Every business enterprise has a set of proposed objective, which must be attained within the given time frame to reach its mission. In order to determine whether the route chosen by the enterprise is correct or not, the objectives are evaluated against dedicated metrics, with the help of KPI. KPI stands for key performance indicator that denotes a quantifiable metric, for a defined objective. It exhibits the factors leading to the success of an organization.
As against, KRA or otherwise called as key result area can be described as the major areas, that requires exceptional performance, so as to survive and obtain a competitive position in the market. The article excerpt presented to you, explains the difference between KPI and KRA, in a detailed manner.
Content: KPI Vs KRA
Comparison Chart
| Basis for Comparison | KPI | KRA |
|---|---|---|
| Meaning | Key performance indicator (KPI) means a mechanism used to represent how well the company is able to reach the business goals. | Key result area (KRA), alludes to the sector of outcome within the business organization, for which the department or unit is responsible |
| What is it? | It is a metric. | It is a strategic factor. |
| Nature | Quantitative | Qualitative |
| Use | Evaluates the success towards goals at various levels. | Outlines the scope of the job or product. |
Definition of KPI
Key Performance Indicator, as the name signifies, is the financial and non-financial metric used by the firms to gauge and fortify the success, towards the goals of the organization. After the ascertainment of the organization’s mission, identification of stakeholders and determination of goals, the progress towards the goal is evaluated through key performance indicator.
The key performance indicator is used at different levels by an enterprise to track the progress of the firm in the realisation of targets. It plays the role of a compass that helps in understanding whether the company has chosen the right way to reach the final aim or not.
Different types of organization have different performance indicators, such as the KPI of a business entity can be income percent. Likewise, the pass out rates of the students is the key performance indicator of a school. Therefore, it can be anything like profit, cost, turnover, consumer satisfaction, customer base, customer attrition, employee turnover ratio, employee satisfaction and so forth.
Definition of KRA
Key Result Area can be understood as the fundamental areas of the outcome, for which a department is accountable. It is the strategic factor, implicit or explicit to the firm, from where favourable outcomes can be attained, to reach the final goal and take a step ahead towards the organization’s vision.
In human resource management, KRA implies the metrics set by the organization for a specific role. Therefore, it highlights the scope of the job profile. It helps the employees in understanding the role and responsibilities, in a better way. So, it needed to be clearly determined and quantified, so that the employee can line up their role with that of the aim of the firm.
Key Differences Between KPI and KRA
the points given below are substantial, so far as the difference between KPI and KRA is concerned:
- Key Result Area can be described as the essential areas of business that requires excellent performance to obtain the favourable result, to survive and grow in the industry. On the other hand, Key Performance Indicator, or otherwise called as KPI is a performance metric, used by the organization to ascertain how effectively the firm is performing.
- Key result area is a strategic business unit, wherein great efforts are needed to achieve success. As against, the key performance indicator is a metric that gauges the level to which business goals are achieved.
- KPI is a quantifiable measure, meaning that it gauges the performance of a product, service or the business unit in the market, in quantitative terms. On the contrary, KRA is qualitative in nature, in the sense that it determines the areas that can help in attaining high value for the organization.
- The key result area is used to find out the scope of a particular product or unit. In contrast, key performance indicator measures the success of the organization towards goals at various levels.
Conclusion
By and large, the business entities work continuously for the achievement its mission. However, it is difficult to ascertain that how far the business has worked towards the realisation of goals. Key Performance Indicator acts as a tool to determine the achievement of an objective, while KRAs are those areas that require a high level of performance to gain a competitive position in the market.
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Ya says
Good information.
Khalid Ali says
It’s easy way to understand
Henry Linn says
Thanks for sharing knowledge about KPI, KRA and the differences between them.
Lakshman Gandhi says
Great quality content!
varinder kumar says
Dear Ma’am..
thanks for sharing information of clear cut difference.. working in the area of insurance plz help me what will be more appropriate to take objective… to examine key result area or key performance indicator of insurance business..
i shall be very thankful to you
Mahesh says
Lucid explanation of the concept.
Good job