Performance Management – Goals, Objectives, KRAs, KPIs – What’s the Difference? - TalentAlign OD (2024)

More and more we see the confusion between Goals, Objectives, KRAs, and KPIs when it comes to defining and measuring the performance of people in the organisation. In many instances these terms are used interchangeably – but this is wrong. Of course there is a relationship between these terms, but the meaning of each is clear and should not be confused with other terms.

In the interests of improved “people performance management”, we attempt to clarify these differences and provide examples of how and when each is used.

Goals

A “goal” can be defined as “The purpose toward which an endeavor is directed“. In personal and organisational development terms, the goal is the main single aim of the entity.

Examples of Organisational Goals are:

  • “To be the leading supplier of IT applications in the Region” (however the region is defined – this is not important for the example.
  • “To be an Employer of Choice for IT employees”
  • “To maximise Return on Investment to our Shareholders”

Each of these “goals” describes a different way of looking at the organisation, and, most certainly, a different way of achieving and measuring success.

A goal is an “umbrella” statement that then needs to be broken down into how this will be achieved – in other words, the goal is broken down into strategy to achieve the goal.

An organisation may have more than one goal, but the number of goals should be limited to not more than 3.

Objectives

“Objectives” are the elements which, together, achieve the goal.

The difference between a Goal and an Objective is the element of “measurability”. Objectives are the overall strategy by which the organisation intends to achieve its goal.

Examples of Objectives based on the above Goals are:

  • “To increase Market Share in the Region by 5% by year end without compromising on service.” (Obviously in this example a 5% increase is needed to become the leader)
  • “Reduce Employee Turnover by 5% by year end while maintaining a high level of internal talent” (No point in reducing turnover just to keep the “dead wood” of the organisation.
  • “Increase Profit after Tax by 5% by year end while maintaining headcount and service quality”. (No point in increasing profit if it leads to a falloff in service – which means reduced profit in following years!)

Objectives break down the goal into “bite-size”, measurable units. Each “objective” defines the quantity, time limit, and parameters in which it is to be achieved.

A “Goal” can have one or more “Objectives”, but the number of Objectives should also be limited to ensure that they are both manageable and achievable.

Key Result Areas (KRA)

Goals and Objectives are set at organisational level, then “cascaded” throughout the organisation to department, and even to individual level if applicable.

Key Result Areas” or KRAs, also called “Key Performance Areas” (KPAs) refer to general areas of outcomes or outputs for which a role, or a combination of roles, is responsible. These are the areas within the organisation where an individual or group, is logically responsible / accountable for the results.

Typical CORE Key Results Areas for an IT department would be:

  • IT Strategy and Planning
  • Business Solutions (design, development and implementation)
  • Service Delivery – the management of the delivery of services to the organisation
  • Service Support – the support of users and service delivery environment

Within the CORE Key Result Areas, there may be specific Key Result Areas:

  • “Innovation” – if one of the objectives is to create new products and services
  • “Customer Focus” – if one of the objectives is to improve customer service.

KRAs always link back to Objectives and Goals. This is how we “plan” and “deliver” the achievement of goals.

Identifying KRAs helps the business area and the individuals in the business area to:

  • Clarify their roles
  • Align their roles to the organisation’s business or strategic plan
  • Focus on results rather than activities
  • Communicate their role’s purposes to others
  • Set individual and team goals and objectives
  • Prioritise activities, and improve time/work management
  • Make value-added decisions

A typical area targets three to five KRAs.

Key Performance Indicators

Sets of Key Performance Indicators, or KPIs, are established to measure performance in Key Results Areas (or Key Performance Areas) – and by definition, link back to the achievement of department / organisation objectives, and the achievement of the organisation’s goals.

Putting it All Together

Goals, objectives, KRAs, and KPIs come together under the banner of “Performance Management”.

Performance Management refers to the process of setting goals and regularly checking progress toward achieving those goals. It is a continuous process feedback loop whereby the outcomes are continually measured and compared with the target objectives. Any discrepancy or gap is then fed back into changing the inputs, so as to achieve the desired objectives. Any such management control system involves communicating the required change and promptly taking action to effect the desired change. This helps the system or organisation being managed to achieve the required goal or the strategic plan.

Performance Management has often been confused with “Performance appraisal”. “Performance Appraisal” forms only the final part of the performance management cycle. Performance Appraisal is a backwards looking process and a “Lagging Indicator” of performance, measuring what happened in the past. Performance Management is a forward looking process and a “Leading Indicator” of performance because it drives a system or organisation towards a desired future goal.

Fundamental for Performance Management is the system that defines the requirements and sets the objectives. In Human Performance terms, this is the Job Description and the Performance Agreement.

The Job Description

The Job Description describes the role that is to be accomplished by a group of individuals, e.g. Programmers. It defines the purpose of the role, the outcomes, the responsibility areas, the KPIs to be achieved, the tasks to be performed and the competencies required to accomplish the role.

The Job Description (a) should not be defined against an individual, but rather in terms of the “role” required by the organisation to achieve its goal, and (b) should not be changed too frequently otherwise it looses its integrity and its value to the individual.

So, although the KPIs are stated in the Job Description, they are stated in general terms and form the basis on which to set Individual Objectives for the performance period.

Making it Work

The Performance Management cycle starts, therefore, with the overall goals and objectives of the organisation. These are cascaded down the organisation and serve to determine the roles necessary to achieve the objectives and goals.

Once the roles have been defined (Job Description) and incumbents placed into roles, “Individual Objectives” are set in a Performance Agreement, based on the KPIs described in the Job Description, for the Performance Period. These are measured on a regular basis throughout the Performance Period and corrective action taken when actual performance falls behind planned performance.

In this cycle there are, therefore, documents that are “long-term”, i.e. Organisational Goals, Job Descriptions and Competency Profiles, and documents that are “short-term”, that is, they can change depending on random circumstances. For example, Organisational Objectives – may change if the economic environment changes and may have short-term horizons (this quarter, first half of the year, etc.), Individual Objectives (Performance Agreement) – may change if priorities change or if the actual performance does not meet required performance and may have short-term horizons (this week, this month, this quarter, etc.)

It stands to reason, therefore, that “long-term” documents should not contain “short-term” information, and “short-term” documents should not contain “long-term” information.

Conclusion

Goals, Objectives, KRAs, and KPIs are collectively essential elements of the Performance Management cycle. However, within the cycle, some have a “long-term” focus and some have a “short-term” focus. If Performance Management is to be implemented successfully, the correct documents and measures need to be used correctly, and in the correct place.

Performance Management – Goals, Objectives, KRAs, KPIs – What’s the Difference? - TalentAlign OD (2024)

FAQs

What is the difference between KRAs and KPIs? ›

Difference between KPI and KRA

While KPIs focus on the performance metrics of the entire organization and employees, KRAs focus on the key activities and responsibilities of the employees and teams.

What is the difference between KPIs and objectives? ›

KPI are quantifiable performance measurements used to define success factors and measure progress toward the achievement of business goals. Whereas, Objective is a concise statement describing the specific things an organization must do well in order to execute its strategy.

What comes first KRA and KPI? ›

KPIs track the progress of an employee/customer towards a set KRA. Therefore, when setting business goals, KRA comes first.

What does KRA and KPI mean? ›

KPI is the Key Performance Indicator, and KRA is the Key Results (Responsibility) Area that helps measure a business's success and progress.

What are 4 KPIs? ›

The four KPIs every manager needs to use.
...
Anyway, the four KPIs that always come out of these workshops are:
  • Customer Satisfaction,
  • Internal Process Quality,
  • Employee Satisfaction, and.
  • Financial Performance Index.
Sep 25, 2013

What are the 5 performance objectives? ›

When it comes to business performance objectives you're likely aware that efficiency and productivity are crucial. But how do you successfully achieve these? The key to having good all-round performance is five performance objectives: quality, speed, dependability, flexibility and cost.

What are the three most important KPIs? ›

The 3 Best KPIs For Measuring Your Marketing Success
  • Goal #1: Build brand awareness. To grow your sales, you need to build brand awareness or consumer recognition. ...
  • Goal #2: Generate new leads and acquire new customers. ...
  • Goal #3: Customer engagement. ...
  • Customizing Your Own Relevant KPIs.
Apr 13, 2021

What is the difference between goal and objective? ›

A goal is an outcome you want to achieve, while an objective is a specific and measurable action that can be reached in a short amount of time, often related to a goal.

What are the 7 Key Performance Indicators? ›

We've defined seven key critical performance indicators to help you go about measuring performance in your team.
  • Engagement. How happy and engaged is the employee? ...
  • Energy. ...
  • Influence. ...
  • Quality. ...
  • People skills. ...
  • Technical ability. ...
  • Results.
Jan 30, 2014

What are the top 5 KPIs you would track? ›

The Most Important KPIs to Track
  • Sales Growth. ...
  • Leads. ...
  • Return on Investment (ROI) ...
  • Lifetime Value of a Customer (LTV) ...
  • Customer Acquisition Cost (CAC) ...
  • Conversion Rate. ...
  • Open Rate. ...
  • Click-Through-Rate.
Oct 20, 2022

Is KPI and KRA are same for the team leader? ›

When it comes to measuring success, then KPI and KRA are two key measurable values that help business owners to gauge their success and progress. KRA is Key Result Area or also known as the Key Responsibility Area and KPI is Key Performance Indicators.

What are KRAs and OKRs? ›

Over the years, there have been many approaches to best monitor, measure and track organizational performance, from Peter Drucker's Management By Objectives to three of the most popular modern measures: Key Performance Indicators (KPIs) Objectives and Key Results (OKRs) Key Result Areas (KRAs)

What is a KPI for an employee? ›

To measure performance in an objective way, you can set key performance indicators (KPIs) for staff members, roles or departments. KPIs are standards or targets that you can track and use as a benchmark to measure success. They also provide employees with focus and clarity over what's expected of them.

What are 9 KPIs? ›

Here are 9 KPIs that you can measure to better identify the financial health of your business.
...
Firstly, here are some KPIs a company owner will want to use to measure the overall financial health of the business.
  • Net profit. ...
  • Net profit margin. ...
  • Free cash flow. ...
  • The cash conversion cycle. ...
  • Quick ratio. ...
  • Gross margin ratio.
Oct 26, 2020

What are 6 KPIs? ›

Here are six such key performance indicators that will ensure success in managing your project portfolio.
  • Customer satisfaction. Our service at the end of the day is to serve our customers and clients. ...
  • Productivity. ...
  • Cost efficiency. ...
  • Time. ...
  • Return on investment (ROI) ...
  • Alignment with goals of the organization.
Feb 11, 2019

What is KPI in performance appraisal? ›

KPI stands for key performance indicator, a quantifiable measure of performance over time for a specific objective. KPIs provide targets for teams to shoot for, milestones to gauge progress, and insights that help people across the organization make better decisions.

What is performance KRA? ›

KRAs or Key Performance areas refer to the general area of output within the organization, for which an individual employee or a group of employees are responsible. They are a list of goals that guide an employee to do their job and remain aligned with the company objectives.

How do you measure KRAs? ›

Design a KPI to measure that KRA. Calculate the KPI based on available department data. Benchmark the calculated KPI internally and externally.
...
Examples of appropriate KPIs linked to recruitment would be:
  1. Average time to fill a vacancy. The less the time, the better.
  2. Average cost per new hire. ...
  3. Qualified applicant ratio.
Jun 7, 2019

What are the 4 types of objectives? ›

In summary,
  • Cognitive objectives emphasize THINKING,
  • Affective objectives emphasize FEELING and.
  • Psychomotor objectives emphasize ACTING.
Sep 11, 2018

What are the 4 stages of performance management? ›

The four stages of performance management.
  • Planning. Goal planning and setting is an integral stage of your performance management cycle. ...
  • Monitoring. The monitoring stage is where goal progress is tracked. ...
  • Reviewing. A comprehensive evaluation of employees' final results occurs in the reviewing stage. ...
  • Rewarding.
Nov 4, 2021

What are the three types of performance metrics? ›

A performance metric has three components: 1) a quantity, 2) the thing being measured, and 3) a time period.

What are the 3 performance measurement? ›

Performance measurement: an exercise in storytelling

The framework should align with these three elements: What does your organization want to achieve, where do they want to make a difference, and what are the desired outcomes? What steps does your organization need to take to achieve its objectives?

What are the three A's of metrics? ›

Test your existing metrics against the three “A”s of good metrics; actionable, accessible and auditable.

Do goals or objectives come first? ›

Goals are big-picture ideas about where you want to go. Objectives are concrete steps that move you toward your goals. Goals precede objectives in a well-run organization, creating an outline and a vision to be filled in with specifics down the line.

Is objective or goal higher? ›

Goals are set to achieve the mission of an organization or individual, while objectives are set for the accomplishment of goals. Goals are thus higher in order than objectives.

Is objective bigger than goal? ›

objective? A goal is an achievable outcome that is generally broad and longer term while an objective is shorter term and defines measurable actions to achieve an overall goal. While different, the two terms are often used in unison when working on a project.

What is KRA for team leader? ›

According to me KRA is Key Responsibility ARea's and KPA is key performance Area's. All the best.

Which goal is set in KRAs? ›

KRAs: Key Result Area/KRAs outline an employee's roles and responsibilities within their organization. KRAs help individuals align their roles to the larger business plan and focus on results rather than activities. This allows employees to set priority goals and objectives, and make effective decisions.

How do you define KRA? ›

KRA stands for Key Responsibility Areas and directly follow from Job Description of an employee. KRAs document the specific areas in which an employee is expected to work. This post shares a simple approach to write goals for employees by using KRAs and KPIs and can be used by employees, managers and HR.

What is the most important KPI? ›

The 5 Most Important Financial KPIs That Drive Business Strategy
  • Sales Growth Rate. Performance Indicators.
  • Revenue Concentration. Performance Indicators.
  • Net Profit Margin. Performance Indicators.
  • Accounts Receivable Turnover. Performance Indicators.
  • Working Capital.

How do you set KPI for a team? ›

Here Are Three Steps for Setting KPIs for Your Team:
  1. Check their position description and adjust if necessary.
  2. If they don't have a position description, write them a good position description.
  3. Identify 5-7 key areas of responsibility.
  4. Sum up the main reason why you have that role in your business.
Jan 29, 2020

What are the 10 characteristics of good KPI? ›

For KPIs to be effective, they should have these characteristics:
  • Don't start by asking for a list of everyone's KPIs.
  • Start from the top.
  • Use leading indicators to drive results.
  • Avoid vanity KPIs.
  • Look beyond the numbers.
  • Let the data decide.
  • Always remember that your KPIs must facilitate decisions.
Aug 31, 2016

What are KPIs called now? ›

OKRs, which stands for Objectives and Key Results, provide that much needed direction and context. We like to call them “KPIs with soul”. The Objective describes what you want to accomplish and the Key Results describe how you know you're making progress.

What are the 5 smart criteria to be met by the KPIs? ›

SMART is an acronym that stands for Specific, Measurable, Assignable, Relevant, and Time-bound. Each of these criteria can help you set strategic goals and improve your business performance.

What is the best KPI dashboard? ›

We Reviewed 13 Best KPI Dashboard Software in 2023 and Here is Our Review [Free & Paid] Some of the best KPI dashboard software for KPI tracking are Datapad, Klipfolio, Geckoboard, Databox, Mixpanel, Arena Calibrate, Zoho Analytics, Mode, InetSoft, Tableau, Praxie, Smarten Augmented Analytics and DashThis.

Is a KPI the same as a target? ›

Targets are the quantifiable benchmarks you want to reach to meet your goals. Using the “improving sales” goal, we could build a simple target of “closing 10 deals per week.” KPIs (key performance indicators) are measurable values used to track progress toward a goal.

Is KPI same as performance appraisal? ›

Goal/KPI setting describes the interaction between managers and employees in jointly defining members work behaviours and outcomes. Performance appraisal involves collecting and disseminating performance data to improve work outcome.

How can you tell KPI from KRA? ›

To understand KPI vs KRA, let's first define them. KPI stands for key performance indicators, while KRA stands for key results area. The difference between KRA and KPI is in what they measure. KPIs measure how a system is functioning, while KRAs measure the results from certain actions within a system.

What are OKRs in performance management? ›

OKRs (Objectives and Key Results) is a performance management framework designed to encourage companies to set, communicate and monitor broad organizational goals and results. The framework is meant to be transparent and to align business, team and individual objectives in a hierarchal, measurable way.

What is the difference between a KPI and a KRI? ›

Relationship between KRIs and KPIs

While the KRI is used to indicate potential risks, KPI measure performance. While many organizations use these interchangeably, it is necessary to distinguish between the two. KPIs are typically designed to offer a high-level overview of organizational performance.

How do you write KPI and KRAs? ›

How to WRITE SMART Goals (KRAs)?
  1. Identify the appropriate Organization KPIs where the employee can contribute meaningfully. ...
  2. Document the responsibilities of the employee in relation to the work they are doing. ...
  3. The unique responsibilities found in step 2 above will help shortlist KRAs to be used for this employee.

What does KRAs mean? ›

Listen to pronunciation. (KAY-ras jeen) A gene that makes a protein that is involved in cell signaling pathways that control cell growth, cell maturation, and cell death. The natural, unchanged form of the gene is called wild-type KRAS.

How do you explain KRA in an interview? ›

Key Responsibility Area (KRA) defines the role of an employee. It describes the key roles and responsibilities associated with a job profile. It is well-defined and easy to measure. It helps an employee focus on their job roles and perform better.

What are the 3 performance indicators? ›

These types of indicators include employee engagement, satisfaction and turnover.

What are the 5 KPIs examples? ›

In general, five of the most commonly used KPIs include:
  • Revenue growth.
  • Revenue per client.
  • Profit margin.
  • Client retention rate.
  • Customer satisfaction.

What is KRAs in job description? ›

Description: Key result areas (KRAs) broadly define the job profile for the employee and enable them to have better clarity of their role. KRAs should be well-defined, quantifiable, and easy to measure. It also helps employees to align their role with that of the organisation.

How do you identify KRAS? ›

Like Sanger sequencing, pyrosequencing is commonly used to analyze KRAS mutation status and is usually performed on immobilized PCR-amplified amplicons derived from genomic DNA. Most studies have demonstrated that the detection limit of pyrosequencing is approximately 1.25% to 6% mutant DNA.

What is the difference between KRAS and RAS? ›

Most common mutations in the individual codons of RAS proteins. The mutations rates at each codon differ between the RAS proteins (2). While KRAS is commonly mutated at codon 12 with only few mutations occurring at codon 61, NRAS mutations are most frequently observed at codon 61.

How is KRAS determined? ›

Three of the commonly used methods for KRAS mutation detection in clinical samples, include nucleic acid sequencing (dideoxy and pyrosequencing), real-time PCR with melt–curve analysis and allele-specific PCR with various modes used to distinguish mutant from wild-type sequences.

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