Performance is the end result of an activity. Managers at all organizations are concerned about the work performance which is the end product of work processes and activities. Organization’s performance goals can only be achieved through its employees. An effective performance measurement and management system aligns individual and teamwork behaviors to the organization's business strategies, goals, and values. For an organization to achieve its goals, it is important that each employee understands individual roles and responsibilities that are integrated to achieve organizational goals.
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There must be continuous dialogue between leaders and employees to set performance expectations, monitor progress, and evaluate results. Combined effort of the leader and staff to plan, measure and analyze, and manage performance enable them to successfully measure and account for work performance.
Tools and Techniques to Measure Work Performance
The most frequently used performance measures are:
Productivity is the ratio between the level of input and output. It is important for managers to increase the productivity level to increase work performance. The same level of input should produce a higher level of output or a lower level of input should be used to produce the same level of output. (Robbins, Coulter 2005)
To measure work performance it should be seen how the efficiently the resources including land, capital and especially labor is being utilized in both service and manufacturing firms.
The managers should also check how appropriate the goals of the organization are and how effectively is working being done to achieve those. E.g. Customers, suppliers, shareholders each have their own goals and interests. But at the end of the day the manager has to see how well the overall goals are being met.
Comparing the work performance against previous way of work done in the same firm or against the industry standard can help managers measure work performance. It is an eye opener for the managers. Managers need appropriate tools to monitor and measure work performance at organizations.
Economic Value Added tool is a financial tool that measure work performance by measuring corporate and divisional performance. This is calculated by subtracting the after tax operating profit from the total annual cost of capital. It focuses manager’s attention on earning a rate of return that is over and above that of the cost of capital. Companies like Hewlett-Packard and Equifax make use of this. (Heizer, Render 1996, p.457)
Balanced scorecard is another tool that measures work performance by focusing on four major areas that is financial, customer, internal processes and people/innovation/growth assets. The basic idea is for managers to set goals in each of these areas and then compare if the goals are being met. The Ontario Hospital Association in Canada developed a scorecard for 89 hospitals to evaluate their work performance
Bench marking is usually done to compare the organization’s work performance with the best practices among competitors. It is the standard of excellence against which firms can measure and compare. The HR department at SYSCO Corporation developed Innovation Key Metrics Benchmark System which enables the regional managers to measure work performance against others in the SYSCO family. (Robbins, Coulter 2005)
Performance can also be measured by using different ratios including Activity Ratio which shows how efficiently inventory is being utilized and Profitability ratios which identifies the profit being generated by various products. Observation and work samples enable managers to asses the performance of work.
Improve Work Performance by using Performance Measure Results
Once the results are found it is important for managers to communicate the results to the employees. The more open about it the better it is. However mangers must be confidential about individual employee result. If the manager is not satisfied with the results then each department should be given goals and targets that should be achieved within a limited time frame. Score cards should be assigned to each department. Productivity targets should be set and communicated to the employees. A system for continuous feedback should be maintained so that the managers are updated on the work activities.
Managers must find the key issues that resulted in the underperformance. It could be due to a fault in the working environment like the ventilation system or the long structural hierarchy which discourages employees at different levels to coordinate with each other and participate in the decision making. These problems should be rectified by the manager. Employees performing a certain task are the best source of information. By interacting with them and setting meetings with those employees, managers would not only find the problems and how to improve them but would make them feel an important part of the organization.
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