Linking KRA to Reward Systems
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Transcript of Linking KRA to Reward Systems
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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
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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
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Performance Linked to KRA
What KRAsto choose?
Typesof KRAs
Organisation KRAs
Individual KRAs
Workgroup KRAs
Typical KRAs
Performance Recognition Scheme
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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
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OBJECTIVE
Long range corporateaspirationand
end resultofa company towards
whichthe resourcesandeffortsof
the businessesaredirected
Responsibility oftheChief Executive
to clearly articulateand maintain
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GOAL
A Shortterm (usually a year)
significantand measurabletarget
whichwill contributetoa result
Key ResultArea
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ACTIVITY
AND RESU
LT
Activity can beanything an
individualdoes
Resultisthefulfillmentofa goalor
objectivewhich can be measured
andhasa positiveshortorlong
rangeeffectontheearningsoftheCompany
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ACCOU
NT
ABI
LITY
Isa meansofencouraging commitment
from anindividualtoachievean
expectedaccomplishment by making
him answerablefortheaccomplishment
and by giving him personal recognition
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RES
PO
NSIBI
LITY
A Delegated requirementto
accomplishsomething.
Can beassigneddownwardsfrom a
Managertohissubordinates
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LINE
FU
NCTIO
N Any individualwho get results
directly orthroughotherindividuals
reporting tohim
Eg. Manufacturing andselling
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STAFF F
UNCTIO
N Anindividualwho gets results
throughsomeonewhodoesnot
reporttohim
Eg. Finance, personnel,
administration, Quality assuranceetc
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MILESTO
NE
GO
ALS
Areaccomplishmentsthatare
absolutely necessary tofinally reach
theoverall resultsometimeinthefuture,notsimply anactivity to be
completed
Resultsarelong term oriented
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WORKG
ROU
P Afunctionalteam working fora
common causeand result
Eg. Production, commercial,
accountsetc
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KEY
RESU
LT
ARE
A Ashortterm significant
accomplishmentwhich contributeto
theachievementoflong rangecorporateobjectives
Should beMeasurable
Shouldfocusontheachievementofresultsandnot merely onlistof
activitiesto be performed
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PRINCI
PALTH
RUST
The mostimportantdirectionofthe
job forthe coming year
Check pointforsetting the KRAs
Theoneareawhichofthehighest
valuetothe company andwhich
optimizesfuture profitability
Shortandsweet
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PREMISES
Assumptions beyondthe controlor
influenceoftheindividualorhis
businessunit
Consistentwiththatofsuperiorand
notnecessarily same
Discussionstotake placeasthechangesoccur
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JOINT
ACCOU
NT
ABI
LITY
Most resultsareachievedthrough
co-operativeeffortsoftwoor more
peo
ple
Eachhasastrong influenceonthe
resultandhasa contributionto make
towardsitssuccessfulachievement
Eg. StaffManagersandline
managers ; planneranddoer;
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WEIGHTAGE
TO
KRAs Setweightintermsof %
Totalofall KRAsequalsto 100%
Representsthe valueordegreeof
importance
All KRAsareimportant
Forces better planning
Gives betterunderstanding
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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
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OUSTAND
ING
LEVE
L Achievementof resultswithstretch
The managersoutstanding levelwill
belowerthanthesummationof
outstanding levelsofsubordinates
SenseofAchievementandthrill
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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.
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KEY INDICATORS
Measurement pointsof performance
Willalwayshavetwolevels Basic
and Outstanding
Cumulativeoraverage measurement
Periodic reviewonthestatus
Corrective/Preventiveactionsin case
ofdeviations