Page 173 - Psychological Management of Individual Performance

156 analysis of performance potential
INTRODUCTION

In an industrial organization the expenditure for personnel amounts to sums of 20 to 25%
of the turnover or 40 to 45% of the net product (turnover minus purchases; e.g., Agrevo,
1998; Hoechst, 1998; Novartis, 1998). Along with the organizations’ aim of continual
increases of their efficiency goes the demand of permanent cost-cutting exercises. It goes
without saying that these efforts include expenses for human resources. A logical con-
sequence of such a claim would be a cutback in personnel. However, if the performance
level of the organization is to be sustained, a cutback is only feasible if the remaining
staff works more efficiently. One possibility to attain this would be human resources de-
velopment; another, the exchange of current personnel by new personnel which already
possesses higher qualifications. In order to be cost-effective, both measures presuppose
an analysis of the performance potential. A sound potential analysis is important because
failures are costly for the organization.
The viewpoint of the organization is central in this chapter, which, however, is not the
only possible perspective that stresses the fact that development of human resources is
useful. For example, from the view of political economists, measures that aim at a high
performance level are essential in order to guarantee the competitiveness of the whole
economy of a country. And seen from the angle of the individual, a high performance
level and the opportunity to develop one’s capability lead to job satisfaction and could
be a way of self-realization.
In this chapter a definition and delimitation of the term potential analysis is given
before contexts are explained in which potential analyses are carried out. Then follows
a description of the objectives of the procedures. The subsequent section focuses on
methodologicalissuesthatareassociatedwiththemeasurementofperformancepotential.
The final section of the chapter comprises the most popular methods of potential analysis
with the focus on assessment centers.

DELINEATION OF PERFORMANCE POTENTIAL ANALYSIS

DEFINITION OF CONSTITUENTS

Before expounding various definitions of potential analysis it is necessary to comprehend
the meaning of the term’s components “potential” and “performance”. Campbell (1999,
p. 402) defines performance
“as behavior or action that is relevant for the organization’s goals and that can be
scaled (measured) in terms of the level of proficiency (or contribution to goals) that
is represented by a particular action or set of actions. Performance is what employers
(self or other) pay you to do, or what they should pay you to do.”

The definition needs further specification for its application in the context of poten-
tial analysis. It should be mentioned that it is not organizations which have goals but
rather human beings, i.e., the management as well as shareholders, employees, works
councils, etc. In order to run the business more or less in accordance with such goals,
certain functions (such as production, purchasing, sales, etc.) are specified. Within
these functions several tasks are combined to a job position. These positions are filled
by employees. Performance as contribution to the goals of the organization—which