What is performance: concept, criteria and performance indicators

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

To build a system of staff motivation and to improve management, it is necessary to understand how efficiently employees and managers work. This makes the concept of efficiency extremely relevant in management. Therefore, you need to know what performance is, what are its criteria and evaluation methods.

The concept of performance

The essence of this concept lies in the degree of achievement of the set goals. There are several main approaches to answering the question of what is performance. In the first case, this concept means precisely the degree of achievement of the goals facing the organization. This approach is effective when the goals can be measured in some specific indicators. In the second case, effectiveness is understood as the ability of an organization to extract from the external environment the necessary, often unique resources necessary for the functioning of the organization. In the third approach, the concepts of efficiency and effectiveness are practically equalized. ATIn this case, they are understood as the ability to achieve good results in the activities of the enterprise at minimal cost and relying mainly on internal resources. In general, there is a tradition to breed these two concepts. The well-known management theorist Peter Drucker associates efficiency with the organization of the management process, and effectiveness with meeting the needs of consumers and customers. Both of these phenomena are important and require attention from the leader.

Management performance

In the management of an organization, the most important evaluation parameter is precisely the achievement of goals. Therefore, the effectiveness of management is the main characteristic of success. Answering the question, what is effectiveness in personnel and organization management, it is worth noting that these concepts in management theory are very close, and sometimes even synonymous. Researchers establish a direct relationship between efficiency, success and effectiveness. These are all links in a single chain. Effectiveness in management is the ability of the entire management system to achieve the desired results in accordance with the strategic and tactical goals set. These goals can be related to the release of products to meet the needs of customers, with the quality of services provided, as well as with the processes of organizing production, with all stages of personnel management and meeting the needs of employees.

Criteriaeffectiveness of managerial work

All work requires evaluation in order to be fairly paid, but it is not always possible to set clear indicators for evaluation. To determine what performance is, it is necessary to formulate indicators by which it can be assessed. First of all, it is a set of criteria related to the level of achievement of the company's goals. The second group of indicators is related to the completeness and quality of meeting the needs of buyers and customers, as well as employees of the company and its partners. Also, performance can be evaluated in terms of finding and finding opportunities for business expansion, for its growth. In addition, performance indicators for various functional areas of the enterprise can serve as criteria for overall effectiveness. When evaluating the performance of managers, it is necessary to correlate their achievements and successes with the company's strategy, as well as to identify their personal contribution to the development of the enterprise.

Personnel performance indicators

In order to determine the personal effectiveness of employees of different functions, the concept of "key performance indicators", or KPIs, is used. This is an individual assessment system for each employee, which is developed by the company, taking into account its own priorities and business direction. The assessment usually uses quantitative and qualitative indicators, so KPI systems cannot be used for absolutely all types of activities. There are several approaches to evaluateperformance:

• correlation of the results obtained with the costs incurred;
• assessment of the compliance of the performance of tasks with established norms and standards;
• employee performance appraisal.

The difficulty of applying uniform valuation standards lies in the fact that many transactions are difficult to present in the form of quantitative estimates. However, the costs of developing such a system are largely justified, since such an assessment significantly increases the motivation of personnel in increasing labor productivity, improves the system for monitoring the implementation of production tasks, and also increases the involvement of personnel in solving the general strategic tasks of the company.

Evaluation of performance in management

To evaluate the work of managers, the KPI system is most often not applicable. Since the manager has to solve many problems that cannot be unambiguously translated into quantitative or qualitative units. Therefore, special performance criteria are used to evaluate the work of a manager. These include the quality of fulfillment of managerial tasks, including the fulfillment by the entrusted unit of indicators for the production of products, compliance with the deadlines for solving the tasks set, for saving and attracting resources. The criteria for evaluating the performance of a manager are usually:

• expenses of managerial labor and their correlation with the achieved goals;
• global results, i.e. the impact of the manager’s work on the overall development strategy of the company;
• efficiency, how timely the leader solves problems;
• orderliness and smoothness of the production process.

The importance of performance evaluation in management

One of the most important functions of leadership is to control the implementation of tasks and achieve goals. Therefore, performance appraisal is an essential part of a manager's job. The manager needs to develop a system of staff motivation, and this requires a high-quality system for evaluating their work. When employees understand what they are being rewarded and rewarded for, they usually begin to perform better. Therefore, any manager should devote enough time and effort to develop a system for evaluating the performance of employees.