What is the difference between a KRA and a KPI?
A KRA (key result area) is an area of result that a person owns. It is written in words. A KPI (key performance indicator) is the number inside that area. It has a formula, a unit and a source. A target is the value of that number you aim for, by a date.
Many owners say "KRA" and "KPI" as if they mean the same thing. Then the sheet that reaches the employee has a list of duties on one side and a list of numbers on the other, and nobody can see how they connect. The employee does not know what he is really being judged on.
One simple way to remember it: the KRA tells the person where to deliver. The KPI tells everyone how much was delivered.
One example from start to finish
Take a purchase executive. Here is the same role, step by step.
| Step | Example |
|---|---|
| Responsibility (JD) | Gets material from approved vendors on the promised date |
| KRA (result area) | On-time delivery of material |
| KPI (the number) | PO lines received by the promised date ÷ PO lines due × 100 |
| Target | 95% by March (an example) |
| Source report | GRN date compared with the promised date |
Notice what happens at each step. The responsibility is a duty. The KRA turns the duty into a result. The KPI makes the result countable. The target gives it a finish line.
If you write only the KRA, the review becomes an argument. If you write only the KPI, nobody knows which part of the job it belongs to.
More examples from the factory
| Role | KRA (in words) | KPI (the number) |
|---|---|---|
| Stores executive | Correct stock and quick issue | Stock accuracy % on cycle count |
| Sales executive | Enquiries answered fast | Quotations sent within the agreed days ÷ enquiries received |
| Quality inspector | Defects caught before dispatch | Customer complaints per month |
| Dispatch executive | Orders leave on the committed date | Dispatched on committed date ÷ due for dispatch |
| Maintenance technician | Machines ready when needed | Breakdown hours per machine per month |
These are examples only. Each plant picks its own words and its own numbers. We have already shown the five KRAs of a production supervisor in a separate article, so we do not repeat them here.
Is "conduct the meeting" a KRA?
Yes, it can be. Many owners think a KRA must always be about production or sales. But a meeting that is held on time and runs well is a real result for a manager. The KPI is then: meetings held as per the plan ÷ meetings planned.
This matters for heads of department. Their KRAs should include some commercial results and some non-commercial ones, such as reports reviewed on time and discipline. If every manager gets only a productivity target, the habits that produce productivity are never measured.
Lagging and leading KPIs
A lagging KPI tells you the result after it has happened. Examples: OEE, customer rejection, attrition. By the time it turns red, the month is gone.
A leading KPI measures the habit that produces the result. Examples: first piece approved before the batch starts, quotations sent in three days, preventive maintenance done on the planned day. The person can act on it this week.
A good KRA sheet has both kinds. The lagging KPI tells the owner whether the result came. The leading KPI tells the person what to do tomorrow.
A KRA says what the person must deliver. A KPI says how we will know. Without the first, the number has no owner. Without the second, the result is an opinion.
How KRAs and KPIs are set, step by step
- Start from the yearly goals of the company. Every KRA must point up to one of them.
- Read the JD and the JR (job responsibilities). KRAs come from the role, not from a wish list.
- Pick four to six result areas. For each part of the JD ask: if this role did not exist, which result would be missing?
- Write each KRA as a result, not an activity. "Supervise the shift" is an activity. "Shift plan achieved, with rejection under control" is a result.
- Give each KRA one KPI with a formula, the unit, whether higher or lower is better, how often it is measured and which report gives the data.
- Give each KRA a weight. Total 100%.
- Check each target is Specific, Measurable, Achievable, Relevant and Time-bound.
- Agree and sign before the year starts, with the employee and the head of department. The person who carries the target should help set it.
Mistakes we see often
- Copying a KPI list from the internet. A KPI is good only if your plant has a report that gives its data.
- Targets before data. If the daily entries are wrong, the KPI will be wrong. Fix the input not the output.
- KRAs that are activities. A list of duties is a JD, not a KRA sheet.
- No review. KPIs need a fixed review date every month. Without it, they die in a quarter.
How to start in your plant
- Take one department, such as stores or purchase.
- Write the JD of one role on one page.
- Pick four to six KRAs and write one KPI for each.
- Run the daily reports for three months. Do not set targets yet. See the baseline first.
- Then agree targets with the person, and hold a monthly review.
Do it in stages. Year one: simple monthly reports. Year two: the reports are reviewed in a meeting. Year three: targets are set on those reports. Do not skip a stage.
Key points
- A KRA is the result area, written in words. A KPI is the number inside it.
- Every KPI needs a formula, a source report and a target date.
- Use both leading and lagging KPIs on the same sheet.
- Four to six KRAs per person, with weights adding to 100%.
- Collect data for three months before you fix targets.
