Measuring people

Small business entrepreneurs conjure their intuitive abilities when hiring people. First impressions count a lot. Once people are hired, these hands-on entrepreneurs evaluate their staff up close, based on what they actually see and hear on the job. There are no formal evaluation formats but there are enough face to face encounters to forego with such bureaucratic processes. Promotions are earned through directly-observed behavior and overt expressions of loyalty.

While enterprises remain very small, informal staff evaluation methods may suffice. However, once enterprises grow, the task of measuring people becomes increasingly difficult. For one, face-to-face contact starts diminishing. Second, since staff evaluations tend to get "personalistic", there is a need to calibrate the ratings given by one manager to his/her group versus the ratings of another. The managers in charge of different groups may be using different standards.

The most common method used by entrepreneurs to measure or evaluate their people is to "size them up". More often than not, rather than using quantitative "sizers", very qualitative assessments are made. "He’s okay…She does the work well…He shows initiatve…She has a very pleasant personality."

Even when entrepreneurs embrace more formal appraisal systems, they usually opt for the qualitative evaluation of employee character traits (e.g. diligence, promptness, honesty, tactfulness, etc.), using a numerical scale of one to five (with five as the highest), rather than measure actual performance outputs and outcomes.

My experience, however, with many Asian organizations suggests that this qualitative appraisal does not work well. Most Asian managers give ratings of "fours" and "fives", with occasional "threes", to their subordinates. Asian culture dictates that the supervisor must show a bit of empathy and compassion and not put down the people who work under him or her.

Managers or supervisors are expected to "take care" of their own. After all, they work and, oftentimes, play together. As an antidote, the enterprise may resort to forced ranking methods. The best worker gets the highest score and the worst obtains the lowest score. Many do not like this method. It forces supervisors to stratify the team. One enterprise circumvented the intent of this method by rotating the rankings of the bottom dwellers to save them from getting fired.

Most supervisors do not like ranking their people They claim that the lowest-ranked employees are still good performers. They may well be.

Search for measuring devices

The search is still on for the best people measurement devices at three levels. The first level seeks to measure the potential of people at the recruitment stage and, later on, at the promotion stage. The second stage purports to measure people’s participation in the various undertakings, programs, and projects of the enterprise. The third level endeavors to measure the performance of people in terms of their delivered outputs and resulting outcomes.

There is, sometimes, confusion among people appraisers as to what they are actually measuring. An employee with very impressive academic credentials and previous work experience may actually obtain good ratings because of this "halo" effect. The person’s potential keeps getting factored into the evaluation.

Conversely, a not-so-well-heeled employee may be repeatedly overlooked because of biased mindsets as to his or her poor school records, which haunt the employee for years on end.

Potential

Potential can be measured in terms of meeting existing job requirements or in terms of prospective job promotions. Two criteria are of vital importance. First, the person’s aptitude in terms of knowledge, skills, and competencies for doing the activities and tasks demanded of a job can be measured. There are testing instruments on intelligence quotient, abstract reasoning, nume-rical abilities, verbal skills, technical competences, functional capabilities, and managerial exper-tise. Analytical, critical, creative, intuitive, systemic, and integrative thinking processes can be assessed. Even behavioral and communication skills as well as emotional quotient (people skills) can be calibrated.

Second, attitudes and values, including personality traits and personal preferences, can be measured through written and oral tests and through job behavior observations. Previous job behavior can give invaluable clues on how a person would conduct himself or herself in a new job, unless the old job was a mismatch to the person’s inherent intelligences, brain preferences, and fields of interest.

If there is no information on past actuations, probationary employment periods, on-the-job training stints, and apprenticeship contracts could be used as the basis of measurement.

Participation

Participation is the amount of hard work, cooperation, and involvement a person exhibits in the work place. It measures the contribution of the employee to the organization’s programs and projects, activities, and tasks.

At the lowest level, it measures the person’s compliance with the minimum expectations of a job. This includes the number of working hours spent and how the employee completes the given assignments within the time limit set.

At the next level, the person’s contribution to group or team efforts can be assessed. His or her ability to work with others and raise group morale is a quality worth measuring.

The highest level of participation is leadership. Does the person show initiative? Can he or she energize the entire team towards better productivity? Is the person a stabilizing influence or a dynamic change agent in the work place?

Performance

Performance goes beyond the efforts exerted by the employee. Performance means the actual measurement of manifested outputs, tangible results, and real outcomes of people during the time period of evaluation. Performers deliver the deliverables. They satisfy and delight customers. They generate sales. They impact positively on the lives of beneficiaries. They produce good bottom line results. They yield commendable results. They bring prestige, honor, and good will to the organization.

Performance measures are quantified attainments of the enterprise’s vision, mission, and objectives set. Entrepreneurs must translate qualitative objectives, like "attaining market leadership" or "achieving a reasonable return on investment", into no-nonsense performance indicators like 40% market share, P10 million sales, 20% return on equity, and so on.

What cannot be measured cannot be managed well. Hence, the all important task of measuring people is a prerequisite to good management.

(Eduardo A. Morato, Jr. is on the faculty of the W. SyCip Graduate School of Business of the Asian Institute of Management. For comments and inquiries, you may contact him at: wsgsb@mail.aim.ed.ph. Published "Entrepreneur’s Helpline" columns can be viewed on the AIM website at www.aim.edu.ph).