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What is a performance evaluation system?

Short Answer

Expert verified

A performance evaluation system is systematic performance evaluation of an employeesโ€™ job.

Step by step solution

01

Meaning of performance evaluation system

The performance assessment system provides a foundation for retaining control over the entire business for senior management.

02

Explaining the performance evaluation system

Evaluating an employee's execution includes looking at how well they are carrying out their obligations and progressing corporate objectives. To assess execution legitimately, a manager must be mindful of the exact necessities for a position, keep an eye on the employee's activities and yield, compare them to the requirements, and evaluate how closely the watched conduct and yield fit the requirements.

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Most popular questions from this chapter

Management by exception is a term often used in performance evaluation. Describe management by exception and how it is used in the evaluation of cost, revenue, and profit centers.

One subunit of Harris Sports Company had the following financial results last month:

Harrisโ€”Subunit X Actual Results Flexible Budget Flexible Budget Variance (F or U) % Variance (F or U)

Direct Materials 28,000 25,900

Direct Labor 13,000 13,800

Indirect Labor 26,400 23,100

Utilities 12,300 11,300

Depreciation 25,000 25,000

Repairs and Maintenance 4,600 5,600

Total 109,300 104,700

Requirements

1. Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage of the budgeted amount rounded to two decimal places.

2. Based on the data presented, what type of responsibility center is this subunit?

3. Which items should be investigated if part of managementโ€™s decision criteria is to investigate all variances exceeding $2,500 or 10%?

4. Should only unfavorable variances be investigated? Explain.

Decentralization divides company operations into various reporting units. Most decentralized subunits can be described as one of four different types of responsibility centers.

Requirements

1. Explain why companies decentralize. Describe some typical methods of decentralization.

2. List the four most common types of responsibility centers, and describe their responsibilities.

Usually, which outweighs the other in decentralizationโ€”advantages ordisadvantages?

What does RI measure?

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