Importance Of Employee Performance

Employee performance, measured in terms of human capital is important to the workplace in that, according to a nineteenth century economic theory referred to by Fitz-enz (2000), “only the investment of capital assets can increase the productivity of labour”. This explains that people and their performance are ‘profit levers’ and a sustainable business and economic benefit is reliant on the information sector. Employee performance measurement is essential to sustaining a successful business dues to a statistic also stated by Fitz-enz (2000) that upwards of 40% of corporate costs are employee related and according to the Harvard business Review (November/December 1998) “"If [businesses] are not yet tracking non-financial criteria, [their] performance measurement is not in sync with the way investors think". Measuring performance of employees therefore allows for resources to be allocated fairly among employees in the form of bonuses and performance rewards and the . Despite the essentiality of measurement of performance, it is not all benefits without some downsides such as psychological effects on employees that negatively effect the work environment as well as a large time consumption for a successful and fair measurement of all employees contributions to the workplace.

Employee performance measurement is known to be a large drive for employees to carry out tasks above and beyond their required level in order to acquire a reward for their commitment. Companies who measure employee performance may group employees into groups such as teams or individuals, giving rewards based on the positive or negative influence that the employees have had on the company and its goals. By measuring performance, a company is able to direct b...

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...roves productivity, increases retention or…that it works”, implying that the approach only relies on the popularity of an employee rather than how they perform their job. There are also many physiological issues involved with the process, as although an employee may receive a mostly complementary feedback, they may choose to focus on the negatives, causing them to withdraw from the work environment and lose confidence. In some cases there has also been bias towards the employee based on their socioeconomic and racial backgrounds and workplace discrimination negatively effects and hinders productivity and performance, making this a detrimental negative aspect of performance measurement. Some other negatives are that some feedback is personal instead of work related criticism or feedback, as well as employees not knowing what to do once they receive the feedback.