Measuring employee performance is widely used in management practice, but is performance measurement all pros and no cons Discuss both the benefits and the possible downside of employee performance measurement - Essay Example

Employee performance measurement Benefits and possible downsides of employee performance measurement Introduction Performance measurement aims at determining the individual’s job related outcomes and comparing the outcomes with the expected performance standards (Bacal, 2012) . Employee performance measurement is the process of assessing or evaluating the attainment of pre-determined job goals and objectives through the measurements of inputs like skills and efforts, processes, service outputs and finally the outcomes (Kline and Sulsky, 2009, p 167).

Some of the aspects that may be measured include the output per hour, the level of skills, behavioural aspects like commitment to the job and discipline in the organisation. The management will also measure the level of utilisation of specific skills and abilities such as efficient communication and interpersonal skills in the particular jobs (Bacal, 2012). Measuring employee performance is widely used in management practice, but performance measurement is not all pros since there are cons that lead to possible downside of the employee performance measurement.

Purpose of employee performance management Performance measurement can be viewed as a process of motivating employees through goal setting, measuring progress, providing feedback and enabling the employee to improve performance (Arthur, 2008). Performance measurement is closely linked with performance management and enables the organisation to implement a work environment that fosters high employee performance through development of clear job descriptions, using appropriate recruitment and training programs, performance-linked compensation and offering performance based promotional opportunities.

Behavioural observation scale (BOS-based) appraisal and review processes enhance employee satisfaction through feedback and increases the level of individual accountability (Tziner & Kopelman, 2002, p 483). Individual employee performance appraisal methods such as graphic rating scales consider the written traits or characteristics, but some traits may not be relevant to the job. In addition, the individuals will definitely rate themselves high on the traits that they perceive to be more relevant to their jobs (Steve, 1975, p 770).

Essay writing method requires employees to have good writing skills and is time consuming. Critical incident technique considers the incidents that may be regarded as ineffective or effective performance thus ignores the daily performance and output of the employees by concentrating on narrow events or incidents in the organisation (Houldsworth and Jirasinghe, 2006). The rating scales consists of numerical scales that have performance criteria such as creativity, output, attitude and dependability that rate employees from either excellent to poor using such as scales (Arthur, 2008).

However, rating scales are complex to frame and encourage rater bias. Forced choice methods are narrow and may contain statements that are not applicable to the nature of the job or that are offending to the employees (Arthur, 2008). Psychological methods such as psychometric tests only focus on the attitudes and not skills of the employees and are essential in understanding the motivational and personal abilities of the employee. In addition, multi-person methods such as rankings and paired comparisons experience high resistance since employees develop a perception of competition against each (Bacal, 2012).

Benefits of employee performance measurement Performance measurement results are used by the human resource managers in job analysis, job descriptions, and job specifications in order to enhance employee productivity and job satisfaction in the organisation (Sims, 2002). The appraisal results are useful in organisational maintenance aspects like reviewing the attainment of organisational goals, evaluating the human resource systems and reinforcing the organisational goals. According to Houldsworth and Jirasinghe (2006), performance appraisal may be necessary for making HR decisions and meeting legal requirements regarding employment legislation.

Performance measurement facilitates other human resource functions such as rewards management since employees are compensated according to the merit and their performance levels in the organisations (Sims, 2002). The measurement results act as legally defensible mechanism for making promotions, rewards, transfers and discharges in the organisation. The results are used in health and safety issues since the organisation will modify its policies, procedures and practices regarding the workplace health and safety issues (Kirkpatrick, 2006).

The results are critical in training and development of employees since the appraisal results will identify the skills gaps in the organisation and areas where the staff need more training (Sims, 2002). The process will also identify the effectiveness of the current selection and recruitment procedures in order to determine whether the organisation needs to change the existing policies. The systematic appraisal systems enable supervisors to analyse the strengths and weaknesses of employees so that the organisation can conduct skills needs analysis and implement succession plans (Kirkpatrick, 2006).

Performance measurement motivates the employees through provision of feedback on their performance and opportunities for discussing on measures that can be undertaken in order to improve the performance (Sims, 2002). Performance measurement enables the management to create a healthy work environment that is characterised by mutual understanding, team spirit, openness, trust and collaboration. The setting process facilitates mutual understanding and cooperation since employees are involved in setting the expected performance standards and benchmarks that will be critical in measuring their performance (Goel, 2008).

The organisation will be capable of using the performance measurement results to understand the causes of poor performance and implement new processes and new technologies that will enhance the productivity of employees and overall organisational performance. The new technologies will enable employees improve the work efficiency and reduce the production costs and wastage of raw materials thus improving the overall output of the organisation (Goel, 2008). Possible downside of employee performance measurement There are various possible downsides and limitations of employee performance measurement that are brought about by the choice of performance rating technique, the employees, subjectivity, rater biases and bureaucracy in the rating process (Roch, Sternburgh and Caputo, 2007).

Employee performance measurement faces the systems design and operation problems since it is practically impossible to design a measurement system that is universally applicable for all types of employees in the organisation (Grote, 2011). In addition, it is cumbersome to combine several evaluation methods and the result is always poorly designed rating scales and cumbersome scales that do not really reflect the individual employee performance outcomes (Grote, 2011). Performance measurement experiences the central tendency problem since raters prefer rating everybody as average.

In addition, the measurement experiences the contrast effect when employees are compared with the excellent performers or worst performers (Goel, 2008). Another downside of performance measurement is manager or supervisor bias since some supervisors will favor some employees or have the leniency or harshness error depending on the ongoing relationship between the supervisor and the subordinate (Grote, 2011). Another possible downside is bad timing since many organisations appraise the performance on annual basis instead of continuous and regular assessments.

This trend leads to poor collection of appraisal data and inability to correct negative performance at the early stages. Grote (2011) asserts that inaccurate performance standards will hinder effective performance measurements since some managers and employees may not understand the expected performance outcomes in a certain job. The same drawback is evident if the job specifications and descriptions are poorly outlined (Goel, 2008). Another drawback in employee performance measurement is halo effect whereby the employee is evaluated on just one quality such as emotional stability or skills adequacy (O’Boyle and Aguinis, 2012, p 97).

In this case, the score may be high for the emotional intelligence tests, but the employee may have low skills in other areas such as creativity thus leading to misleading outcomes of the performance measurement. The performance measurements tend to concentrate on the recent events or past performance thus ignoring the current state of affairs in the organisation. Managerial implications Employee performance measurement is essential in the organisation and managers must eliminate biases in performance appraisals.

The performance expectations must be well outlined and appraisal must be done regularly. The nature of the job will determine the selection of the appraisal method and numerous methods should be combined in order to eliminate recent incidence errors, rater biases and central tendency problem. In addition, feedback to employees is essential and managers must discuss on how the improve the performance with employees. Conclusion Employee performance measurement or appraisal is critical since it enables the organisation to assess the current skills levels and skills gap in the company and facilitates the formulation of training and development programs.

In addition, it justifies the compensation packages that include extra bonuses, allowances and pre-requisites for the highly performing staff. The process acts as a communication tool that boosts employee morale and enhances cordial management leadership. However, the processes suffers several downsides and drawbacks since it is time consuming and there is no universal performance rating system that is ideal for all nature of work and type of employees. Rater biases, hallo effect and central tendency errors are other drawbacks that make performance measurement difficult.

Employee resistance, leniency and harshness of the supervisors may lead to misleading performance measurement results. Reference list: Arthur, D. (2008). Performance appraisals: strategies for success. New York: American Management Association. Bacal, R. 2012. Manager’s guide to performance management. New York: McGraw-Hill. Goel, D. 2008. Performance appraisal and compensation management: a modern approach. New Delhi: Prentice-Hall. Grote, R.C. 2011. How to be good at performance appraisals: simple, effective, done right.

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