(Abstract) 100 Great Business philosophy: Philosophy 25: employee performance evaluation

Concept 25 employee performance evaluation

Recent research shows that the company uses an average of 40% of revenue to spend on personnel-related expenses (human capital costs), and 92% of financial directors believe that, human capital has a "huge" impact on customer satisfaction and profitability. However, only 16% of companies really consider the return of human capital. The solution is to measure your direct human return.

Concept

Considering the investment in human capital-mainly in training and development-and the obvious connection between investment and validity of employees, it is very important to measure the performance of the system. Jack Welch, former CEO of GE, said: "the three most important things to be measured in business activities are customer satisfaction, employee satisfaction, and company cash flow ." Although Welch later changed the last article to shareholder value, the importance of the other two -- and the connection between them -- is still very large.

Executives often encounter one or more typical performance evaluation problems.

§ Too many measures make people unable to see which are the most important and shift people's attention to other things.

§ All measures are irrelevant to the company's strategy and business advantages.

§ Emphasize results, but there is no need to fully describe and explain how such results are obtained.

§ Inconsistent incentives and performance measures will make the expected behavior unencouraging.

§ Inconsistent measurement scales cannot support team and collaboration spirit.

§ Encourage short-term stakeholder because various measures will result in a focus on improving the results for the next quarter.

Watson and Wyatt's Human Capital Index highlights the influence of human management practices. Five of them directly affect the profitability:

1. Total rewards and responsibility levels.

2. Flexible and community-oriented work location.

3. Talent recruitment and retention.

4. Open and honest interactions.

5. Pay attention to human resource service technologies.

B & Q's "employee incentive plan" provides a way to measure the connection between human resource investment and performance. This approach gives priority to employee input and customer loyalty. Each manager has a regular one-page report that summarizes their performance from two aspects: human capital management and traditional financial measure management.

As a result, their talent turnover rate dropped from 35% to 28% (at least 1 million CNY per age point), and their profits also increased, the turnover of each employee increased from 1998 in 87,000 to 2002 in 106,000. The finance team plays an important role in the success of the process: design, provide funding, and manage the plan. Other features of the plan include the close connection between the human resources and retail departments, the direct focus on improving performance with objective measurements, and the dedication of employees to the plan.

Practical application highlights

§ Be aware that the measures on "persons" should be included in the overall unit Unit of the company, which can improve the image of human capital management and ensure that important issues are concerned. In practice, there is a correlation between customer satisfaction and economic income results.

§ Selecting the right human resource management measure means finding the connection between motivating employees and achieving great results for the company, including product innovation, security issues, and customer satisfaction.

Ensure that the management level is obligated to collect and use the information.

Actively provide support to frontline managers.

§ Aware of the importance and influence of decision making.

(Abstract) 100 Great Business philosophy: Philosophy 25: employee performance evaluation