Measuring Performance

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Table of Contents

Introduction
Process of Performance measurement
Importance and Role of Performance Measurement Approaches for Companies
Conclusion
References

Introduction

The purpose of this essay is to assess whether measuring an employee’s performance is an essential tool for managers within organizations. Most managers and human resource directors view performance management and measurement to be a time wasting activity given the belief that they have hired skilled and experienced workers to perform organizational activities.

These managers fail to understand the fact that recruitment, selection and development of employees are important activities that lay the foundation for performance management and measurement. Performance measurement is defined as the sampling of an employee’s current work performance after which the sampled information is measured against a desired result to determine whether the employee is achieving the set out objectives and goals of the company (Carlaw et al 2003).

Performance measurement is also the management of work outcomes to reduce any variations that might exist in the work performance process.

Performance management is seen to be an important activity for many organizations and managers as it allows them to determine whether the employees are achieving the goals, objectives and mission of the organization. Performance measurement provides a sense of direction to employees by showing them what progress they have made in terms of personal goals as well as organizational goals.

It provides employees with a gauge of how they have been performing their duties and what they need to do to make their performance better. Performance measurement ensures that employees are motivated to perform their work because of the reward programs that exist for employees who have performed their duties in the appropriate way (Carlaw et al 2003).

Performance measurement is the process where an organization sets out the measurements that need to be analysed against the desired results.

The main reasons for conducting performance measurement include evaluating how well a company is performing, controlling the performance of employees within the organization by providing managers with the authority to ensure their subordinates are performing their work activities in the right way and also improve the performance of the organization to achieve the organizations goals and objectives (Howell 2006).

Process of Performance measurement

Performance measurement is an important activity for organizations since all managers want their employees to perform their jobs well. Measuring job performance ensures that the organization’s resources have been optimally utilised. It also reduces any expenses that might arise due to poor job performance and employee underperformance of work activities.

Measuring performance identifies, communicates and rewards the employees who have met the desired organizational results. Performance measurement programs usually originate from the needs and expectations of an organization. Every employee within an organization has a specific need that they should meet to ensure that the organization’s objectives have been met (Mathis and Jackson 2008).

The first step in the performance measurement exercise is to identify the expected performance levels that every employee is expected to achieve in their work activities. This will involve conducting a joint discussion between the employees and managers to determine what needs to measured.

There are many business processes that require performance measurement and the most important processes are deemed to be those that are important to the organization and its customers. In determining which work activities need to measured managers and employees should ask questions such as what goals and objectives need to be achieved within the organization, what business processes is the organization involved in and what operations are needed to conduct these processes (Platts and Sobotka 2010)

After identifying the organization’s business activities, the next step will be to identify the critical activities that need to be measured. This will involve examining the critical activities that are involved in each of the business processes. Critical activities are described as those that have a major impact on the organization’s overall process efficiency, effectiveness, quality and productivity.

To determine the critical activities, the organization has determined whether these activities have a direct or indirect relation to the customer’s satisfaction and whether the employees and management view the activity to be critical to the organization. Once the critical activities have been identified, the next step will involve establishing the performance goals or standards that will be used in the measuring exercise (Hatry 2006)

Performance goals and standards are deemed to important in the measurement exercise as they help in determining the desired result of the performance measurement exercise. Goals are usually determined by managers or by customers through their feedback, inquiries or complaints. This will require the organization to know its customers in order to identify their needs and expectations.

For every critical activity that has been chosen for measurement, a goal or standard has to be established to measure this activity. The performance measurement goals should be designed in a way that they can easily be attainable and applicable in the existing environmental conditions of the business. The goals should also be legitimate, measurable and easy to understand (Hatry 2006).

One the performance goals have been established the next step will involve establishing performance measurements. Performance measurements are usually defined units of measure that are composed of numbers and units of measures. These numbers and units are usually represented by multidimensional units such as work hours, dollars, and number of errors, meters, and number of projects completed in a given time.

To develop appropriate performance measures, managers need to identify raw data that can be used to generate performance measures as well as identify what tools and approaches will be used in implementing these performance measures. This stage involves using what the manager wants to measure by using the critical activity to derive a performance measure.

Critical activities that have quantifiable goals can be used to easily derive the performance measures for the exercise. If the critical activities lack quantifiable goals, the performance goals can be derived from raw data needed for the performance measurement program. Raw data could be in the form of customer orders, customer complaints or the number of sales that an employee has made (Hatry 2006).

Once the performance measures have been identified the next stage will involve identifying the employees to be measured and the people to conduct the performance measurement activities. Appropriate people need to be chosen to conduct data collection as well as analyse employee performance by comparing the collected information to the desired performance.

The person required to conduct the performance measurement activity should also be capable of determining whether any corrective action is necessary to improve performance within the organization. The people or person to conduct this process should know what the goals of the exercise are as well as know what the actual performance of an employee is. They should also have the authority to implement necessary changes after the exercise has been completed (Hatry 2006).

After the people to measure and be measured have been chosen and identified, the next step will involve collecting the actual employee performance data. The person conducting the performance exercise will have to look at both descriptive and quantitative data related to the performance of the employee. This will include number of sales that the employee has made, number of errors they have made while performing their jobs and the number of hours they have worked.

Once this data has been collected, the next step will involve analysis and evaluation. Data analysis and evaluation determines whether the results of the measurement compare to those of the actual performance or standard. If there are inconsistencies, then the people responsible need to determine whether any corrective action needs to be undertaken to improve performance (Hatry 2006).

Importance and Role of Performance Measurement Approaches for Companies

While many personnel and human resource specialists concur that performance measurement is an important activity for an organization, some people hold a different opinion on the importance of performance measurement. The generalist view of performance measurements is that they are the tools that managers use to evaluate the performance of an organization and its employees so as to gain understanding of what has been achieved and what needs to be achieved.

Performance measures are important for managers as they help them know how the organization is doing, whether the employees are meeting the organization’s goals, whether the company’s customers are satisfied with the products and services or whether any improvements are necessary for the company’s business operations (Mathis and Jackson 2008).

Platts and Sobotka (2010) hold a different view of the importance and role of performance measurement to an organization. The two based their views on a study they conducted on a German gas and electricity company, the results of which revealed that the managers did not use any performance measures on their employees.

The results showed that the company used operational excellence instead of performance measurements where the operational excellence depended on organizational mechanisms such as trust and employee responsibilities. The company also used incentives, rewards and inspiration to motivate employees to perform their work effectively (Platts and Sobotka 2010).

Conventional research has shown that performance measurement activities within organizations are important activities that help an organization to determine whether it has achieved its goals and objectives and what changes have to be implemented to ensure that the organization achieves its goals and objectives.

The traditional roles of performance measurement have been divided into three roles which are inspiration, incentives and accountability where accountability involves the monitoring and reporting of an employee’s performance against the previously determined performance goals (Platts and Sobotka 2010).

According to their research, the authors found that an alternative view existed on accountability in performance measurement where the employees in the German company had to prove themselves to be compliant to the principles and guidelines that underlined the operations of the company. They determined from their research that organizations that had a flat structure did not require any performance measurement metric to drive the performance measurement process.

With regards to incentives, the authors observed that the employees working in the German gas and electricity company viewed their clean and healthy working environment as an incentive and motivation for them to perform their work and achieve the set out goals of the company. They also viewed the public recognition of the work efforts to be a more important incentive than monetary rewards (Platts and Sobotka 2010).

When it came to inspiration, the authors noted that it came from a desire that the employees had to achieve the stated performance measures. This desire also came from an awareness of the employee’s efforts that contributed to the overall achievement of the organization’s objectives and mission.

The alternative view of inspiration that the authors derived from their assessment was employees who identified with the company were motivated to perform well in their work because they had a sense of belonging. Inspiration within the company was instilled by charismatic leaders and the practice of management allocating more responsibilities to employees (Platts and Sobotka 2010).

Platts and Sobotka’s (2010) research noted that the German company practiced alternative means of achieving high employee performance which were through offering inspirational leadership, providing a positive working environment for the employees and encouraging employees to provide their suggestions and opinions on how the company can improve its performance.

The authors concluded their research by stating that formalized employee performance measurements were not required in achieving high performance standards within an organization (Platts and Sobotka 2010).

Platts and Sobotka’s analysis of the German company showed that performance measurement was not a fundamentally important activity in organizations. A case study of Lloyds TSB Bank showed that the company practised the traditional approach of performance measurement for its employees since it was involved in a company merger with TSB Group in 1995.

The performance measurement program used by the bank was mostly a checklist that assessed the performance of employees within the bank after a given period of time. Performance measurement in the bank was not directed towards the achievement of the company’s goals but it was directed towards the completion of tasks by the bank’s employees.

This demonstrated that performance measurement within the bank was more of a bureaucratic process instead of a performance enhancing activity (Houldsworth and Jirasinghe 2006). This reinforced Platts and Sobotka’s view that performance measurement was not an important activity for organizations.

The Lloyds TSB Bank incorporated the use of the balanced scorecard in its performance measurement activities where the approach was used to balance the bank’s strategic priorities to its business processes, finances and its customers. The balanced scorecard did not however measure the performance of employees within the bank effectively because the objectives of the individual scorecards were viewed to be no more than the banks repackaged objectives and goals.

There was also a general lack of understanding on how the balanced scorecards worked when it came to measuring employee’s performance within the organization. Such challenges presented an opportunity for the bank’s management to seek new ways of enhancing performance amongst the bank’s employees. These saw the incorporation of five new areas which included franchise growth, contribution, customer satisfaction, risk and people (Houldsworth and Jirasinghe 2006).

While the above case studies showed that performance measurement was not an important activity for organizations, the general conception that exists about the activity is that it is important for organizations and managers. Performance measurement is viewed to be an important key in the success of a business because it communicates the established goals of the organization to the employees.

It outlines the activities that need to be achieved by an organization’s employees and it also provides a sense of direction for organizations. Without conducting performance measurement a company cannot be able to determine where it’s going. It also cannot determine whether the set out goals and objectives have been achieved. Performance management therefore becomes an important activity and tool for managers who are determined to achieve the goals and objectives the company (Howell 2006).

Conclusion

The essay has focused on the aspect of whether measuring employees performance is an important activity for managers. The assessment of the performance measurement process has revealed that the activity is in important in terms of providing a sense of direction to the organization as well as determining what objectives and goals have been achieved by the organization’s employees.

The essay also revealed the varied opinions that existed on whether performance measurement was an important activity for an organization. A review of various case studies showed that the activity did not in any way improve the performance of a company meaning that it was just another human resource program that did not add any value to the organization.

The case studies revealed that the company’s management practised other activities that were meant to improve the performance of employees within the organization such as using inspirational and charismatic leaders, encouraging employees to take up more responsibilities and encouraging employee loyalty to the organization.

While these activities worked for these organizations, the same cannot be applied for other organizations. Despite these variations in opinion, the general consensus was that performance measurement was an important activity for most organizations.

References

Carlaw, M., Carlaw, P., Deming, V.K., and Friedmann, K., (2003) Managing and motivating contact centre employees. New York: McGraw Hill.

Hatry, H.P., (2006) Performance measurement: getting results. Washington, D.C.: Urban Institute Press

Houldsworth, E., and Jirasinghe, D., (2006) Managing and measuring employee performance. London, UK: Kogan Page

Howell, M.T., (2006) Actionable performance measurement: a key to success. Milwaukee, US: American Society for Quality (ASQ) Quality Press

Mathis, R.L., and Jackson, J.H., (2008) Human resource management. Ohio, US: Thomson higher education

Platts, K., and Sobotka, M., (2010) When the uncountable counts: an alternative to monitoring employee performance. Business Horizons, Vol.53, No.4, pp 349-357

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