Performance measurement plays an integral role in the success of an organization.

Answer

• Performance measurement plays an integral role in the success of an organization.  Organizations have goals they set to achieve within a given trading period. The goals are set for both the institution and the employees of the company. Therefore, it is imperative to measure the performance of an organization to determine the level of progress it has made in achieving the goals or how far it has deviated from the goals it set to achieve that the beginning of the trading period.  Holistic performance measurement should provide information on financial measures, people measures, customer measures, and process measures.

   The performance measurement policy implanted by an organization hinges highly on the philosophy adopted by those in management when it comes to measuring performance.  For me, I believe in continuous performance measurement.  Continuous performance management is a method measuring performance throughout the trading period. It offers feedback regularly to determine how well the organization and its employees are progressing towards meeting set goals and objectives. It is different from the scheduled performance appraisal method that takes place either yearly or semi-annually.   The method is continuous and ensures that performance is regularly monitored, thus increasing the chances of meeting the set objectives.

   In executing continuous performance measurement philosophy, I often leverage the use of 360 degrees performance evaluation method. The method offers a holistic look at the facet of performance being measured; for instance, in measuring employees' performance, 360 degrees evaluation will seek for opinions about the performance of the employee from his /her superiors, subordinates, and also the employee's peers, this, therefore, ensures the information obtained about the employees offers a while round view of his/her performance. Additionally.  It eliminates the chance of bias since all the people involved in the process cannot be biased towards a single person.

  My philosophy to use continuous performance management stems from the following reasons; first, it offers better quality data to evaluate the organization's key performance indicators. Each organization sets targets that it needs to achieve within a given time line. The targets are the milestones that have to be met in order for the company to meet its overall performance goals at the end of the trading period. Continuous performance measurement offers an avenue to analyses the organization's performance towards meeting the milestones that determine its ability to meet its ultimate performance. Analysis of the level of achievement of the milestones requires data.

   The results of the analysis hinge highly on the quality of the data collected.  Low-quality data yield misleading results. The use of continuous performance measurement guarantees the quality of the data analyzed to determine the organization's success in achieving any of its key performance indicators. The data used is collected from various sources and regularly and analyzed regularly to obtain the trend and determine whether the trend is moving towards the set performance goals. If the trend obtained from the data shows that the organization is not likely to meet its targets, corrective action can be taken fast enough to reverse the negative trend.

   The financial department prepares a budget that controls the expenditure of the organization. However, there are instances where some unbudgeted expenses are paid for in the course of the year, thus increasing the possibility of a budget falling short of meeting its intended performance of serving the company until the end of the year.  Using data obtained from the departments' expenditure in the organization, the finance department leveraging continuous performance measurement can determine whether the money being spent will cause a deficit or result in a surplus and, therefore, take corrective measures before it is too late. Therefore, the use of quality data in continuous performance measurement makes it a good method to evaluate an organization's performance.

  The second factor that influenced my preference for continuous performance measuring as philosophy stems from its ability to promote a deep level of engagement among the organization's employees. Continuous performance measurement encourages deep engagement by opening regular channels of communication. In an annual performance measurement method, the employees work, and then their performance is addressed at the end of the trading period. It is a method that limits communication between the management and the employees when it comes to performance. However, in continuous performance measurement, communication channels are open, and employees are talked to regularly about their performance. The employees also get to air their view on the challenges they are facing and what can be done to improve their performance. Open communication makes employees feel appreciated.

   Employee engagement from continuous performance measurement also stems from the motivation that comes from continuous performance measurement.  Leveraging continuous performance measurement comes with setting one overall goal and then smaller periodic goals whose attainment helps achieve the overall goal. For instance, if the accounting department wants to reduce the costs of operations by one million dollars by the end of the year, the departmental heads will be given cost reduction targets to meet after every month to ensure the company attains its target by the end of the year. Through goal-setting theory, meeting the regular smaller targets convinces the employees that the bigger target is achievable and motivates them to work towards meeting the goal. Furthermore, it helps the organization and its employees develop as the regular performance reviews synonymous with continuous performance measurement highlight areas of weaknesses and strengths seen during the short period being evaluated. The information helps make the organization and the employees capitalize on the strengths to reduce the weaknesses identified.

  Thirdly, leveraging the use of continuous performance measurement increase the efficiency of performance reviews. Performance reviews provide information on the performance of the organization. The information from the review is used by management to make crucial decisions such as changes to increase an organization's chances to meet its performance goals in the market. The information should, therefore, be real time and reliable. Annual or semi-annual performance reviews collect a lot of data over the trading period and analyze them at the of the year or after six months to determine the organization's performance.

  After such a long time, the data to be analyzed is too much and cumbersome to work with. The challenge stemming from handling the data results in inefficiencies in analysis and the feedback obtained. Furthermore, the results obtained from such reviews cannot effect any serious changes because a lot of time has been lost.  On the other hand, using the philosophy of continuous performance measurement ensures the process's efficiency by working with small regular data that can be thoroughly analyzed.  Additionally, information retrieved from such analysis can be used to make changes as there is room for adjustments.  For instance, if the accounts receivables are not likely to achieve their targeted debt collection from suppliers, the credit terms offered to customers can be changed to reduce risk exposure to bad debts. This, therefore, shows information from continuous performance reviews offers actionable intelligence that improves performance.

  Continuous performance measurement is my performance measurement philosophy of choice because it also eliminates various biases that plague performance measurement, especially the measurement of people's performance. The biases that plague employees' performance, especially when leveraging the use of annual performance measurement methods, include; the halo effect. This refers to a bias where one positive or negative attribute of an employee is used overshadow all other employee attributes. This bias can result in a lazy employee getting a positive performance review or a good employee who made one noticeable mistake getting a wrong review.  For instance, a lazy employee who does one good act that gets publicized will get noticed by the management. The event will significantly influence such as employees review positively at the end of the year since it is the only thing the managers can remember.  Leveraging the use of continuous performance measurement eliminates the halo effect bias since the appraisal is done regularly when all the employees' actions are still fresh in the mind of the performance appraiser.

   The second bias that the continuous performance measurement philosophy eliminates is the spillover effect. The spillover effect is a bias that stems from rating an employee's performance based on their past performance. That is, an employee who performed well in the past evaluation is assumed to be good and will, therefore, maintain the same performance in the current performance appraisal period.  The bias, therefore, means an employee who got a negative performance review in the past can get similar negative reviews even in the future. Spillover bias stems from the appraise not having current information to base his/her assessment on. However, in continuous performance measurement, the performance reviewer has the latest information because of the short interval between the performance reviews and is, therefore, able to offer a truthful and objective review.

  In conclusion, continuous performance measurement is a philosophy I believe in because of its ability to leverage accurate and recent information in performance measurement, its effectiveness, and its ability to eliminate human capital performance measurement biases such as the spillover effect and the halo effect bias.