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To me, KPI based performance management is the best technique for measuring employee performance. In this context, setting KPI is very crucial to get the best result out of this technique.
Right set of expectations, SMART goals and transparent performance reviews
Performance is generally made up of several elements can be summarized as follows:Knowledge of the job requirements: Includes professional skill and technical knowledge and general background for the job and related fields;The quality of work: include precision and order and technical mastery and the ability to organize work and freedom from errors;The amount of work: includes the amount of work done under normal conditions and fast delivery;Perseverance and trust: where and enters the dedication and hard work and the ability to take responsibility and complete the work on time, and the need for supervision and guidance.
Punctuality
Quality of work
Observe personal habits
Check their attitude
Review personal presentation
Carry out a client survey
Carry out random checks
Recently, there is an increasing trend towards implementing balanced scorecard (BSC) as a set of performance indicators. In the literature review, the feasibility and value of using balanced scorecard to measure performance has been evidenced. It is argued that the key to achieve the aimed level of performance is to adopt new approaches to performance and performance measurement. Balanced scorecard (BSC) is fundamentally a customized performance measurement system that looks beyond traditional financial measures and is based on organization strategy.
To evaluate the organizational and employee performance in performance appraisal management processes, the conventional approach measures the performance only on a few parameters like the action processes, results achieved or the financial measures etc. The Balanced scorecard –an approach given by Kaplan and Norton- provides a framework of various measures to ensure the complete and balanced view of the performance of the employees. Balanced scorecard focuses on the measures that drive performance. The two basic features of the balanced scorecard are:
Balanced Scorecard (BSC) is a performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy. By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business, which in turn helps organizations act in their best long-term interests. Organizations are encouraged to measure – in addition to financial outputs - what influenced such financial outputs. For example, process performance, market share/penetration, long term learning and skills development, and so on. The underlying rationale is that organizations cannot directly influence financial outcomes, as these are "lag" measures, and that the use of financial measures alone to inform the strategic control of the firm is unwise. Organizations should instead also measure those areas where direct management intervention is possible. In so doing, the early versions of the Balanced Scorecard helped organizations achieve a degree of "balance" in selection of performance measures. In practice, early Scorecards achieved this balance by encouraging managers to select measures from three additional categories or perspectives: "Customer," "Internal Business Processes" and "Learning and Growth." In 1993, Robert S. Kaplan and David P. Norton began publicizing the Balanced Scorecard through a series of journal articles. In 1996, they published the book The Balanced Scorecard. Since the original concept was introduced, Balanced Scorecards have become a fertile field of theory, research and consulting practice. The Balanced Scorecard has evolved considerably from its roots as a measure selection framework. While the underlying principles were sound, many aspects of Kaplan and Norton's original approach were unworkable in practice. In both firms associated with Kaplan & Norton (Renaissance Solutions Inc. and BSCOL), and elsewhere (Cepro in Sweden, and 2GC Active Management in the UK), the Balanced Scorecard has changed so that there is now much greater emphasis on the design process than previously. There has also been a rapid growth in consulting offerings linked to Balanced Scorecards at the level of branding only. Kaplan and Norton themselves revisited Balanced Scorecards with the benefit of a decade's experience since the original article. The Balanced Scorecard is a performance planning and measurement framework, with similar principles as Management by Objectives, which was publicized by Robert S. Kaplan and David P. Norton in the early 1990s.
Implementing Balanced Scorecards typically includes four processes:
1. Translating the vision into operational goals;
2. Communicating the vision and link it to individual performance;
3. Business planning;
4. Feedback and learning, and adjusting the strategy accordingly.
The Balanced Scorecard is a framework, or what can be best characterized as a ―strategic management system‖ that claims to incorporate all quantitative and abstract measures of true importance to the enterprise.
According to Kaplan and Norton (1996), ―The Balanced Scorecard provides managers with the instrumentation they need to navigate to future competitive success‖. Many books and articles referring to Balanced Scorecards confuse the design process elements and the Balanced Scorecard itself. In particular, it is common for people to refer to a ―strategic linkage model‖ or ―strategy map‖ as being a Balanced Scorecard. Although it helps focus managers' attention on strategic issues and the management of the implementation of strategy, it is important to remember that the Balanced Scorecard itself has no role in the formation of strategy. In fact, Balanced Scorecards can comfortably coexist with strategic planning systems and other tools
The grouping of performance measures in general categories (perspectives) is seen to aid in the gathering and selection of the appropriate performance measures for the enterprise. Four general perspectives have been proposed by the Balanced Scorecard:
* Financial perspective;
* Customer perspective;
* Internal process perspective;
* Innovation and learning perspective
The financial perspective examines if the company‘s implementation and execution of its strategy are contributing to the bottom-line improvement of the company. It represents the long-term strategic objectives of the organization and thus it incorporates the tangible outcomes of the strategy in traditional financial terms. The three possible stages as described by Kaplan and Norton (1996) are rapid growth, sustain and harvest. Financial objectives and measures for the growth stage will stem from the development and growth of the organization which will lead to increased sales volumes, acquisition of new customers, growth in revenues etc. The sustain stage on the other hand will be characterized by measures that evaluate the effectiveness of the organization to manage its operations and costs, by calculating the return on investment, the return on capital employed, etc. Finally, the harvest stage will be based on cash flow analysis with measures such as payback periods and revenue volume. Some of the most common financial measures that are incorporated in the financial perspective are EVA, revenue growth, costs, profit margins, cash flow, net operating income etc.
The customer perspective defines the value proposition that the organization will apply in order to satisfy customers and thus generate more sales to the most desired (i.e. the most profitable) customer groups. The measures that are selected for the customer perspective should measure both the value that is delivered to the customer (value position) which may involve time, quality, performance and service and cost and the outcomes that come as a result of this value proposition (e.g., customer satisfaction, market share). The value proposition can be centered on one of the three: operational excellence, customer intimacy or product leadership, while maintaining threshold levels at the other two.
The internal process perspective is concerned with the processes that create and deliver the customer value proposition. It focuses on all the activities and key processes required in order for the company to excel at providing the value expected by the customers both productively and efficiently. These can include both short-term and long-term objectives as well as incorporating innovative process development in order to stimulate improvement. In order to identify the measures that correspond to the internal process perspective, Kaplan and Norton propose using certain clusters that group similar value creating processes in an organization. The clusters for the internal process perspective are operations management (by improving asset utilization, supply chain management, etc), customer management (by expanding and deepening relations), innovation (by new products and services) and regulatory & social (by establishing good relations with the external stakeholders).
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Base on my experience, the best practices to measure employee performance is based on KPI. Employe KPI will determine how employee is capable to achieve their objectives based on a certain period of time. It also measures how employee are efficient to achieve their certain objectives aligned with the business objectives.
SAP Success Factor is best tool to evaluate an employee performance, we are using it from last three years and it helps us in following areas;
*Goal Management
*Continuous feedback on Performance
*Identifying areas for improvement
*linking with Learning & Development
*Identify top talent
Hope this answer will help you. All the best wishes…
Doing all of his tasks on time without any delay inadditin to achieves determind goal.
There is no one answer for such question, if the business has predefined targets then acheiving these targets the performance can be measured.
Otherwise apprecials are effective tools if they have been well designed
