Page 713 - Encyclopedia of Business and Finance

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Standard-Based Work Performance

plan. Employees must know what will determine a pay technical skills needed to get the job done. Nevertheless,
increase: the manner in which the work performed is the notion of a skill being performed to a particular stan-
being measured, the work itself, or the factor to be meas- dard may not have been part of the novice employees’
ured. education and/or training, to say nothing of the employ-
ees considering their skill levels being tied to compensa-
EXAMPLES OF STANDARD-BASED tion. Thus the notion of developing standards as a route
WORK PERFORMANCE to accountability and increased job performance slowly
Many examples of work standards exist in business today. emerged.
Compensation experts say the key is to design a plan that
enforces the goals of the organization and to regularly In 1994, Congress created the National Skill Stan-
evaluate the effectiveness of the plan. Compensation & dards Board (NSSB) to develop a voluntary
national system of skill standards, assessment, and
Performance Management reported these benefits of pay- certification to enhance the ability of the United
for-performance plans:
States to compete effectively in the global econ-
Increased productivity and efficiency omy and to increase opportunities for America’s
workers (American Youth Policy Forum)
Better understanding of goals
Clearer communication The American Youth Policy Forum also reported that
skill standards were being developed across a number of
Improved collaboration
industries, starting with the manufacturing industry sec-
Successful retention tor and the sales and service industry sector. Skill stan-
dards tell the student and teacher not only the specific
The standard-based work-performance plan used by
skill required, but also the level at which the skill must be
the Ford Motor Company measures quality using war-
ranty figures expressed as repairs per thousand vehicles performed.
and both short- and long-term customer satisfaction. The state of Texas, for example, has developed a skill
In the late 1990s, Sun Microsystems started tracking standards program to guide the incorporation of industry-
quality of customer loyalty and customer quality. Employ- specific skill standards into the curriculum in technical
ees understand that the corporation’s overall success will and community colleges throughout the state. The Texas
affect their compensation. Employees know their annual program suggested skill standards are comprised of seven
bonus is based on a reduction in customer dissatisfiers essentials, divided into three parts:
(such as late delivery, software defects, and poor product
quality) and an increase in customer loyalty. The idea for 1. Work-oriented elements:
the Sun Microsystems plan emanated from quality bench- • Critical work functions
marking strategy meetings of chief executive officers of • Key activities
Sun Microsystems, Federal Express, Motorola, and Xerox.
The successful standard-based work-performance plans of • Performance criteria
these companies have three qualities in common: clear 2. Worker-oriented elements:
communication with employees, annual plan reviews, and
appropriately ambitious goals. • Occupational skills, knowledge, conditions
Employees must have a clear idea of the organization’s • Academic knowledge and skills
goals, how their jobs factor into meeting those goals, and • Employability knowledge and skills
how they will be rewarded for doing their part to achieve
the goals. The degree to which an employee is accountable 3. Evaluate performance:
for results on the job is the amount of control or oppor- • Statement of assessment
tunity available to the employee. Standard-based perform-
In summary, standard-based work performance is an
ance focuses on the importance of providing
accountability for work performance. Goals and compen- extraordinarily useful tool for both management and
sation should be assessed, reviewed, and updated at least employees to set both workplace expectations and meas-
once a year. urement strategies. Postsecondary education can serve a
unique role in including skill standards-based instruction
throughout their programs of study.
LAYING THE FOUNDATION
When an organization hires new employees, the assump- SEE ALSO Employee Compensation; Performance
tion is often made that the employees have the requisite Appraisal; Productivity

690 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION