Assessment or measurement of employee performance
Performance appraisal or measurement is an important factor in a company. Besides being used to assess the success of the company, performance measurement can also be used as a basis for determining the reward system within the company, for example to determine the level of employee salaries and appropriate reward. Management can also use the company's performance measurement as a tool to evaluate in the past period. The Balanced Scorecard is a fairly comprehensive measure in realizing performance, where the financial success achieved by the company is long-term. The Balanced Scorecard is not just a measure of company performance but is a form of total strategic transformation to all levels in the organization.
With comprehensive performance measurement not only financial measurements but the combination of financial and non financial measures, the company can run its business better. The Balanced Scorecard was developed by Harvard Business School academics, Robert S. Kaplan and David Norton in 1992, where this tool assumes that financial measures only report the results of past decisions and if the performance measurement is to get any real significant impact, then more goals and more balanced measures are needed. The following are the performance evaluation objectives utilized by management, including:
Manage the organization's operations effectively and efficiently through maximum employee motivation, employee training and employee turnover rate. Help decision-making concerned with its employees such as promotions, dismissals, transfers. Identify employee training and development needs and to provide criteria for selection and evaluation of employee training programs. Provide feedback for employees about how their superiors assess their performance. Provides a basis for the distribution of awards.
While the performance evaluation measures that can be used to assess performance quantitatively are as follows:
1. Single Performance Measure Is a performance measure that only uses one rating measure. By using only one measure of performance, employees and management will tend to focus their efforts on these criteria and ignore other criteria, which may be equally important in determining the success or failure of a particular company or section.
2. Diverse Performance Measures Are performance measures that use a variety of measures to assess performance. Diverse performance measures are a way to overcome the weaknesses of a single performance criterion. Various aspects of the manager's performance are searched for criteria so that the manager's performance is measured by various criteria.
3. Combined Performance Measures With the awareness of several criteria that are more important for the company as a whole compared to other objectives, the company weighted its performance measures. For example, marketing managers measure their performance by using two elements, namely profitability and market share by weighting respectively 5 and 4. In this way the marketing manager understands that must be emphasized in order to achieve the goals to be reached by top managers.
Thus, the Balanced Scorecard will provide a framework for translating strategies into operational frameworks using a benchmark approach to four related perspectives, which by trying to respond to specific questions. The four perspectives that serve as benchmarks for the Balanced Scorecard and the questions are as follows:
1. Financial Perspective (financial perspective): How do we see shareholders and those who have financial interests in the organization? Financial perspectives remain a concern in the Balanced Scorecard because financial measures are an overview of the economic consequences that occur due to economic decisions and actions taken. The objectives of achieving good financial performance are the focus of the objectives in three other perspectives. The targets of financial perspective are distinguished at each stage in the business cycle which Kaplan and Norton differentiate into three stages:
Growth (growth) At this stage a company has a growth rate that has absolutely or at least has the potential to develop.
To create this potential, the possibility of a manager must be committed to developing a new product or service, building and developing production facilities, adding operational capabilities, developing systems, infrastructure and distribution networks that will support global relationships, as well as nurture and develop relationships with customers.
Sustain (sustainable stage) In this stage the company tries to maintain the existing market share and develop it if possible. The investments made are generally directed at removing congestion, developing capacity and increasing operational improvements on a consistent basis.
At this stage the company no longer relies on long-term strategies. The financial goals of this stage are more directed at the magnitude of return on investment made.
Harvest (harvest) This stage is the stage of maturity (mature), a stage where companies harvest (harvest) of their investment. The company no longer makes further investments except to maintain and repair facilities, not to expand or build new capabilities. The main objective in this stage is to maximize the cash flow that enters the company. The financial goal for the harvest is the maximum cash flow that can be returned from past investments.