Key result areas or KRA and Performance Appraisal – Process, Problems and Examples

Key Result Areas are those aspects of a job that are critical to achieving success in the overall job objective. They define the end result or outcome expected to be delivered. KRAs state what a job is expected to achieve.

Benefits of KRAs

  1. Clarify employee roles and state the outcome of the job
  2. Align employee roles to the organization’s plan
  3. Help focus on the result of the activity, not the activity itself
  4. Communicate to each employee the purpose of his role
  5. Set end goals and objectives for each employee
  6. Help employees prioritize activities and improve time-work management.

Performance Appraisal Definition

Performance appraisal is the technique of assessing, as impartially as possible, the attributes, strengths, weaknesses, capacity, and attitude of an individual employee in relation to his/her job.

Performance appraisal is the process of evaluating the performance of an employee in the organization.

Uses of Performance Appraisal

  1. Training personnel on employee weaknesses
  2. Facilitating wage and salary administration such as raise, bonus, etc.
  3. Assisting employee placement decisions
  4. Promoting efficient employees
  5. Terminating inefficient employees
  6. Fostering job satisfaction
  7. Validating selection procedures
  8. Obtaining employee feedback

Process Of Performance Appraisal

The performance appraisal process involves 6 steps:

1. Establishing performance standards

Performance criteria for employees need to be established using job analysis. The criteria should be clear and objective in nature.

2. Communicating the standards

Performance standards should be communicated to the employees and they should be modified based on employee feedback. Effective communication helps to avoid misunderstandings and confusion.

3. Performance measurement

This step involves the actual performance of the employee.

Frequently used techniques to measure actual performance are personal observation, oral reports, written reports etc.

4. Comparing performance with actual standards

The actual performance of the employee is compared with the set standards to determine the deviations.

Positive deviations (employee’s performance exceeds the set standards) and negative deviations (employee’s performance is below the set standards) are determined.

5. Appraisal discussions

The appraisal results and deviations observed are communicated to the employees. The employee’s strengths and weaknesses are discussed to improve future performance.

6. Taking corrective measures

Corrective measures are taken in consultation with the employees to improve their performance. Based on these measures, the steps required to improve performance are identified and initiated.

Problems in Performance Appraisal

  1. Employee resistance in the case of unfavorable appraisal
  2. Lack of time to conduct proper appraisal
  3. Lack of rewards for appraisers
  4. Lack of appraisal training of managers
  5. Poorly drafted and vague appraisal forms
  6. Avoidance of negative remarks to prevent employee resistance
  7. Appraisal politics
  8. Poor perception of the manager owing to low employee ratings

Example 1 – Snapdeal

  • Snapdeal replaced its annual employee appraisals with trimester reviews.
  • The new system is based on employee feedback. It is aimed at frequent engagement with staff and retention of high-potential employees.
  • At the end of every trimester, there are monetary & non-monetary rewards for employees based on the assessment, while the main salary hikes continue to be at the end of the fiscal year.
  • New performance metrics articulated by Snapdeal include innovation, being transparent, agility, regular review and feedback, and employee development and upskilling.

Example 2 – IBM

  • IBM did away with their previous yearly appraisal assessment methodology and adopted the new five-point scale Checkpoint Appraisal system in which employees will be subjected to four-yearly reviews.
  • The system includes checkpoints, on the basis of which employees’ milestones are discussed and they are given more immediate feedback.
  • This new appraisal system seeks to maximize output and productivity from each employee and ensure that employees keep meeting their targets through the course of the year.
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Article by:

Runal Mehta

Runal brings in more than a decade’s worth of experience in the field of consulting and education. He loves writing research oriented articles at Digiaide.