KRA vs KPI vs KPA – What are the differences
[KRA vs KPI vs KPA, Differences, Meaning, Not PDF, KRA, KPI, KPA full form]
Every business has some objectives. These objectives must be achieved within the given time frame so that the business can reach its mission. These objectives are evaluated against dedicated metrics. In this article I am going to explain the difference between KPI, KRA and KPA in detail.
KRA vs KPI vs KPA
KRA shows us from where we should pick the results; KPI shows us the results based on the data we picked from KRA and KPA is sometimes used as a synonym of KRA and sometimes not. If not it tells us the combined practices to reach the goal.
The following table provides a quick summary of the three key terms;
|It indicates whether the business is reaching the expected outcome or not.||KRA pinpoints the areas from where we should collect the data.||KPA has two meanings. If KPA is Key Performance Areas, it is just as same as Key Result Areas. But if it is Key Process Areas, it is a different thing.|
|KPI has more than one indicators||KRA helps us to define the necessary indicators for KPI.||Key Process Area helps us to decide how we achieve the positive KPI|
|KPI is single layered which means the process of KPI ends when KPI is shown.||KRA is also single Layered which means the process of KRA ends when the KRAs are finalized||KPA is multi-layered which means KPA has multiple levels. Once one level is matured the next level will be in effect.|
|KPI is used by every entities||KRAs are used by only the responsible persons who summarize the data and shows KPI||KRA is used widely by software engineers.|
What is KRA?
KRAs are the areas the results of which express the success or failure of a department within an organization.
For example: X is a company. It has many departments like manufacturing, IT, sales and marketing departments. To analyze the success of the sales department, we have to focus on the amount of sales and the growth of sales. These are the areas which show whether the sales department is failing or succeeding.
Let’s look at another example: Y is a Digital Marketing agency. It mainly does facebook paid promotion campaigns. When it comes to the campaign, the KRA depends on the campaign objective. If the objective is branding or awareness, the number of reach will be the KRA. If the objective is engagement, the number of pages like, post share and comment will be the KRA. If the objective is conversion, the number of sales and clicking on the link will be KRA.
Importance of KRA:
When we want to find out whether the company is successful or not, we need to focus on multiple Key Result Areas. For the Sales Department we have to find out sales growth rate, and sales amount. We don’t look at the profit margin to find out the success of the sales department. This is why it is extremely important to set the right KRA for a department. If we don’t set the KRA for a department it will be impossible for us to judge whether the department is doing good or not.
Limitations of KRA:
KRAs only let us know the area where we should pick the results from. It only shows the area of required data. But they don’t analyze data. We need KPI for doing that.
What is KPA:
KPA refers to both Key Performance Area and Key Process Area. Key Performance Area is just another name of Key Result Area. On the other hand, the Key Process Area is a set of practices in an area. These practices are implemented collectively to reach a set of goals in that area.
What is KPI:
A business organization or company uses some metrics to analyse whether it has achieved its expected goals. These metrics are called Key Performance Indicators (KPIs). KPI is probably one of the most overused and little understood concepts in business. However, there are no one-size-fits-all type KPIs. It varies from business to business, organization to organization, industry to industry.
Examples of KPI:
X is a Website. Adam is the owner of the website. He connected google analytics and search console with his website. In the search console, there are 4 major pieces of data. The 1st one is Click, the 2nd one is Impression, the 3rd one is Conversion and the 4rth is Position. These are the 4 very basic SEO performance indicators of the website.
X is a Company. To know whether the business is profitable or not we must see the Asset-Liability Ratio, Profit-Asset Ratio, Inventory, Cash, Profit Margin, Cost of Good Sold. These are the very basic indicators which show whether the business is profitable or not.
Importance of KPI:
We can’t find out the performance of a business without KPIs. It is the indicator which tells us what the real performance of a business process is. After analyzing the KPIs, if we find any mistake or any problem, we need to perform trial and balance.
KPI doesn’t consider uncertainty and global scale scenarios. For example: Covid-19 devastated economy, this means negative sales growth. But the KPI will show that the business is not doing well. But some companies are doing very well considering the global scale crisis. But the KPI will tell us that the business is in a very bad shape.
In a nutshell, the purpose of this article is to underline the basic differences between the concept of KRA, KPI and KPA. KRA, KPI and KPA are widely used terms. In Every business, people use them, even often they are not aware that they are using them. Though the terms hold different meaning but are often used interchangeably with same applicability, which is a wrong approach. For proper documentation and assessment, we need to define them clearly and know when we use them, why we use them, and when they are useless.