.CHRMGlobal.com

ACTIVITY

AND RESU

LT

Activity can beanything an

individualdoes

Resultisthefulfillmentofa goalor

objectivewhich can be measured

andhasa positiveshortorlong

rangeeffectontheearningsoftheCompany

8/8/2019 Linking KRA to Reward Systems

8/22

www.CHRMGlobal.com

ACCOU

NT

ABI

LITY

Isa meansofencouraging commitment

from anindividualtoachievean

expectedaccomplishment by making

him answerablefortheaccomplishment

and by giving him personal recognition

8/8/2019 Linking KRA to Reward Systems

9/22

www.CHRMGlobal.com

RES

PO

NSIBI

LITY

A Delegated requirementto

accomplishsomething.

Can beassigneddownwardsfrom a

Managertohissubordinates

8/8/2019 Linking KRA to Reward Systems

10/22

www.CHRMGlobal.com

LINE

FU

NCTIO

N Any individualwho get results

directly orthroughotherindividuals

reporting tohim

Eg. Manufacturing andselling

8/8/2019 Linking KRA to Reward Systems

11/22

www.CHRMGlobal.com

STAFF F

UNCTIO

N Anindividualwho gets results

throughsomeonewhodoesnot

reporttohim

Eg. Finance, personnel,

administration, Quality assuranceetc

8/8/2019 Linking KRA to Reward Systems

12/22

www.CHRMGlobal.com

MILESTO

NE

GO

ALS

Areaccomplishmentsthatare

absolutely necessary tofinally reach

theoverall resultsometimeinthefuture,notsimply anactivity to be

completed

Resultsarelong term oriented

8/8/2019 Linking KRA to Reward Systems

13/22

www.CHRMGlobal.com

WORKG

ROU

P Afunctionalteam working fora

common causeand result

Eg. Production, commercial,

accountsetc

8/8/2019 Linking KRA to Reward Systems

14/22

www.CHRMGlobal.com

KEY

RESU

LT

ARE

A Ashortterm significant

accomplishmentwhich contributeto

theachievementoflong rangecorporateobjectives

Should beMeasurable

Shouldfocusontheachievementofresultsandnot merely onlistof

activitiesto be performed

8/8/2019 Linking KRA to Reward Systems

15/22

www.CHRMGlobal.com

PRINCI

PALTH

RUST

The mostimportantdirectionofthe

job forthe coming year

Check pointforsetting the KRAs

Theoneareawhichofthehighest

valuetothe company andwhich

optimizesfuture profitability

Shortandsweet

8/8/2019 Linking KRA to Reward Systems

16/22

www.CHRMGlobal.com

PREMISES

Assumptions beyondthe controlor

influenceoftheindividualorhis

businessunit

Consistentwiththatofsuperiorand

notnecessarily same

Discussionstotake placeasthechangesoccur

8/8/2019 Linking KRA to Reward Systems

17/22

www.CHRMGlobal.com

JOINT

ACCOU

NT

ABI

LITY

Most resultsareachievedthrough

co-operativeeffortsoftwoor more

peo

ple

Eachhasastrong influenceonthe

resultandhasa contributionto make

towardsitssuccessfulachievement

Eg. StaffManagersandline

managers ; planneranddoer;

8/8/2019 Linking KRA to Reward Systems

18/22

www.CHRMGlobal.com

WEIGHTAGE

TO

KRAs Setweightintermsof %

Totalofall KRAsequalsto 100%

Representsthe valueordegreeof

importance

All KRAsareimportant

Forces better planning

Gives betterunderstanding

8/8/2019 Linking KRA to Reward Systems

19/22

www.CHRMGlobal.com

BASIC

LEVE

L Just minimum acceptable performance

It is usually below what an average

employee is expected to accomplish

The Basic level of a managers KRA

should be more than the summation of

basic levels of all immediatesubordinates

Nothing great in achieving this

8/8/2019 Linking KRA to Reward Systems

20/22

www.CHRMGlobal.com

OUSTAND

ING

LEVE

L Achievementof resultswithstretch

The managersoutstanding levelwill

belowerthanthesummationof

outstanding levelsofsubordinates

SenseofAchievementandthrill

8/8/2019 Linking KRA to Reward Systems

21/22

www.CHRMGlobal.com

RANGE

50% - 65%ofthe gap between basic

andoutstanding levels

A ran

geallow

sout

standin

gemployeeto get good crediteven

withsome reverses

Most peoplewill goabove basic and

many will pushtowardstowards

outstanding,while majority will beup

in range.

8/8/2019 Linking KRA to Reward Systems

22/22

www.CHRMGlobal.com

KEY INDICATORS

Measurement pointsof performance

Willalwayshavetwolevels Basic

and Outstanding

Cumulativeoraverage measurement

Periodic reviewonthestatus

Corrective/Preventiveactionsin case

ofdeviations