What Are Key Result Areas?
The term Key Result Areas (KRAs) refers to a short list of overall goals that guide how an individual does their job, or general achievement and progress goals for an organization or one of its divisions.
KRAs help define the scope of a job or a department or an organization’s goals, and define the optimum outcomes and results of daily work. KRAs are the items that are critical for an organization or employee to be successful.
The Most Important Qualities of Key Result Areas
Key Result Areas will of course differ widely, depending on the role of an employee or the specific goals of a department or an organization. However, there are some primary attributes that are important in the development of any KRA.
KRAs must be specific, clear, and measurable. Dan Montgomery, Founder and Managing Director of Agile Strategies, a strategic planning firm, says that too often, organizations make lofty statements about their goals. “But they’re actually weasel words — they’re very slippery,” Montgomery says. “You can make something that sounds kind of meaningful, [but] you’re not really pinning down what success is actually going to look like.”
That’s why it’s important that KRAs are specific and measurable, he explains. He adds, “You need to have the discussion about how you’re going to measure them ahead of time — rather than arguing about it after the fact.”
It’s also essential that KRAs involve tasks and work that’s under the control of the person or entity they’re written for. They must also comprise an essential activity of the organization.
Why Is It Important to Identify Key Result Areas?
The Pareto principle says that 80 percent of the consequences or effects of something come from 20 percent of the causes. Applying that principle to how people (or departments and organizations) do their jobs, this means that 80 percent of the value of your work will come from 20 percent of your work.
Therefore, it’s critical that you understand and identify the most important 20 percent of your work. What is the relatively small portion of your work that brings the most value to your organization? Asking this question will help you develop Key Result Areas.
How to Prepare Key Result Areas for an Individual
Developing Key Results Areas doesn’t have to be complicated. That said, there are some basics you need to understand and key elements you must include. Here are some of those basics:
- Begin with a Conversation: If you’re writing the Key Results Areas for a department or organization, team members will want to convene to talk about and decide on them. If, as is often the case, the Key Result Areas are being written for an employee’s position within the organization, the employee’s supervisor will want to meet with the employee to consider and agree on appropriate Key Results Areas for the position.
Dave Crenshaw, Management Expert and Author of the time management bestseller The Myth of Multitasking, says that a conversation — or conversations — between supervisor and employee is crucial.Employees can give their supervisors insights over what they can control; supervisors can give employees insights over what’s most important to the organization’s goals. “That back and forth conversation is going to lead to a clear understanding of what indicators are for appropriate KRAs,” Crenshaw says.
Alternatively, Crenshaw adds, KRAs established by fiat from the supervisor may not seem reasonable or credible to the employee, and often fail. “People need to care about it, and they need to see the value of it,” Crenshaw explains. “We have to have a conversation about it and explain why we’re tracking it.”- Broadly Define the Job Profile: If the KRAs are being developed for a position, they should broadly define that job and give the employee clarity in their role and mission within the organization. The KRAs likely will include a list of functions and activities vital to success.
- Ensure the KRAs Fit the Position: KRAs can require certain objectives from an employee only when the employee has the ability within the organization’s structure to accomplish that objective.
- Create SMART KRAs: Many experts believe that KRAs (for an employee, department or organization) should be SMART (specific, measurable, aligned, relevant, and time-bound). Learn more about S.M.A.R.T. criteria at “The Essential Guide to Writing S.M.A.R.T. Goals.
”Here is an example of a well-written KRA: Launch a public relations campaign by December 2019 to improve your organization’s brand awareness.
Here is an example of a poor KRA: Build a brand for your organization. - Set a Limited and Realistic Number: KRAs should be the most important objectives. They seldom should number more than a handful — no more than seven. Crenshaw suggests writing three to five. That number applies to both KRAs for individuals and KRAs for departments or organizations.
“You need to allocate your resources to that which is the greatest value,” he says. “From an indicator standpoint, there’s a lot of different things to track. But only a handful are the most valuable indicators. It’s not helpful to track 10 or 15 different things because it’s just too much data.” - Tasks and Activities Grouped Together: Group tasks that are related to each other together.
- Put It in Writing: KRAs must be in writing, reviewed by all relevant parties, agreed upon, and signed by people involved — especially when the KRAs involve an employee’s role. The written format for KRAs can be relatively simple. For an employee’s KRA, It should include the employee’s name, the department and supervisor’s name, and a description of some of the most important duties of the employee’s role and how it serves the organization’s strategic objectives. Then, you should include details on several areas of expected performance. Those details should include metrics that can and will be measured to assess the employee’s performance in those areas.
KRA Individual Template
You can use this template to help create appropriate Key Result Areas for an individual within an organization. The template has entries for KRAs and key performance indicators associated with those KRAs. The template is free to download and you can customize it to fit your needs.
Questions to Ask Yourself to Understand and Determine Your Own Key Result Areas
Your supervisor may ask for your help in determining appropriate key result areas for your position. Here are some basic steps to help you get started:
- Set aside some time to evaluate how you are currently spending time in your job. Write down what you are doing daily or weekly. Also, write down what you think you should be doing that you aren’t doing.
- Ask yourself: Why was I hired? What am I supposed to accomplish? What are tasks that only I can do to produce positive results for my organization? What makes my position essential to the success of the company?
- Also, ask yourself: Are there tasks that I’m doing that I can delegate? Tasks that aren’t vital to me doing my job well, or get in the way of doing my job well?
- If you are in charge of a department, ask yourself: What should it be doing to show its value?
- Review your KRAs frequently, and, with your supervisor, make adjustments if needed.
Establishing Key Result Areas For Employees Who Report to You
If you are a supervisor, you will, of course, want to be involved in the development of KRAs for employees who report to you. Here are some questions you should ask or steps to take to help develop those KRAs:
- What is the purpose of every position that reports to you? Why is each staff member employed by your organization?
- For each employee, create a list of vital tasks they’ve been hired to do. Order the tasks based on their importance to your organization.
How to Determine Key Results Areas for a Department or Organization
The Key Result Areas for an organization should focus on the vital areas that fit best with an organization’s strategic goals and most directly drive its success. Determining those success factors will require some analysis and discussion among organization employees and leaders.
Bill Zeeb, Founding Partner of Infinitas, a business and leadership consulting firm based in Geneva, Switzerland, says he finds that large companies often have various overall objectives and KRAs among different departments and functional areas. And they are often not aligned across the organization.
“In my view, the white space between the functional silos is where there are big opportunities to get everyone in the company working in the same direction and on the same priorities,” he explains. “That happens by establishing a reasonable number of important KRAs.”
When you’ve decided on a handful of areas that you believe drive an organization’s success, you will then work to determine what can impact those areas positively to help your organization grow and succeed. That means that each of the broad KRA will include detailed metrics that you can track to determine progress in those areas. Those metrics are often called key performance indicators.
An organization’s Key Result Areas will vary depending on the organization. But, several broad areas are a part of KRAs for many organizations. They include the following:
- Profit and economic gain
- Customer satisfaction
- Employee happiness
- Product quality
- Organizational management
- Innovation
KRAs Department Template
You can use this template to help create appropriate Key Result Areas for a department or an organization. The template has entries for KRAs and KPIs associated with those KRAs. The template is free to download and you can customize it to fit your needs.
Hurdles in Properly Identifying, Understanding, and Using KRAs
While developing good KRAs can be straightforward, common hurdles often create problems:
- Lack of Clarity: In KRAs that involve an employee’s performance, neither the individual nor the supervisor is clear about the primary tasks and results that the employee should focus on — the tasks and results that will help drive an organization’s success.
- Distractions: People are too often distracted into doing daily tasks that seem important, but that are of limited value to the success of the organization.
- Top-Down Imposition of KRAs: Supervisors who impose specific KRAs on employees — without a discussion to get their input — create a system that often fails.
When employees are allowed to explain how their job works and given some voice in setting appropriate goals and objectives for their job, they’re “going to buy into it more,” says Agile Strategy’s Montgomery. If your inclination as a supervisor is to “be too commanding and controlling and dictatorial about it,” then you should dispense with any objectives and key results system. “Just tell people what to do,” Montgomery advises.
Problems Created When You Don’t Identify and Understand Key Result Areas
Significant problems often arise in your organization or with your employee’s performance when KRAs aren’t identified and monitored. Below are some common issues:
- The Distractions Mean Poor Results: As people are too easily distracted with unimportant tasks, organizations suffer. Those unimportant tasks add up and employees find themselves spending a large portion of their time performing tasks that aren’t helping the company.
- Motivation Erodes: Crenshaw says that motivations of employees can quickly erode if they don’t have specific goals that they and others can track to see progress. “If people can’t see that they’re making progress, they start disengaging from their work,” he says. “They stop caring about what they’re doing.”
- Performance Suffers: In part because of those motivation issues, employees’ performance will suffer. Crenshaw likens it to someone trying to lose weight but never stepping on a scale. If they never track or see progress, “they fall back to their old ways” and their performance declines.
- The Organization Drifts: Without identified areas to focus on to improve, any organization will drift and not progress.
“If you don’t make a distinction between what’s important to focus on and what’s urgent,” says Montgomery, “you stay really busy … emails come in and you react. You’re busy, but at the end of the day, you’re not really making any progress — say nothing about the end of the year.”
Infinitas’ Zeeb says many jobs are lost, and companies fail, because leaders and workers aren’t focused enough on identifying and monitoring performance in KRAs. “If everyone is not focused on the right targets and everyone’s not aligned, you have a situation where the first competitor who is aligned is going to eat your lunch.”
What Are Key Performance Areas?
Key Performance Areas (KPAs) describe broad areas for which a department or organization — or individual employee — may be responsible. Unlike KRAs, they aren’t necessarily tracked with results or results-focused metrics. But, they do describe broad areas of responsibility.
4 Important Key Performance Areas
KPAs can cover a wide range of areas, and can differ significantly by organization and company. However, some experts suggest there are four KPAs that almost any business should understand and pay attention to:
- Financials: These include basics like revenue, costs, net profits, and trends that affect all three.
- Customer Satisfaction: How often do your customers complain about your business or products? What is your product return rate? What are the results of your customer satisfaction surveys?
- Market Perception: How do customers and potential customers view your company or its products?
- Productivity: Is your business accomplishing its overall goals? Is it meeting the everyday requirements to keep the company moving forward and keep its customers satisfied?
Examples of Key Performance Areas
There are hundreds or thousands of examples of KPAs, depending on the organization, employee, or industry. Here are just a few examples:
- Maintaining good working conditions in a plant
- Using resources efficiently and effectively
- Improving business processes
- Improving safety and accident prevention
- Improving an organization’s service level agreements
- Improving an organization’s risk management and regulatory compliance
What Is a Key Performance Indicator?
A key performance indicator (KPI) is any metric that measures whether an organization is meeting certain objectives and goals that are set to help the organization succeed. KPIs might involve sales figures, product performance, return on certain organizational investments or a wide range of other areas. KPIs are often the measurements associated with the general goals outlined in a Key Result Area. You can learn more about KPIs by reading “All About KPI Dashboards,” “Everything You Need to Know About Executive Dashboards,” and “Essential Guide for Defining Business Dashboard Metrics.”
Differentiating Among Goals, Objectives, KRAs, and KPIs
Organizations may create and monitor a number of goals and measures to assess their performance or that of their employees. They are often considered part of performance management. It’s important to understand how various components are distinct from but related to each other.
Goals: These describe the overall aim of an organization or department or employee. Goals are more often set for an organization.
Objectives: There are measurable components that help drive the organization to its overall goal.
Key Result Areas: KRAs are defined objectives that are vital to the performance of an individual employee, a department, or an organization.
Key Performance Indicators: A KPI is a quantifiable metric that helps assess whether an organization, department or employee is meeting certain objectives. KPIs are often the “proof points” associated with Key Result Areas.
KRAs and KPIs for Sales Representatives
Examples of KRAs for sale representatives include the following:
- Increase number of sales from previous period.
- Increase sales revenue from previous period.
- Increase outreach to prospective customers.
Examples of KPIs for sales representatives include the following:
- Number of new sales contracts signed
- Dollar value for new sales contracts
- Growth or decline, in net sales from previous period
- Monthly outreach contacts
KRAs and KPIs for Sales Managers or Sales Executives
Examples of KRAs for sales managers or executives include the following:
- Increase sales from previous period.
- Increase profit margin from previous period (or year).
- Increase sales contacts per sales representative.
- Increase ratio of online sales to other sales.
Examples of KPIs for sales managers or executives include the following:
- Sales growth from previous month
- Average profit margin on sales
- Outreach contacts (calls or emails) per sales representative
- Sales per representative
- Sales by method of contact
KRAs and KPIs for Product Managers
Below are some examples of KRAs for product managers:
- Increase revenue over previous period from product.
- Attract new customers for the product.
- Ensure current customers continue to buy and use the product.
- Ensure current and new customers are satisfied with the product.
Examples of KPIs for product managers include the following:
- New revenue from product (current month compared to previous month)
- Customer acquisition cost
- Customer retention rate
- Customer satisfaction score
KRAs and KPIs for Project Managers
Examples of KRAs for project managers include the following:
- Complete project at or under budget.
- Complete project on time.
- Improve forecasting on costs for components of project.
Examples of KPIs for project managers include the following:
- Variance from planned project budget
- Percentage of project milestone deadlines missed
- Cost variance within components of project
KRAs and KPIs for Marketing Manager
Examples of KRAs for marketing managers include the following:
- Increase percentage of people who buy product after being attracted to the company through marketing.
- Increase ratio of customers to marketing budget.
- Decrease marketing costs per new customer acquired.
- Increase public awareness of the organization and its brand.
Examples of KPIs for marketing managers include the following:
- Conversion rates of those who inquire about product
- Marketing costs per customer
- Customer acquisition cost
- Brand awareness
- Return on marketing investment
KRAs and KPIs for Human Resources Managers
Examples of KRAs for human resources managers include the following:
- Improve job vacancy by advertising to attract more qualified candidates.
- Increase rate of acceptance for job offers made.
- Decrease HR costs per new hire.
- Decrease employee turnover.
Examples of KPIs for human resources managers include the following:
- Qualified applications received per advertised job vacancy
- Rate of acceptance of job offers
- Total HR costs per hire
- Employee turnover rate
KRAs and KPIs for Finance Managers
Examples of KRAs for finance managers include the following:
- Increase company revenue over previous period.
- Increase profitability of company over previous period.
- Increase cash flow.
- Increase operational efficiencies within the company.
Examples of KPIs for finance managers include the following:
- Net profit margin
- Growth in revenue for the current period compared to the previous period
- Debt to equity ratio for company
- Accounts receivables collection rates
- Return on equity rates
KRAs and KPIs for Executive Assistants
Examples of KRAs for executive assistants include the following:
- Ensure executive’s daily schedule operates well and that they use their time efficiently to advance the organization.
- Assist in executive’s correspondence with internal employees and external stakeholders.
- Ensure all administrative tasks on their behalf are completed efficiently.
Examples of KPIs for executive assistants include the following:
- Rate of errors in maintenance of daily schedule
- Rate of errors in correspondence that is the responsibility of the executive assistant
- Percentage of deadlines set by executive that are met
KRAs and KPIs for Teachers
Examples of KRAs for teachers include the following:
- Increase professional knowledge in quality teaching.
- Increasingly engage students with quality instruction.
- Increasingly help students learn.
Examples of KPIs for teachers include the following:
- Number of certificate programs completed to enhance instructional knowledge
- Daily attendance rate among students in teacher’s classes
- Overall standardized test scores for students in teacher’s classes
- Improvement in standardized test scores for students in teacher’s classes
KRAs and KPIs for Education/Schools
Examples of KRAs for high schools or colleges include the following:
- Improve quality of instruction.
- Improve efficiency for quality instruction.
- Engage students with quality instruction.
- Do better job of preparing students for college or a career.
Examples of KPIs for high schools or colleges include the following:
- Graduation rate
- Student daily attendance rate
- Student to faculty ratio
- Cost per student
KRAs and KPIs for Customer Service Representatives
Examples of KRAs for customer service representatives include the following:
- Increase satisfaction levels with dissatisfied customers.
- Efficiently and appropriately handle customers’ complaints.
Examples of KPIs for customer service representatives:
- Customer satisfaction rates after engaging with customers service representatives
- Percentage of complaints resolved within a set time
- Percentage of completed call center calls
- Average handling time for call center calls
- Average time to answer email or other correspondence
KRAs and KPIs for Procurement Managers
Examples of KRAs for procurement managers include the following:
- Ensure increased supplier compliance with what’s promised in their contracts.
- Ensure organization receives the correct product order on time.
- Increase efficiency in making orders.
Examples of KPIs for procurement managers include the following:
- Rate of compliance with your procurement contracts
- Defect rate with suppliers’ products
- Rate of purchase order discrepancies (wrong products or wrong delivery)
- Purchase order cycle time
KRAs and KPIs for Internal Auditors
Examples of KRAs for internal auditors include the following:
- Increase internal auditing of vital areas within the organization, and areas where there’s risk of non-compliance with regulations.
- Increase quality of audits.
- Increase efficiency of audits.
Examples of KPIs for internal auditors include the following:
- Total number of internal audits completed in a year (or defined time period)
- Total resources devoted to internal audits, compared to industry benchmarks
- Total costs per audit hour
- Total time between completion of field work for the audit to completion of both a draft and final audit report
- Number of recommendations made per audit report, and percentage of those recommendations implemented within a set time period
KRAs and KPIs for Operations Managers
Examples of KRAs for operations managers include the following:
- Improve customer satisfaction with company’s products.
- Improve delivery of high-value products to satisfied customers.
- Ensure continued improvement in using company’s assets to efficiently produce products.
Examples of KPIs for operations managers include the following:
- Percentage of time company delivers the product to the customer on schedule
- Percentage of time customer rejects or returns product due to product deficiencies (rather than order or delivery issues)
- Ratio of costs or goods sold to the total inventory used to produce the goods
- Return on net assets (ratio of net income produced by a facility to the value of fixed assets in that facility)
KRAs and KPIs for Business Analysts
Examples of KRAs for business analysts include the following:
- Improve quality of business analysis recommendations.
- Ensure and improve employee satisfaction in working with business analyst.
Examples of KPIs for business analysts include the following:
- Percent of business analyst projects that include prioritized requirements for organizational improvement
- Percent of business analyst recommendations that were fully implemented
- Satisfaction index among company personnel who worked on projects with business analyst
- Percent of business analyst recommendations that are testable for improved operations, and percent of those testable items that showed improvement
KRAs, KPAs and KPIs for Legal Departments
Examples of KRAs for legal department include the following:
- Improve timeliness of response for help.
- Use resources efficiently.
- Improve quality of legal work and internal satisfaction with services.
Examples of KPIs for legal department:
- The size of in-house legal team compared to industry averages
- Annual budget of in-house legal team compared to industry averages
- Time it takes to substantively respond with legal advice to internal request for service
- Company assessments (through regular surveys) of legal department as a whole (and of individual lawyers)
KRAs and KPIs for Payroll Manager
Examples of KRAs for payroll managers include the following:
- Increase efficiency in processing payroll.
- Decrease errors in processing payroll.
- Decrease time to fix payroll errors.
Examples of KPIs for payroll managers include the following:
- Annual costs to process the organization’s payroll
- Total hours it takes to run payroll for each payroll period
- Ratio of payments that need to be rerun to fix errors, compared to the total payroll numbers
- Length of time to fix payroll mistakes
KRAs and KPIs for Nurses
Examples of KRAs for nurses include the following:
- Improve care for all patients.
- Decrease hospital-acquired infections among patients.
- Improve patient satisfaction with care.
Examples of KPIs for nurses include the following:
- Number and percentage of patients who develop pressure ulcers (bed sores)
- Rates of infections developed within healthcare facility
- Number and percentage of patients who experience falls that cause injury within the healthcare facility
- Spot assessments from an internal team on whether nurse practiced appropriate hand hygiene
- Number of complaints from patients
Examples of Key Result Areas for Organization Leaders
Key Result Areas for leaders of an organization will often focus on strategic goals for the company as a whole. They are likely to include the following:
- Profitability: Details on the company’s revenue, costs and profitability, including within specific divisions.
- Customer Satisfaction: Details and metrics that measure customer satisfaction.
- Employee Engagement: Details about employee satisfaction, turnover rates, and other measures that reflect how your employees feel about their work and your organization.
What Good Key Results Areas Can Do for Your Organization
When developed and written well, Key Result Areas focus your organization and help drive its success. Broader organizational KRAs include the following:
- Solidify the structure of your organization and define goals, helping to unify the work of everyone in the organization.
- Communicate updated organizational strategies for all employees.
- Align employee roles with the organization’s overall strategic plan.
- Prioritize the organization’s activities, and improve the overall management of time and work.
- Improve communication among divisions of the organization.
Below are some examples of individual employee KRAs:
- Clarify roles and define an employee’s responsibilities.
- Help keep employees focused and accountable to their responsibilities. “Defining what the results need to look like actually helps people simplify how they think about what they’re supposed to be doing,” Agile Strategy’s Montgomery says.
- Ensure employees are spending time on areas that are helping the organization meet its overall goals.
- Help employees focus on results rather than their day-to-day activities.
How to Monitor Key Result Areas
The way to track and monitor Key Result Areas after you’ve developed them occurs by tracking the key performance indicators, or the metrics that are most directly associated with the KRAs.
Most of your Key Result Areas should be measurable with your organization’s internal data. That could be data representing everything from the proportion of sales from returning customers to customer complaints you’ve received to how long it takes your employees to fulfill an order or answer an incoming phone call.
You don’t want to monitor the KPIs so often that the monitoring creates inefficiencies. But, you want to monitor often enough that you can see trends and make corrections in a reasonable timeframe.
“I’m a big fan of weekly tracking,” Crenshaw shares. “That works especially well if we’re tracking just a handful of numbers. That gives the organization enough of a pulse as to what’s going on, but not so much to be overwhelming.”
Infinitas’ Zeeb says consistently doing follow-up by tracking your KRAs is vital. He says companies in some industries “are going to daily or even hourly tracking” of some KRAs. “The more frequent the reviews, the better — whether we’re talking about leadership or business performance,” he adds.
While much of your tracking will be of your own internal numbers, it can also be helpful to benchmark your organization against competing organizations or industry averages, when those numbers are available.
Important Steps to Take after You've Defined and Tracked Your Key Result Areas
Identifying and tracking KRAs won’t do any good without taking action based on your results. You must take steps to improve your operations, or your own individual performance, based on your results.
For organizational and department KRAs, learn and analyze what impacts each of the KRAs positively. Then, take steps to move those numbers in a direction that will help make your organization more efficient and successful.
For individual employees, after they and their bosses determine and assess their performance on their KRAs, they must do the following:
- Honestly look at areas where they are strong and weak in their performance.
- Decide and set goals on how they can improve on the weak areas.
- Decide which one or two skills, if they developed them and did them well, could have the most positive impact on their organization’s success and their own career.
The important thing is to learn from what the results show, Agile Strategy’s Mongtomery explains. It’s important to be “OK to fail — as long as you’re learning.”
What Are Objectives and Key Results, or OKRs?
The term Objectives and Key Results (OKR) is a management framework and strategy that establishes a clearly defined objective that will help the organization progress or improve operations. The organization then sets down key results — similar to KPIs — that are specific measures that can track whether the organization is making progress towards its objective.
Examples of OKRs
Examples of OKRs might include the following:
- Objective: Increase company profitability.
- Key Result: Increase recurring monthly revenue by 10 percent by the end of the year.
- Key Result: Increase the number of first time customers who become recurring customers by 20 percent.
- Key Result: Hold down cost increases by one percent below the rate of inflation.
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