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What is a performance evaluation system?

Short Answer

Expert verified

A performance evaluation system is systematic performance evaluation of an employees’ 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

Fill in the blanks with the phrase that best completes the sentence.Some phrases may be used more than once and some not at all.

Phrases:

  • cost center
  • revenue center
  • investment center
  • lower
  • profit center
  • higher
  • responsibility center

1. The maintenance department at the local zoo is a(n)___________

2. The gift shop at the local zoo is a(n)____________

3. The menswear department of a department store, which is responsible forbuying and selling merchandise, is a(n)_______________

4. The production line at a manufacturing plant is a(n)

5. A( n)________________is any segment of the business whose manager isaccountable for specific activities.

6. A division of a beverage manufacturing company responsible for aparticular brand of soft drink is a(n)_______________

7. The sales manager in charge of a shoe company’s northwest sales territoryoversees a(n)

8. Managers of cost and revenue centers are at_____________ levels of theorganization than are managers of profit and investment centers.______

Padgett Company has compiled the following data:

Net sales revenue $1,000,000

Operating income 60,000

Average total assets 400,000

Management’s target rate of return 12%

Compute the following amounts for Padgett:

  1. Profit margin ratio
  2. Asset turnover ratio
  3. Return on investment
  4. Residual income

Well-designed performance evaluation systems accomplish many goals. Consider the following actions, and state which goal is being achieved by the action:

a. Comparing targets to actual results

b. Providing subunit managers with performance targets

c. Comparing actual results with industry standards

d. Providing bonuses to subunit managers who achieve performance targets

e. Aligning subunit performance targets with company strategy

f. Comparing actual results of competitors

g. Taking corrective actions

h. Using the adage “you get what you measure” when designing the performance evaluation system

What is a key performance indicator?

Consider the following key performance indicators, and classify each according to the balanced scorecard perspective it addresses. Choose from financial perspective, customer perspective, internal business perspective, or learning and growth perspective.

a. Number of employee suggestions implemented

b. Revenue growth

c. Number of on-time deliveries

d. Percentage of sales force with access to real-time inventory levels

e. Customer satisfaction ratings

f. Number of defects found during manufacturing

g. Number of warranty claims

h. Return on investment

i. Variable cost per unit

j. Percentage of market share

k. Number of hours of employee training

l. Number of new products developed

m. Yield rate (number of units produced per hour)

n. Average repair time

o. Employee satisfaction

p. Number of repeat customers

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