Absolute Performance Standard
The absolute performance standard is a measurement system to show how well a company is doing. The standard is only theoretical because it is impossible to reach perfect performance.
Absolute Performance Standard Details
Despite being unattainable, the absolute performance standard is still a good way to measure how a company and its workers are doing. A company can easily see how far off the mark of perfection they are and make goals on how to improve. A company should see changes little by little. Nothing is going to improve overnight.
The absolute performance standard can show the company’s progress over time. The best way to improve and get close to perfection is to make the right kind of goals and standards. Goals and standards need to be attainable, specific, observable, meaningful, and measurable. They also need to be stated in terms of quality, quantity, timeliness, or cost.
Once goals and standards are set companies should create an environment where workers and management can achieve the optimal results. The company should invest in the right materials and resources to help achieve its goals. That means old equipment needs to be replaced and training revamped or made available.
Example of Absolute Performance Standard
There are many different goals that a company can make and many different standards of absolute performance. For example, the production department could set a goal of zero defects or losses in the units they manufacture. This may not be totally attainable but it will show how well the department is performing.
An accounting firm may say they want to end each reporting period with zero errors. To achieve this goal the firm makes additional training available to their employees. This will help the workers perform better and know exactly what their duties are.
Types of Absolute Performance Standard
There are no set types of absolute performance standards. The standards are all set by the company and the department. The standards can be about production, performance, errors, or whatever the company needs to do to improve and reach a perfect standard.
Significance of Absolute Performance Standard
Even though the absolute performance standard is impossible to attain it is a good idea to have goals that a company is working toward. If there are no goals then there cannot be progress. How would a company know where to start improving things if there is no expectation to become better?
While having an absolute performance standard is a good idea it can create problems. As said before, achieving the absolute performance standard completely is not possible. If employees feel pressured to be perfect they can actually end up making more mistakes instead of less. This is especially true if a company gives out bonuses for reaching the performance goals.
Companies that set absolute performance standards and make goals to reach them need to consider the time and money doing so will require. Setting goals and making changes will not work if the company is not totally committed to investing the time and money it may take.