Abstract
Today, Performance Measurement has become one of the major roles of the Human Resource Department of any organization. Nowadays, organizations use different approaches to ascertain the performance of their employees. In this paper, I have compared three famous approaches used by many organizations in our societies today.
The question is why should there be any performance Measurement? There is a need to ensure effectiveness, efficiency, quality, timeliness, productivity and safety. A comparison has been drawn between the Balanced Scorecard, Management by Objectives and Graphic Rating Scale system of performance measurements.
Keywords: Balanced Scorecard, Management by Objectives, Graphic Rating Scale
In this paper, a comparison will be made between the below three types of method commonly used by organizations to measure performance:
- Balance Scorecard
- Management by Objectives (MBO)
- Graphic Rating Scale (GRS)
The most commonly used system of performance measurement by organization is the Balanced Scorecard. Any performance measurement established by an organization is regarded as a Key Performance Indicator (KPI). What is a Balanced Scorecard?
A Balanced Scorecard is a strategic-based responsibility accounting system that translates the mission and strategy of the organization into operational objectives which measure employees performance in four different areas: Financial Perspective, Customers Perspective, Process Perspective, Learning and Growth Perspective. This is the most effective performance measurement system because it touches all areas of the organization.
Considering that we are trying to build a performance measurement of some company by examining the above listed methods. Establishing a Balanced Scorecard; the financial perspectives will include the improvement of the organization’s financial performance, the customer perspective will try to ensure a value delivery to the customers of the organization, the process perspective will seek to find out if there is an improvement on the key internal processes used by the organization so that they can add more value to their customers. Lastly, the learning and growth perspective will examine the company’s ability to change and improvement.
A Balanced Scorecard translates strategic objectives into operational objectives where employees could use their scorecards to see if their set objectives are being met while MBO is a participating management system which requires that the managers and their subordinates come together for a discussion. During this meeting, they set objectives that have to be met while taking into consideration the resources available to do that within a given time frame.
In most organizations, progress is monitored quarterly, that is, each quarter, the managers and their subordinates come together to see which objectives were not achieved, reasons for the unachieved objectives and a re-definition on the timeframe to achieve them. With MBO, employees performance are measured based on the time they used to achieve the set objectives.
Meanwhile, employees are directly involved with the Balanced Scorecard and the MBO system of performance measurement, the GRS requires that supervisors rate employees based on their productivity. This rating is usually made on a scale of 1 to 5. Judgment is made by the supervisors. It is mostly used in some production departments. Unlike the Balance Scorecard and MBO performance measurement system, the GRS does not clearly states key measurements to be achieved.
There is a need to monitor performance in every given project from its beginning to its end to see If activities are moving as planned. As I base my fact on the Balance Scorecard discusses above, we ought to measure employees performance in a project to identify whether we are meeting customer requirements: how do we know that we are providing the services or products that our customers require?, It also guides us on the processes we use; that is, to confirm what we know or reveal what we do not know: Do we know where the problems are?.
Sources
Ruth Mayhew, Small Business, Houston Chronicle-Hearst Corporation, February 06, 2014 «http://smallbusiness.chron.com»
Rajesh K. Tyagi, Safari Books Online, July 01, 2008, FT Press, February 06, 2014, «http://my.safaribooksonline.com»
