Performance Management 243
Another strategy that goes beyond financial indicators to evaluate
performance and is related to goalsharing is the balanced scorecard
(Kaplan & Norton, 1996). Although no one will dispute the importance of
fi nancial measures and the importance of operating in the black, fi nancial
measures are not always the best indicators of effectiveness in the public
and nonprofi t sectors. Public and nonprofi t agencies often provide services
that are not profi table and to citizens and clients who need special and
often expensive assistance. The balanced scorecard approach to evaluating
performance includes measures such as customer satisfaction, employee
satisfaction and quality, in addition to relevant fi nancial measures.
Gainsharing, goalsharing, a balanced scorecard approach, and other
team - based quality improvement processes rely on many of the same
principles as performance evaluation and are not antithetical to the per-
formance evaluation process. If done correctly, quality improvement
processes require the development of performance standards and mea-
sures to determine whether the standards have been achieved; they require
feedback from multiple sources and the development of an action plan for
reaching future goals. What is key to the success of any of these quality
improvement and performance assessment systems is not the name of the
process used but the HRM policies and rules that support and enhance
quality improvement processes in the entire organization. Exhibit 8.6 identi-
fi es key questions that management should consider prior to developing
a performance evaluation system.
To facilitate change, HRM departments must expand their awareness
to ensure that all work focuses on the agency ’ s mission and its stakehold-
ers. Continuous improvement must be integrated into its culture. Mutual
respect and teamwork among all levels of the organization are necessary.
Quality improvement requires that supervisors give workers more autonomy
and allow their participation in decision making. Employee training there-
fore must extend beyond job or technical skills. Since all workers will be
expected to function in a group setting, quality improvement and per-
formance evaluation programs must provide training in group dynamics,
problem - solving techniques, and the use of quality improvement tools.
Quality improvement processes and performance evaluation systems do
not have to be at odds with each another. Evaluation systems can be
developed that focus on developing individual job skills that support
the group ’ s efforts for quality and productivity improvements. The com-
petitive nature of evaluation can be eliminated by comparing employees
to standards instead of to one another.