MEASURING PERFORMANCE

Given our previous discussions on the importance of measuring both results and behaviours, it is useful to explore the processes to carry out measurement.

Measuring Results

Theoretically, to measure results you must determine the objectives against which the results will be measured and the standards that will be applied. This is necessary to determine the level of performance against these results. Consider the following diagram:

FIGURE 5: MEASURING RESULTS – PROCESS

(Adapted from Aguinis, 2013:107-112) Key  accountabili.es  

(from  job  descrip.on  and   strategic  priori.es)  

Expected  objec.ves   (SMART)  

Performance  standards   (Yards.cks)  

© Regenesys Business School 47 The key accountabilities derive from the job descriptions, with some flexibility depending on the strategic direction of the organisation. Clearly, if the strategic direction of the organisation has changed significantly then job descriptions (core responsibilities) may need to be renegotiated. It is important to allocate a weighting (percent) to each accountability. For example, if quality improvement is a strategic priority, this should carry a greater weighting than other accountabilities (eg 30% of the weighting, whereas other accountabilities might range between 10% and 20%). Key accountabilities must be grouped appropriately, for example issues relating to the broad areas of quality management, time management, and cost management.

The expected objectives must be made specific (eg quality targets stated in specific, measurable, achievable, relevant and time-based terms). While the objectives should be challenging, they must be realistic and agreed upon. Aguinis (2013:110) argues in favour of limiting the number of objectives (five to ten). Yet, consider that too few objectives may not contribute sufficiently toward strategic priorities and job descriptions and too many may not be achievable.

Performance standards are the criteria (yardsticks) against which the objectives are measured.

These standards can be internal to the organisation (eg 40 units per hour) or they can relate to industry or professional standards (eg according to local or international legislation; ISO standards, etc).

Effective standards:

• Are observable or verifiable;

• Include appropriate flexibility – provide a range within which the employee is expected to perform (eg within one or two days, etc), especially if the standard depends on external factors (eg the performance standard depends on inputs from another source);

• Reliable in that the observed performance of the standard is accurate;

• Valid in that the standard measures what it is intended to measure;

• Are without any form of bias or dispute; and

• Are reviewable on a regular basis.

Efficient standards provide performance results using the least amount of resources (time and costs).

Task Questions

1. Critically evaluate your performance management agreement using the above results based approach. In your analysis, select only those criteria that are results-based and evaluate these against the three criteria given in Figure 5 above.

2. What recommendations would you make based on our discussions? Justify why this would lead to a more effective and efficient measurement process.

© Regenesys Business School 48 Measuring Behaviour

The behaviour approach relates to how the results are achieved (eg through communication;

adaptive and resourceful or creative thinking; dependability, etc).

Aguinis (2013:112-113) distinguishes between two measurement types:

• Differentiating competencies: These proficiencies allow the distinction between average and superior performers; and

• Threshold competencies: These are the proficiencies that everyone needs to display to perform the job to a minimum adequate standard.

Consider the example provided by Aguinis (2013):

The IT project manager must have:

• Differentiating competence: Process management (the ability to manage project activities);

• Threshold competence: Change management (knowledge of operational and relational skills and sensitivity to motivators that he/she will require).

Therefore, in order for the IT project manager to meet performance expectations he or she must possess process management and change management competencies.

(Aguinis, 2013:113) To measure behaviours we need to measure competency indicators. A competency can have several indicators. If these indicators are displayed, it suggests that the competency is present.

However, as Aguinis (2013:114) states, "the measurement of competencies is intrinsically judgemental".

Two types of systems are used to evaluate competencies:

• Comparative systems (comparing employee A to B) and

• Absolute systems (comparing employees with prescribed performance standards).

Table 6 provides a synopsis of the various comparative and absolute behavioural measurement systems (Aguinis, 2013).

Aguinis (2013:117-118) emphasises that forced distribution (comparative methods) assumes that performance scores are normally distributed. Some employees perform highly, some poorly and the majority perform somewhere in between (the Bell Curve). However, consider that a unit is comprised of all high performing employees or conversely all low performing employees. The very nature of the unit is such that job performance is rarely normally distributed (eg the team members each contribute in different areas of responsibility, which cannot be compared).

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TABLE 6: COMPARATIVE VS ABSOLUTE MEASUREMENT SYSTEMS

Comparative

Simple rank

order Employees are simply ranked from best to worst

performer. Advantages:

Explicit comparisons are made between each employee against the performance of all other employees using a 100-point scale (50-point marks the average employee). For example, employee A is rated at 95 in terms of communication (well above average) and employee B is rated at 45 (slightly below average; 55% of employees are better communicators than employee B).

Forced distribution

Employees are apportioned according to an approximately normal distribution. For example, 20% of employees must be classified as exceeding expectations, 70% must be classified as meeting expectations and 10% must be classified as not meeting expectations. Made popular by GE (Jack Welch) through their 'vitality curve'.

Absolute

'Essay'

Individualised account of each employee without reference to other employees; strengths and weaknesses are identified and suggestions for improvement made. performance (get from "fairly often" to "very often");

• Behaviour checklist is relatively easy to use and understand;

• Critical incident approach gets right to the heart of the problems (achievements); and

• BARS combine ratings with critical incidents as anchors.

Disadvantages:

• The 'essay' is likely to be unstructured which does not lend itself to the allocation of rewards;

• Some supervisors or managers

Consists of behavioural statements with behavioural indicators (eg "always", "very often",

"fairly often", "occasionally", and "never"). The rater ticks the response category that best describes the employee's behaviour. The responses are weighted and the "anchors" can effective or ineffective behaviours in accomplishing jobs critical incidents), eg "The project management initiation phase consists of inputs, processes and outputs. Rate Peter Smith's performance knowledge of the inputs required to initiate a new project. The scale (eg 5-point scale) speaks directly to the measurement, eg:

• Unaware or not interested;

• Needs additional training;

• Aware of inputs in initiation phase;

• Excellent knowledge of project initiation inputs; and

• Superior knowledge; ability to train others.

(Aguinis, 2013:115-124)

© Regenesys Business School 50 It is also important to reflect on the behavioural responses to comparative approaches. For example, some employees who understand the Bell Curve, might think, "The better my colleague does, the smaller the chance that I will be rated at the top of the distribution, so why should I help her do her job?" (Aguinis, 2013:118). Based on this type of response, Aguinis (2013:118) points out that comparative approaches can be counter productive to team work and that it is important to relate the performance management approach to the culture of the organisation. If the culture of the organisation is highly competitive then a forced distribution approach may produce an effect opposite to what is intended. This may create performance problems.

Aguinis (2013:123) states that the most popular tool used to measure performance is the "graphic rating scale" (an absolute measure). Response categories are clearly defined and together with the scales these emerge as a consequence of critical incidences, which makes them highly relevant (targeted). Further, this approach appears to meet the needs of all stakeholders including organisational needs, administration needs, rater/user needs, and employee needs.

The purpose of your study guide is to guide the direction of learning. To obtain an in depth understanding of the complexities that surround the individual topics, students must carry out their own supplementary research (eg prescribed, recommended reading, and other sources).

Task Questions

1. Supplement your understanding of comparative methods by reading widely on the topic. Evaluate the strengths and weaknesses of comparing employees with each other (simple rank order, relative percentile methods, forced distribution).

2. Critically evaluate the following statement by Lisa Brummel (senior vice president in charge of human resources at Microsoft) when asked about comparative methods in use, "people were beginning to feel like their placement in one of the buckets was a larger part of the evaluation than the work the person actually did". Similarly an employee at Microsoft (on their blog) said, "I LOVE this company, but I hate the Curve".

3. Several types of methods are available for assessing performance each of which has advantages and disadvantages and which will appeal more to the organisation, HR administrators, the rater/user, or the employee.

Practicality, efficiency, and effectiveness are key determinants in selecting performance measures. Critically evaluate your own performance management system and make recommendations based on your research on the topic.

4. You are encouraged to test the depth of your understanding on the topic by completing the case studies (5-1 to 5-3) in the recommended textbook (Chapter 5, pp 126-128 in Aguinis, H. 2013, Performance Management, 3^rd ed., Cape Town: Pearson Education).

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