Difference Between KRA and KPI: Explained With Example

Sat May 03 2025

Do you have a business mind? Are you thinking of starting your company? If yes, are you aware of the terms KRA and KPI? Do not worry. We are here to let you know about these terms in detail. These are the terms necessary to make a business/company. Majorly we will discuss in this blog: What is KRA and KPI with examples? Difference between KRA and KPI

KRA Meaning

In business, KRA stands for Key Result Area or Key Responsibility Area. Every organization sets goals and objectives. Then assigned the tasks to the employees. After that, their performance is evaluated on the basis of a certain number of tasks completed by them. The KRAs of an employee are determined according to their job profile and department.

In short and simple words, KRA is a framework that outlines the tasks and responsibilities of a specific job profile. It provides an overview of the results that teams, individuals, and the company as a whole are expected to achieve. Furthermore, it provides direction to the employees and makes them understand their tasks.

KRA Example

Let’s have a look at the example of Key Responsibility Indicator.

Example: Creating sales and marketing strategies

The above example shows that a company focuses on creating good sales and marketing strategies to sell goods and services to its customers. It may include branding, campaigning, and marketing research of the company's goods and services.

KRA importance

Now you must be having a question ‘why is KRA important?’ Here you can have a look on why it is essential.

Pointers	Description
Assess Employee Performance	You can know whether employees are carrying their tasks and whether tasks are producing the intended outcomes.
Better Time Efficiency	It is good for better time efficiency. It enhances productivity of the employees as they concentrate on the main tasks that produce results.
Helps in Resource Management	It also helps in management of resources. For example: On the basis of the assigned roles and responsibilities to the employees it is easy to determine if more employees are required to use the resources, the kind of technology that staff members require, and possible training materials to get things started to achieve the intended outcomes.
Enhances Employee Engagement	KRAs give workers a clearer understanding of how their work benefits the company as a whole. Additionally, KRAs may be customized for individual employees, giving them a sense of control over how they can succeed inside the organization.

KPI Meaning

In business, KPI stands for Key Performance Indicator. Companies use KPI metrics to assess employee work and make recommendations for enhancements. When employees are hired in an organization, certain tasks are assigned to them. Their performance is assessed after a certain period of time. It helps the management to understand how their employees contribute in achieving the goals of the company. Then suggestions are given to them to enhance their performance, if required.

In other words, KPI refers to the quantifiable performance evaluation for a particular goal. It works on the acronym ‘SMART’ which means Specific, Measurable, Attainable, Realistic, and Time-bound.

KPI Example

Let’s have a look at the example of Key Performance Indicator.

Example: Increasing revenue 30% within the next one year.

In this example, the KPI is a specific objective inside the broader KRA of developing sales and marketing strategies. If the company is able to generate 30% revenue within the targeted duration, it is a good sign of the company’s success. It also shows the effectiveness of the sales marketing strategies created within the KRA.

KPI Importance

We have already discussed the meaning of KPI. Now let’s get the knowledge of its importance in business.

Pointers	Description
Team Alignment	Choosing and monitoring business KPI helps the team in making informed decisions and maintaining alignment with the goals of the organization.
Make changes	KPI helps in determining which tactics are effective and which require improvement. Accordingly, you can decide how to enhance team performance to maximize productivity.
Maintain employee performance	Using KPI as a performance meter helps to make sure that all employees meet a specific standard of performance.
Knowledge of Patterns	Through KPI, you can know that some methods/strategies are more effective than others, increase productivity of the employees, generate more revenue, etc.

Types Of KPI

We have already developed the idea of Key Performance Indicator. Now, let’s be ready to know the types of KPI. Basically there are two types of KPI, i.e., for organization and for employees. Here details of both is given below:

Types	Description
KPI for organization	It refers to the overall performance of the organization. Profit and loss, revenues, expenses, or sales volume are a few examples of organizational KPI that a company measures for its success.
KPI for Employees	It refers to the individual performance/team performance of the employees to know if they are able to perform their task productively.

Difference Between KRA and KPI

There are certain points on which KRA and KPI work. Some are similar, such as both the terms pay attention to performance, both are interdependent, both have assessment aspects, and both work on the principle of efficiency.

But, KRA (Key Responsibility Area) and KPI (Key Performance Indicator) are two different terms used in business. KRA outlines essential responsibilities/tasks. It focuses on what must be done. Whereas KPI is precise and quantifiable used to assess performance and accomplishments within KRAs.

Additionally, comparing KRA and KPI on a regular basis offers insightful information about performance gaps. Understanding the distinction between KRA and KPI is important for business owners, and HR managers.

Pointers	KRA	KPI
Definition	It is a strategic component that outlines the main responsibilities and areas of concentration for a team or individual inside an organization.	KPI is a metric used to evaluate the performance and accomplishments within KRA.
Scope	It describes the general duties and responsibilities to reach a specific good, service, or unit.	It helps in tracking an individual’s success.
Nature	It focuses on the primary duties and explains what must be completed.	It evaluates the degree to which goals are met.
Procedure	It requires having a specific goal in mind and every job role is essential to accomplish the vision and mission of the company.	KPI monitors an employee’s progress toward a predetermined KRA. It takes precedence when establishing a company's objectives.
Measurability	KRA is subjective and qualitative. It identifies the areas that contribute to the high achievement of the company..	KPI are easily measurable and quantitative. It determines how well a firm, service, or product is performing in the marketplace.
Example	'Developing Marketing Strategies' could be a KRA in marketing.	For marketing, 'Increasing Sales Revenue by 20%' could be a KPI.
Structure	A marketing manager can use a number of KPI to gauge the success of a campaign if they have a KRA.	A single KPI may not always be sufficient to convey the whole picture. A website may receive a lot of traffic but very few conversions. For Example: This indicates that there is a problem with the conversion rate KPI. The marketing manager may therefore take steps to guarantee a higher conversion.

Conclusion

In the end we can conclude that knowing the KRA and KPI examples, KRA KPI format and difference between KRA and KPI is important for a businessman. It helps in setting goals, and measuring performance effectively. In other words, understanding these two concepts provide a clear roadmap for success of a business. Furthermore, it increases the productivity of the employees. Because on the basis of KRA and KPI, problems may be identified that lead to low productivity, least engagement of the employees. Steps may be taken accordingly to improve the performance.

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