IDENTIFYING AND MEASURING EMPLOYEE PERFORMANCE

Performance is essentially what an employee does or does not do. Performance of employees that affects how much they contribute to the organization could include:

-Quantity of output

-Quality of output

-Timeliness of output

-Presence at work

-Cooperativeness

Obviously other dimensions of performance might be appropriate in certain jobs, but those listed are common to most. However, they are general; each job has specific job criteria or job performance dimensions that identify the elements most important in that job. For example, a college professor’s job might include the job criteria of teaching, research, and service. Job criteria are the most important factors people do in their jobs; in a sense, job criteria define what the organization is paying an employee to do. Because these criteria are important, individuals’ performance on job criteria should be measured, compared against standards, and then the results must be communicated to each employee.

Jobs almost always have more than one job criterion or dimension. For example, a baseball outfielder’s job criteria include home runs, batting average, fielding percentage, and on-base performance, to name a few. In sports and many other jobs, multiple job criteria are the rule rather than the exception, and it follows that a given employee might be better at one job criterion than at another. Some criteria might have more importance than others to the organization. Weights are a way to show the relative importance of several job criteria in one job. In some universities a college professor’s teaching might be a bigger part of the job than research or service.

1. JOB CRITERIA AND INFORMATION TYPES

The data or information that managers receive on how well employees are performing their jobs can be of three different types. Trait-based information identifies a subjective character trait—such as pleasant personality, initiative, or creativity—and may have little to do with the specific job. Traits tend to be ambiguous, and many court decisions have held that performance evaluations based on traits such as “adaptability” and “general demeanor” are too vague to use as the basis for performance-based HR decisions.

Behavior-based information focuses on specific behaviors that lead to job success. For a salesperson, the behavior of “verbal persuasion” can be observed and used as information on performance. Behavioral information is more difficult to identify, but has the advantage of clearly specifying the behaviors management wants to see. A potential problem is that there may be several behaviors, all of which can be successful in a given situation. For example, identifying exactly what “verbal persuasion” is for a salesperson might be difficult.

Results-based information considers what the employee has done or accomplished. For jobs in which measurement is easy and appropriate, a results-based approach works very well. However, that which is measured tends to be emphasized, and the equally important but unmeasurable parts of the job may be left out. For example, a car sales representative who gets paid only for sales may be unwilling to do any paperwork or other work not directly related to selling cars. Further, ethical or even legal issues may arise when only results are emphasized and not how the results were achieved.

2. RELEVANCE OF CRITERIA

When measuring performance, it is important that relevant criteria be used. Generally, criteria are relevant when they focus on the most important aspects of employees’ jobs. For example, measuring customer service representatives in an insurance claims center on their “appearance” may be less relevant than measuring the number of calls handled properly. This example stresses that the most important job criteria should be identified and be linked back to the employees’ job descriptions.

3. POTENTIAL CRITERIA PROBLEMS

Because jobs usually include several duties and tasks, if the performance measures leave out some important job duties, the measures are deficient. For example, measuring the performance of an employment interviewer only on the number of applicants hired, but not on the quality of those hires, could be deficient. If some irrelevant criteria are included, the criteria are said to be contaminated. An example of a contaminated criteria might be appearance for a telemarketing sales representative who is not seen by the customers. Managers use deficient or contaminated criteria for measuring performance much more than they should.

Performance measures also can be thought of as objective or subjective. Objective measures can be directly counted—for example, the number of cars sold or the number of invoices processed. Subjective measures are more judgmental and more difficult to measure directly. One example of a subjective measure is a supervisor’s ratings of an employee’s customer service performance. Unlike subjective measures, objective measures tend to be more narrowly focused, which may lead to the objective measures being inadequately defined. However, subjective measures may be prone to contamination or other random errors. Neither is a panacea, and both should be used carefully.

4. PERFORMANCE STANDARDS

To know that an employee produces 10 “photons” per day does not provide a complete basis for judging employee performance as satisfactory or not. A standard against which to compare the information is necessary. Maybe 15 photons is considered a sufficient day’s work. Performance standards define the expected levels of performance, and are “benchmarks,” or “goals,” or “targets”— depending on the approach taken. Realistic, measurable, clearly understood performance standards benefit both the organization and the employees. In a sense, performance standards define what satisfactory job performance is. It is important to establish standards before the work is performed, so that all involved will understand the level of accomplishment expected. 

The extent to which standards have been met often is expressed in either numerical or verbal ratings, for example, “outstanding” or “unsatisfactory.” It may sometimes be difficult for two or more people to reach agreement on exactly what the level of performance has been relative to the standard.

Figure shows terms used in evaluating employee performance on standards at one company.

Terms Used to Define Standards at One Company

Notice that each level is defined in terms of performance standards, rather than numbers, in order to minimize different interpretations of the standards. 

Sales quotas and production output standards are familiar numerical performance standards. A nonnumerical standard of performance is that a cashier in a retail store must balance the cash drawer at the end of each day.

Standards are often set by someone external to the job, such as a supervisor or a quality control inspector, but they can be written effectively by employees as well. Experienced employees usually know what constitutes satisfactory performance of tasks in their job descriptions, and so do their supervisors. Therefore, these individuals often can collaborate effectively on setting standards.