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 whom, i.e., supervisors to line managers, line managers to managers, managers to departmental heads, and departmental head to the directors and so forth.
Therefore, the KRAs or KPIs of the Director get 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 create a sync 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 before putting your KRAs and KPIs in place. This process is called Goal Setting, which happens at the beginning of the year and is based on your budgets, targets, and other initiatives that you put in place according to your Balanced Scorecard.
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 them to your HR. Like this, all the KRAs and KPIs go to the custody of the HR right from the bottom-most person to the Top Management, including the Director. Normally, the Director is assessed by his CEO, etc.
Now, each category of the KRA is broken down into subparts for that particular department for all their activities, and you provide a particular weightage for the same to arrive at 100%. An example is 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 gist and a sample of where you need to focus on the four major factors of any business: Customer, Employee, Financial, and Departmental Initiatives, besides your direct reporting manager's assessment of you (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 achievements, which are normally done at the end of the year once you have all results in place, such as P&L Account, Customer Satisfaction Results, Productivity Results, and Employee Engagement Results, and so forth.
You may get the overall result, and the incentives can be derived accordingly based on the individual's achievements. Normally, there is also a mid-year review that happens in some organizations to assess how the performance is in the middle of the year so as to make course corrections if necessary. Deriving the results must be as per the documented final reports of the organization at the end of the year, normally signed off by the CEO or Top Management so that there is no bias, as the reporting manager has only 10% in providing his assessment of his reportee, which again would be based on certain soft skills or leadership qualities.
I trust this gives a simple guideline to derive your templates.