KRA vs KPI: the simple difference
KRA (Key Result Area) is what a role is responsible for. KPI (Key Performance Indicator) is how you measure it.
| Role | KRA (what) | KPI (how it is measured) |
|---|---|---|
| Dispatch supervisor | On-time, error-free dispatch | % orders dispatched within 48 hours; dispatch errors per month |
| Accounts executive | Collections | % of dues collected by due date; receivables over 60 days |
Each role should have 3 to 5 KRAs. More than that and nobody knows what matters.
How to set KRAs and KPIs in 5 steps
- Start from business goals. If the goal is 20% growth with better margins, which roles drive sales, cost and delivery?
- Write 3 to 5 KRAs per role, each an outcome the person can genuinely influence.
- Attach 1 or 2 KPIs to each KRA, with a number, a target and a source of data.
- Weight them. Weights add to 100 so the most important outcome carries the most weight.
- Agree them with the employee and sign the sheet. Imposed targets get ignored.
KRA and KPI examples by role
Sales executive
| KRA | KPI | Weight |
|---|---|---|
| Revenue | Monthly sales vs target (₹) | 35% |
| Collections | % of own customers' dues collected on time | 25% |
| New accounts | New active customers per month | 20% |
| CRM discipline | % of calls and visits logged same day | 20% |
Production supervisor
| KRA | KPI | Weight |
|---|---|---|
| Output | Production achieved vs plan | 35% |
| Quality | Rejection % (by reason) | 30% |
| Machine uptime | Unplanned breakdown hours | 20% |
| Safety and discipline | Incidents; SOP audit score | 15% |
Store in-charge
| KRA | KPI | Weight |
|---|---|---|
| Stock accuracy | Physical vs book variance % | 40% |
| Material availability | Production stoppages due to stock-outs | 35% |
| Dead stock control | Value of items not moved in 180 days | 25% |
Accounts executive
| KRA | KPI | Weight |
|---|---|---|
| Timely books | Monthly accounts closed by the 7th | 30% |
| Receivables | Receivables over 60 days as % of total | 40% |
| Compliance | GST and TDS filed on time, zero penalties | 30% |
KRA format (template)
Keep one sheet per employee with these columns: KRA, KPI, weight, target, data source, monthly actual, score. Score each KPI as actual divided by target (capped at, say, 120%), multiply by weight, and add up for a total out of 100.
Do not link 100% of salary to KPIs on day one. Run the KRA sheets for three months without money attached, fix the targets that turn out unrealistic, then link increments and incentives to the scores.
How to review KRAs
- Weekly: 15 minutes with each manager on leading numbers.
- Monthly: score the sheet together; agree one improvement action.
- Annually: use the 12 monthly scores for increments, not memory.
Common mistakes
- KRAs that describe activities ("make calls") instead of results ("new active customers").
- KPIs with no data source, so every review becomes an argument.
- The same KRAs for every person in a department regardless of role.
- Reviewing only at appraisal time, when it is too late to improve.
Sales roles need incentive design as well; see how to structure sales incentives. To have TBS design KRAs, appraisal and HR systems for your team, see our HR consulting.
Want this built for your business?
TBS installs these systems inside MSMEs and stays until your team runs them without you. Start with a 45-minute strategy session with the founder, or take the 20-minute Business Depth Assessment to see where you stand.
Frequently asked questions
What is the difference between KRA and KPI?
A KRA is the result area a role is responsible for, such as collections. A KPI is the measurable indicator of that result, such as the percentage of dues collected by the due date.
How many KRAs should an employee have?
Three to five. Fewer keeps focus on what matters; more than five dilutes attention and makes reviews unmanageable.
Should salary increments be linked to KPIs?
Yes, after a 3-month trial period to calibrate targets. Then use the average of monthly KRA scores for increments and incentives instead of an annual impression.
How often should KRAs be reviewed?
Score them monthly with the employee, track leading numbers weekly, and revise targets once a year or when the role changes.
Munishh Latawa is the founder of The Business Studio, an execution-first MSME consulting firm in Ludhiana that builds sales, operations, HR and costing systems for manufacturers, traders and service businesses across North India. About TBS