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  • Writer's pictureArvind Dang

Performance appraisal for F&A Professionals - using KRAs

Updated: May 27

A KPI for a function is a measurable value that demonstrates how effectively a function is meeting organizational objectives. KPI needs to be specific, measurable, realistic, and communicated to concerned key functional team members to accomplish.

This article highlights the following aspects:

AA).KPIs identified for F&A function-30 Nos

BB).KRA defined vis a vis KPI

CC). KRA’s driven appraisal system, along with 1st Illustration for GM-F&A-8 steps to follow

DD). KRA’s driven appraisal system, along with 2nd Illustration for AM-F&A-8 steps to follow

EE).Activities that can adversely impact the business

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AA). Fifteen KPIs have been identified for Direct responsibility areas no’s & another fifteen for indirect responsibility areas, totalling to 30 KPIs

Please click this link for a list of these 30 KPIs mentioned in my earlier article on the website, and hence, KPIs are not being repeated.

BB).KRA (Key result areas)

a) While KPIs are targeted at the overall functional level, KRAs are key result areas at individual levels.

b)Based on KPI, KRA can be identified and articulated appropriately

c)Based on KPI, budgeting can be done at the Business unit and at divisional -function levels for the planning of monthly/quarterly performance targets such as the following for F&A team members:

i)Key milestones to be accomplished

ii)Key timelines for milestones

iii)Revenue & earnings

iv)Expenses & costs

v)Essential resources, including assets, software, manpower, etc.

vi)Organisation structure to accomplish the above targets

d)KRA’s can be evolved directly from KPI, but these ought to be different for different levels depending on competence, experience, and role envisaged for the level

e)The template for KRA can be like that of KPI for ease of implementation (Template in the previous article)

f)KRAs need to be fixed for each position such that:

i)The number of KRA will be different & much lower than the 30 KPI mentioned above vis a vis each position/level. These can be, say, 6 or 8 or 10 or 12, or 16 for each hierarchical level /position, depending on the role to be performed by F&A professionals holding such levels.

ii)Each KRA can have a unique % weightage (like for KPI), but the total of weightages for all KRAs must add up to 100

g)Depending on the organization's size and complexity, the organization structure can have many layers, as below.

i)Higher level: Directors-, CEO, COO, CFO/Vice president, General managers, and so on as applicable

ii) Middle level: Senior manager, Manager, and so on as applicable

iii)Lower level: Assistant Manager, staff as applicable, or even blue-collar employees if engaged

The designation & number of levels can be different in different companies.

h)There can be many Sub-functions within the umbrella F&A, such as those listed below, and specialized skills are needed to manage these efficiently. An independent person in large organisations may head each.

i)Sales & marketing accounting

ii)International operations/accounting

iii)Purchase accounting

iv)Material accounting

v)Costing & expense accounting

vi) Corporate borrowing

vii) Corporate investments

viii)Treasury and cash management


x)General ledger accounting(P&L,BS)

xi)Budget, MIS/Dashboard

xii)Taxation (GST, Income tax, import duties, Incentives for SEZ/Export oriented units, state taxes, etc.)

xiii)Statutory compliances related (specifically for F&A )

xiv)The secretarial team deals with Board matters -quarterly & annual reports, Dividends, Corporate governance, auditing (Such a team could be a part of the Legal team as well), And so on

CC) KRA’s Driven appraisal system-along with 1st illustration for General Manager level finance & accounts person-8 steps to follow

a)In large professional organizations, annual increments/payouts usually comprise two components and need to be objective, as below.

·i)Annual Increments over existing pay – Linked to Individual performance based on KRA accomplishment.

·ii)Annual incentive payout/bonus – linked to overall business unit /Company performance based on KPI accomplishment.

b)KRA performance can be assessed on two aspects per the illustrations below.

i)Quantitative performance assessment based.

ii)Qualitative performance assessment based.

1st Illustration for appraisal of a GM Position based on the above two aspects

Different competencies will apply to different levels/positions. The performance assessment/reward is based on a combined assessment/score on both quantitative and qualitative aspects, with varying weightages at different levels/positions, as illustrated below.

Step 1) Determine Quantitative performance assessment based on a KRA target -vs. Score-based method as below

KRA chose parameter(out of 30 KPI)

Weightage out of 100





Actual *b

Derived /earned Score

Overall finance costs for the division


Rs xLac



A2/A1 x 25

Return on investments





B2/B1 x 20

Cash flow from financing activities


Rs x Lac



C2/C1 x 15

To choose out of 30 KPI


Rs x Lac



D2/D1 x 15

To choose out of 30 KPI


Rs x Lac



E2/E1 x 15

To choose out of 30 KPI


Rs x Lac



F2/F1 x 15

To choose out of 30 KPI


Rs x Lac



G2/G1 x 15

Total Score


85 (assumed)

*a Indicates targets to be fixed by the CFO or an immediate senior person of the appraisee (General manager in this case) at the beginning of each financial year for the review period with inputs from the CEO/MD if necessary.

*b indicates to be populated based on YTD-year-to-date actual data based on ERP/IT/internal software compiled by the system and recorded, where inputs from the appraisee could also be obtained to counter any partial recording of actuals.

Step 2)Determine Qualitative performance assessment score based on competence attributes vs. actual Say for a General manager in F&A



KRA Attributes /Skills

(To capture as relevant for this role)


Score *c Say


score *d Say

Basic functional

Sales accounting, fixed assets accounting,Material accounting, cash flow management, Accounting standards, & so on attributes



Corporate matters

Long-term borrowings, JV/M&A, Equity, Board matters, Forex & so on



IT/ERP Software:

Knowledge of ERP to generate reports, Specialized software for F&A modulesfor costing, controlling, audit trails& so on




The Company’s Act 1956,Income tax Act 1961, The Central Goods and Services tax Act 2017,SEBI Act 1992 , RBI regulations & so on




Team building, Change management, Ethics, Analytical skills and so on



Total Score



*c Indicates the target to be fixed by an immediate senior person of the appraisee at the beginning of each financial year for the review period with inputs from appropriate level HR professionals.

*d Indicates to be populated based on YTD assessment of the superior with inputs from the peers of the appraisee +peers of the appraiser and HR professional to avoid any biased for recording the actuals.

Step 3) Carrying out annual performance appraisal -Once quantitative and qualitative assessments have been done as per the above two tables, an annual appraisal is to be coordinated by the appropriate level HR person (for each appraisee level) by providing advance key inputs to the proposed team members as below

Step 4) Deciding team for carrying out appraisal-For a robust appraisal system for career planning & development of appraisees, a team comprising the following is suggested for carrying out an annual performance review (in this example of appraisee at GM level in -F&A


Appraising Team member


The immediate superior of GM -F&A (appraisee)

Customer function

1 level higher than GM in any one interfacing function like Purchase or sales, or manufacturing


1 level higher than GM

​Other function

1 level higher than GM(as invitee) proposed by


CFO +COO/CEO or MD in case of Promotion or firing of GM

Step 5) Determining performance ratings -Usually, the corporate HR team lays down policies of rating individuals as Promotable to the next higher level and for rating as excellent, very good, good, below average, and poor, etc., and accordingly determine annual increments or for employees exit as per the illustration /assumption below

  • Excellent =80-100

  • Very good=60-80

  • Average =40-60

  • Below average=20-40

  • Poor= below 20

Step 6) Arriving at the weighted average score for rating- For performance ratings -In the illustration of GM-F&A, the performance rating based on KRA assessments is shown along with assumptions in the table below.

Assessment on

Assumed Score earned

Assumed Weightage at General Manager level

Derived Weighted score

Quantitative parameters




Qualitative parameters




Total Weighted average score


The score for GM falls within range of 80-100, and hence rating is assessed as Excellent.

Step 7) Evolving career development plans -The appraising team also discusses aspects such as below vis a vis appraisee

· Promotion based on opportunity based on consistent performance over the last few appraisals,

· Transferability to other functions/business units,

· Training & development needs,

· Changes in roles & associated organisation structure etc.

· Effective dates

Step 8) Implementation of the decisions taken in the appraisal meeting as above

DD) KRA’s Driven appraisal system with 2nd illustration for junior management in F&A- Assistant manager (AM) level with “Accounts payable” role-8 steps to follow

Steps i) Determine Quantitative performance assessment based on a KRA target

Step ii) Determine Qualitative performance assessment score

Step iii) Carrying out annual performance appraisal

The above 3 steps will be similar for AM but with different /applicable skills/competencies, and two tables like for GM need to be prepared.

Step iv) Deciding the team for carrying out appraisal

The suggested appraising team is indicated below.


Appraising Team member


Manager -F&A (immediate superior of appraisee)

Customer function

Manager in Purchase function


Manager or senior manager

Other function

Not necessary


GM-F&A +GM-HR in case of Promotion or firing of AM-Appraisee

Step v) Determining performance ratings-similar to earlier for GM-F&A

Step vi) Arriving at the weighted average score-Users can populate tables in earlier paragraphs as per the hypothetical example below

Assessment on

Assumed Score earned

Assumed Weightage at General Manager level

Derived Weighted score

Quantitative parameter




Qualitative parameters




Total Weighted average score


The score for AM-F&A falls within the range of 60-80, and hence rating is assessed as very good.

Step vii )Evolving career development plans and Step viii)Implementation of the decisions ---similar to earlier for GM-F&A

CFO/F&A teams can use these concepts to develop performance appraisal methods in consultation with corporate HR and CEO/MD for each level

EE) Activities that can adversely impact the business

1. Providing incorrect inputs to senior management -CFO/CEO/MD with malice intent of assigning easy targets/goals for KRA parameters

2. The target setting of the following is not objective at different levels.

3. Quantitative: No of KRA parameters and their appropriateness

4. Qualitative: Biased selection of applicable competencies and their target score

5. KRA parameters are neither -comprehensive nor aligned with KPI and may contain transaction-related daily routine activities:

6. Percent weightages assigned to each KRA or competencies are biased with ulterior objectives of influencing outcome vis-à-vis performance review perspective.

7. Targets set are biased (too stretched or loose) to reprimand or favour specific team levels /employees, leading to demotivation/dissatisfaction.

8. The actual measurement is captured inaccurately or manipulated by the immediate appraiser with malicious intent.

9. Through the back end of the software, the appraiser makes circular changes in the KRA Targets or actuals during the performance review period with ulterior motives and turns off the audit trail to prevent detection.

10. Not ensuring restricted access rights to KRA values (both targets & actuals)in the appraisal workflow software in HR, thus enabling persons to make unauthorised changes in targets vis a vis approved KRA.

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