12 August, 2022

Why Is Measuring All Three Levels Of Performance In A Business Important?

In any business, performance can be considered and assessed at three levels:

  • The business
  • Work groups, and…
  • Individuals

In the most general terms, the performance goals of the business are achieved through individuals contributing to work groups using work processes. So, an important aspect of human resource management is therefore the measurement and management of both individual and group performance. And this in order to maintain and improve the overall performance levels in terms of the business’ goals including its trading profit and loss accounts.

Because performance levels and improvement can be addressed through two complementary approaches, process and people, it’s worth summarising each.

The Process Approach is when the focus is on Assessing work processes in order to design the most efficient methods for achieving individual and group work objectives.

The People Approach is when the focus is shifted to Assessing people to ensure they have the ability, motivation, knowledge and skills of required so that they perform to their individual and group potential.

In this article we will be primarily concerned with the individual performance aspect of the people approach with a brief reference to the measurement of work processes. Because this is when a business thinks of individual performance as a system with inputs at one end and outputs at the other end, so that it can generally see and measure a variation in both.

Input variations include:

  • Capabilities
  • Knowledge
  • Skills
  • Attitudes
  • Motivation
  • Relationships
  • Opportunity

Output variations are typically:

  • Quantity related to time
  • Quality
  • Behaviour
  • Information
  • Processes and methods
  • Results and impact

There are of course different business views about what is meant by performance, and whether behaviours are inputs or outputs. Some argue that we should see performance as the behaviour involved in doing the work such as while others suggest that that behaviours are outcomes that can be judged alongside results because behaviour can be assessed.

Performance management can be concerned with all performance variations in order to evaluate and improve the work performance of individuals and groups to meet current and future business objectives. This approach means looking at how people are selected, appraised, developed, communicated to and rewarded and can work together to create the conditions for high performance.

Performance management is therefore, often associated with either individual improvement, development and with individual reward or a combination of these factors.

The key question is: How are you managing performance in your business?

Is it forward looking and developmental and impacting on results? Is it regarded as a method for generating information for linking pay and promotion decisions to achievement? Is it based on the improvement and development of individuals and teams and a sense of satisfaction? Or, does it just not exist in your business?


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