Performance Management Systems based on KRA & KPI
Managing the performance of an organization or individual is always a challenge to all CEOs and leaders. This involves not only the understanding on Performance Management, but acting on performance issues at each level of the organization, from individuals, departments, teams and business units, right through to the organization itself.
Performance management is about managing people and the way people within an organization operate and work together. Issues such as leadership, decision making, motivation, and innovation, involving others and risk taking are just as important to bring about improvement.
The problem of how organizations should assess their performance has been challenging management practitioners and consultants for many years. Financial measures have long been used to evaluate the performance of organizations. However, there was a growing realization that given the increased complexity of organizations and the markets in which they compete, owing to ICT age and globalization, it was no longer appropriate to use financial measures as the sole criteria for assessing success.
These shortcomings of traditional measurement systems have given rise to a revolution in the field of performance management. The concept of performance has been one of the most important and positive developments in the sphere of Human Resources Management in recent years. It has grown out of the realization that a more continuous and integrated approach is needed to manage and reward performance. It is now replacing the current practices of performance appraisals, membership based increment systems and of course the ACRs.
Performance management system is now being used as a strategic tool to achieve an organization’s long term goals in line with its vision. Managing performance within the organization means getting better results from the whole organization, or team and individuals within it, by understanding and managing performance within an agreed framework of KRAs (Key Result Areas) which come from planned goals, standards and competence requirements. These KRAs of the organization are then converted to KPIs (Key Performance Indicators) for individuals.
Key Performance Indicators (KPIs) provides the organization with the needed direction, motivation, as well as the means to measure the health of the organization. Good KPIs are specific, measurable, aligned to the organizational vision, and provide the impetus to shape strategies and plans. But HR Managers can only participate and become empowered within their own organizations by knowing how to use these systems effectively to achieve organizational objectives. The modern HR practitioners and members of the Top Management today are trying to learn the new concepts related to this new phenomenon and apply the new methods of KRA and KPI in the Performance Management Systems in their respective organizations.