The document discusses performance appraisal and the balanced scorecard approach. It describes the balanced scorecard as a framework that uses financial measures and measures regarding customers, internal processes, and learning/growth. It provides examples of performance measures that could be used for each of these perspectives in a balanced scorecard.

1. Session 8
Performance Appraisal
The Gentleman’s Three
by Brian J. Hall & Andrew Wasynczuk

2. -When they are going to get time?
-They‘ll make time.
-Don’t they have real work to do?
-This is the real work.
The Gentleman’s Three
by Brian J. Hall & Andrew Wasynczuk

3. Conflicting Roles for Performance Appraisal

4. Trait-based
Information
Job Behavior-based
Performance? Information
Results-based
Information
Types of Performance Information

5. Criticisms of Performance Appraisal
◦ Focus is too much on the individual and does
little to develop employees.
◦ Employees and supervisors believe the
appraisal process is seriously flawed.
◦ Appraisals are inconsistent, short-term
oriented, subjective, and useful only at the
extremes of performance.
Uses of Performance Appraisal

6. Deficiency Contamination
Performance
Criteria
Objectivity
Potential Performance Criteria Problems

7. Common Rater Errors
© 2002 Southwestern College
Publishing. All rights reserved. 11–7
Figure 11–11

8. The Balanced Scorecard
Balanced Scorecard
21 languages
17 languages
8

9. What is the BSC?
Financial
To succeed Objectives Measures Targets Initiative
excel at?
must we
processes
business
what
customers,
s and
shareholder
our
To satisfy
Initiatives
financially,
how should
we appear to
our
shareholders?
Objectives
Targets
Customer
VISION
s
Measure
Measures
Internal Business
AND
STRATEGY
Process
Targets
Objective
Learning & Growth
s
Initiatives
To achieve
our vision,
Objective Measures Targets Initiatives
customers?
vision, how
To achieve
s
should we
appear to
how will we
sustain our
ability to
our
our
change and
improve?

10. Performance Measures in Financial Perspective
 Return on investment  Cross-selling
 Economic value added  Customer and product line
 Sales growth rate by segment profitability
 Percentage revenue from new  Revenue/employee
product, service, or customer  Cost reduction rate
 Share targeted customer an  Unit cost
account
 Payback
 Cross-selling
 Return on Capital Employed
 Working capital ratios (cash-to-
cash cycle)
10

11. Customer Perspective
 Information about market & customer
Customer selection, acquisition, retention & growth
 Who are profitable customers?
— Target Segmentations
 What do they need? [same as the thing we serve them]
— Customer Values Propositions (e.g. QSC&V –
quality, services, cleanliness, and value)
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12. Performance Measures in Customer Perspective
 Market Share: Reflects the proportion of business in a given
market (in term of number of customer, dollar spent, or unit
volume sold) that a business unit sells.
 Customer Acquisition: Measures, in absolute or relative, the rate
at which a business unit attracts wins new customers or business.
 Customer Retention: Measures, in absolute or relative, the rate at
which a business unit retains or maintains ongoing relationships
with its customers.
 Customer Satisfaction: Assesses the satisfaction level of
customers along specific performance criteria within the value
proposition.
 Customer Profitability: Measures the net profit of a
customer, after allowing for the unique expenses required to
support customer.
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13. Performance Measures in Customer Perspective
 Market Share: Reflects the proportion of business in a given market (in term of
number of customer, dollar spent, or unit volume sold) that a business unit sells.
 Customer Acquisition: Measures, in absolute or relative, the rate at which a
business unit attracts wins new customers or business.
 Customer Retention: Measures, in absolute or relative, the rate at which a
business unit retains or maintains ongoing relationships with its customers.
 Customer Satisfaction: Assesses the satisfaction level of customers along
specific performance criteria within the value proposition.
 Customer Profitability: Measures the net profit of a customer, after allowing
for the unique expenses required to support customer.
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14. Performance Measures in Internal Process Perspective
 Quality  Rework
 Response time  New product introduction
 Cost  Service error rate
 Yields
 Product development cycle
 Waste
 Hours with customer
 Scrap
 Time to market
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15. Performance Measures in Learning & Growth Perspective
 Employee satisfaction
 Employee retention/turnover rate
 Employee productivity
 Information system availability
 Organizational Climate Index
 Personal Goals Alignment Index
 Staff development
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