Performance Measurement
Guideline
Performance Based Reward must be greater
than alternative reward from Non-Performance.
Performance Measure & Related Rewards must
reflect Organizational goals.
Employee must believe that their effort
influence Performance.
Impossible goals are de-motivators, & so are
easy goals. Make goals difficult but not
impossible.
Reward must be link to desired Performance in
fair manner.
Performance Measures must be observable &
verifiable.
Reward must meet market conditions & reward
must be available.
Minimizing the overall costs of aligning goals
& monitoring behavior is a goal of incentive
system design.
Monitoring
Decision Making
Attention Focus
Legitimization
Compensation income is not guaranteed but dependent on performance
Translating and implementing strategy.
Given the goals of the company which alternative incentive will motivate the desired
behavior?
Unlikely a single measure or even several measures will effectively assess performance.
o Assesses progress toward organizational goals and objectives - promote intended
behavior
o Includes critical success factors
o A mix of financial and non-financial multiple measures
o Congruent with reward systems pay performance link
o Participatory and easy to understand by employees
o
o
Importance-measurement gap
Measurement-use gap
Susceptible to measurement problems
Difficult to measure effectively (accuracy, ambiguity, timeliness)
Lead-lag relationship.