Review Of Literature Employee Performance Measurement

Question: Discuss about theReview Of Literaturefor Employee Performance Measurement. Answer: Introduction Performance measurement is a complex area for business leaders. Organizations need to measure the performance of their employees, and using this, decide on their career path and fair compensation. In a typical organization, the performance measurement is an annual activity. Employees are assessed on their performance, usually using written forms and lengthy discussions between leaders and the employees. These appraisals are conducted in batches, and take a long time to complete, taking, as in the case of Deloitte, millions of hours every year. Deloitte has come up with a new method of performance measurement that does not look at past performance as the basis of employee performance and future prospects. It has also decided that batched appraisals are not as representative as they should be, if they were to be done as performance happens. Due to this, and the need for employers to constantly align their employees performance to the overall strategy of the organization, which involves examining employees performance in terms of expected future performance, rather than historical data. In this, the authors determine that a drastic change in appraisal is needed, which will be more objective. Current objectivity tests are highly dependent on the rater, sometimes as much as 62%. This should therefore be changed to reflect more on other aspects of an employee. Secondly, performance measurement should be geared towards the need to have employees utilizing their strengths, by focusing on their skills. In terms of performance, the organization needs to have a standard and fair way that helps in defining and recognizing performance. Change The assertions above by Buckingham and Goodall (2016) on performance are also echoed by Watts and McNair-Connolly (2012), who believes that organizations should measure performance depending on their specific circumstances. Generalized performance measures that only happen periodically, and long after the performance has been delivered, are unlikely to give a true measure of the employees ability. Watts and McNair-Connolly chronicle changes in performance management and measurement, using such instruments such as a balanced scorecard, key performance indices, and the application of smart objectives. However, Watts contends that these measures are all meant to measure past performance, and use it as an indicator of what to expect. This is what Buckingham and Goodall (2016) had argued against, saying that historical performance is hardly dependable in showing how well employees will perform in future situations, when their roles are aligned to more closely match organizational objectiv es. Ratings and Objectivity Mughal, Akram and Ali, (2014) have also explored the weaknesses associated with ratings and forms of performance measurement in organizations, in their case focusing on the Alfalah Bank. According to their analysis, the bank has been enjoying low motivation of its employees. This demoralization has been linked strongly to the performance measurements that the organization employs. The performance management system is such that it does not provide for a proper reward system, meaning that highly performing individuals feel that their performance goes unrewarded. Performance measurement issues are widespread in the banking sector, as they are in other services industries. This problem is in part brought about by the insistence on employees appraisals to be done by their managers, meaning that the objectivity of the report on appraisal is severely compromised. For instance, if an employee enjoys good relations with the manager, their report is likely to be favorable. If, on the other han d, relations are not so positive, the employee may suffer a negative appraisal, and potentially derail their career. At the same time, ratings are too simplistic, as Buckingham and Goodall (2016) show, meaning that they may fail to capture some key performance areas. Strengths Orientation Dobre (2013) is also an advocate of organizations that try to utilize employees strengths, seeing it as a major source of motivation for employees. Dobre adopts Theory Y by McGregor to describe this importance. The theory sees a pleasant work environment where employees welfare is well taken care of, and in which their goals are well aligned with those of the organization. Productivity levels are likely to be high and turnover low when the organization enables them to do what they are best at. This is best seen when the employees feel that the organization actually values them, and believes they can be self motivated and self directed in pursuing goals the organization cares about. In short, motivated people work hard to achieve their own goals. When this is well aligned with organizational goals, the organizations performance is more likely to be achieved. Talent dependent companies such as Deloitte are more likely to see the sense in applying this approach. Definition, Recognition and Compensation of High Performance According to Buckingham and Goodall (2016), there is a strong correlation between compensation and high performance, especially when such compensation is in recognition of exemplary performance and the value an organization places on the employee. Compensation does not only involve monetary rewards, but indirect compensation as well. This involves things such as paid holidays and other perks. Companies need to come up with a clear and simple method of measuring performance, and accurately correlating it to compensation. This way, it will be clear that better performance will automatically lead to higher reward, and such an employee will be valued by the organization (Hameed, 2014). References Buckingham, M. Goodall, A., 2016. Reinventing Performance Management. Harvard Business Review, 1, 1-14. Dobre, O., 2013. Employee motivation and or ganizational performance . Review of Applied Socio-Economic Research, 5(1), 53-60. Hameed, A, 2014. Impact ofCompensation on Employee Performance (Empirical Evidence from Banking Sector of Pakistan). International Journal of Business and Social Science, 5(2), 302-309. Mughal, F, Akram, F, Ali, S, 2014. Implementation and Effectiveness of Performance Management System in Alfalah Bank. Journal of Public Administration and Governance , 4(4), Published online. Watts, T. McNair-Connolly, C., 2012. New performance measurement and management control systems. Journal of Applied Accounting Research, 13 (3), 226-241.