PRM/U1 TOPIC 5 Effective Appraisal System and Criteria (KRA, KSA, KPI)
Effective Performance appraisal is the process of reviewing an individual’s performance and progress in a job and assessing his potential. It is a systematic method of obtaining, analyzing a recording information about a person doing a specific job, rather than assessing the job itself as in the case of job analysis.
Performance appraisal is the assessment of the real and relative worth of the employees in a systematic and subjective way. The competence of the employee should be measured with reference to the established standard of the task assigned.
Characteristics of Effective Performance Appraisal:
The characteristics of performance appraisal are given below:
- The system must be bias-free:
The evaluator must be objective and the methods of appraisal must be fair and equitable. The atmosphere must be that of confidence and trust.
- It must be relevant:
It should only measure behaviour that are relevant to the successful job performance and not any other personal traits.
- It should be acceptable to all:
The performance standards as well as the appraisal methods should be developed by joint participation and joint collaboration.
- It should be reliable; dependable; stable and consistent:
High reliability is essential for correct decision-making and validation studies. It should be sufficiently scientific, so that if an employee is evaluated by two different evaluators, then the result should be significantly the same.
- It must be able to objectively differentiate between a good employee and an ineffective employee:
Rating an employee average does not adequately indicate the degree of effectiveness. So the technique must be sufficiently sensitive to pick up the difference between an effective and an ineffective employee.
- It must be practical, sound, clear and unambiguous so that all parties concerned understand all its implications.
Key Result Areas (KRA)
Definition: Key result areas or KRAs refer to the general metrics or parameters which the organization has fixed for a specific role. The term outlines the scope of the job profile, and captures almost 80%-8% of a work role.
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 organization.
KRAs are broad categories or topics on which the employee has to concentrate during the year. For example, an employee who is working at a managerial level in a manufacturing company would have a different KRA than somebody who is in a technology firm.
A manager who is working in a manufacturing firm would have to focus on maintaining the budget of the department, safety of the employees, coordination with different departments, training, reporting as well as introducing new technologies to improve productivity.
The next step is to define objectives and standards for each KRA which should be easily quantifiable. The employee should have a clear understanding of his/her KRAs to perform his/her tasks efficiently.
Key result areas are those areas in which you have to take complete ownership. The first step is to list out daily activities which could be part of the KRAs. In some organization even a team meeting everyday is part of a manager’s KRA.
So, KRAs could be vary from organization to organization and from one work profile to another. There are no set rules to define KRAs, but broadly they sum up the job profile as well as the key impact areas on which the employee is expected to deliver.
KNOWLEDGE, SKILL, ABILITIES (KSA)
Managing employee performance is a key concern for every employer. The measure of success and method for harnessing employee performance to align with business needs will vary from employer to employer as well as being dependant on industry sector. Whilst employers will seek to tailor their performance management systems to their own operations employers in KSA need to be mindful of the provisions in the Ministry of Labour and Social Affairs’ Model Work Regulations regarding performance management. The Model Work Regulations are available for employers to adopt wholesale or to adopt with modifications provided any amendments receive prior approval from the Ministry of Labour and Social Affairs. Extensive modification of the standard model is unlikely to be approved for use by an employer. Broadly the Model Work regulations provide for the following.
Every employee should be assessed formally and in writing at least once a year; with the appraisal covering the following:
- The individual’s ability to perform work and their level of proficiency;
- The employee’s conduct, cooperation with colleagues, customers, and managers; and
- The individual’s punctuality.
Each employee should be given a performance marketing or ranking based on five performance gradings which are not specified but would include categories along the lines of high performance, upper intermediate, intermediate, lower intermediate, and poor.
Key Performance Indicator (KPI)
A Key Performance Indicator (KPI) is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use key performance indicators at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the enterprise, while low-level KPIs may focus on processes or employees in departments such as sales, marketing or a call center.
What makes a KPI effective?
Now that we know KPI stands for key performance indicator it is only as valuable as the action it inspires. Too often, organizations blindly adopt industry-recognized KPIs and then wonder why that KPI doesn’t reflect their own business and fails to affect any positive change. One of the most important, but often overlooked, aspects of KPIs is that they are a form of communication. As such, they abide by the same rules and best-practices as any other form of communication. Succinct, clear and relevant information is much more likely to be absorbed and acted upon. KPIs are an effective tool to help build better performing teams.
In terms of developing a strategy for formulating KPIs, your team should start with the basics and understand what your organizational objectives are, how you plan on achieving them, and who can act on this information. This should be an iterative process that involves feedback from analysts, department heads and managers. As this fact finding mission unfolds, you will gain a better understanding of which business processes need to be measured with a KPI dashboard and with whom that information should be shared.