Process for designing a KRA/KPI template.
First of all you need to have your strategies for the financial year in place such as budgets, targets and achievements that you desire to accomplish your goals for the business success that year.
Secondly you need to derive the line of managers from the supervisors upward as to who is reporting to who ie., supervisors to line managers, line managers to manager, managers to departmental heads and departmental head to the directors so on and so forth.
Therefore the KRA's or KPI's of the to Director gets cascaded down the line for the goals that all need to achieve from the bottom. In other words the KRA or KPI of the Supervisor is that of the Line Manager and that of the Line Manager is the Managers and so on. This would have a sink that all of us work towards a common goal. That is if the bottom line does not perform the top line would stagger. Therefore all need to come to a common consensus prior to putting your KRA's and KPI's in place. This process is called Goal Setting which happens at the beginning of the year which would be based on your budgets, targets and other initiatives that you put in place based on your Balanced Score Card.
Next once you put this in place, you come to a common agreement and sign off the papers at the beginning of the year and present it to your HR. Like this all the KRA's and KPI's goes to the custody of the HR right from the bottom most person to the Top Management ie., including the Director. Normally the Director is assessed by his CEO etc.,
Now each category of the KRA is broken down into sub parts for that particular department for all their activities and you provide a particular weightage for the same so as to arrive at 100%. An example as follows:-
1. Driving Customer Satisfaction:- 30%
2. Achieving Financial Results:- 20%
3. Achieving Employee Satisfaction:-20%
4. Achieving Departmental Initiatives (Productivity):- 20%
5. Overall Assessment by the Reporting Manager:-10%
The above is only a jist and sample of where you need to focus on the four major factors of any business such as Customer, Employee, Financial and Departmental Initiatives besides your direct reporting managers assessment of you (as in the form of an appraisal).
Each initiative is now given a weightage score based on a template as follows:-
1. Supersedes above Targets-5
2. Above Target:- Marks-4
3. On Target:- Marks-3
4. Below Target:-Marks-2
5. Significantly below Target-1
Now put this on an excel sheet and give your scores based on the achivements which is normally done at the end of the year once you have all results in place such as P&L A/c., Customer Satisfaction Results, Productivity Results and Employee Engagement Results so on and so forth.
You may get the over all result and the incentives can be derived accordingly based on the individuals achievements. Normally there is also a mid year review which happens in some organization to assess as to how the performance is in the middle of the year so as to have course corrections if any. Deriving the results must be as per the documented final reports of the organization at the end of the year normally gets signed off by the CEO or Top Management so that there is no bias as the reporting manager has only 10% towards providing his assessment of his reportee which again would be based on certain soft skills or leadership qualities.
Trust this gives a simple guideline to derive your templates.