Performance Measurement Approach
ASE STUDY Choosing a Performance Measurement Approach at Paychex, Inc.
The following job description is for an account executive at Paychex, Inc. (www.paychex.com). Paychex,
Inc., is a leading national provider of payroll, human resources, and benefits outsourcing solutions for
small- to medium-sized businesses. Paychex is headquartered in Rochester, New York, but the
company has more than 100 offices and serves hundreds of thousands of clients nationwide. Because
account executives often make sales calls individually, their managers do not always directly observe
their performance. Furthermore, managers are also responsible for sales in their markets and for
staying up-to-date on payroll laws. However, account executives are responsible for training new
account executives and networking in the industries in which they sell products. For example, if an
account manager is responsible for retail companies, then that account executive is expected to attend
retail trade shows and professional meetings to identify potential clients and to stay current with the
issues facing the retail industry.
ACCOUNT EXECUTIVE JOB RESPONSIBILITIES
�� Performing client needs analysis to ensure that the major market services product can meet a
client�s requirements and expectations.
�� Establishing clients on the host processing system.
�� Acting as primary contact for the client during the conversion process.
2
�� Supporting clients during the first few payrolls.
�� Completing the required documentation to turn the client over to customer service for ongoing
support.
Performance measurement plays an important role in an organization as it provides a
tool for both supervisors and managers to gauge employee performance. Furthermore,
Performance measurement is paramount to enable managers to find out if employees can meet
organization goals. Performance measurement can be defined as a practice of analyzing,
collecting and reporting individual performance in a company (Bititci et al., 2012 pg 208). It
involves analyzing company’s processes to find if the business processes output are consistent
with the objectives of the company.
However, this paper focuses on coming up with the most appropriate Performance
Measurement Approach that can be used by Paychex Inc managers to assess account
executives. Furthermore, this article discusses the ideology that developing good relationships
within the industry is of dire importance for the success of Paychex, Inc.
Be as it may, account executives at Paychex, Inc work at different offices nationwide
apart from working at the headquarters office which is situated at Rochester. They incur
minimum supervision from their managers. They perform different duties such as training of
new account executives, establishing clients on the host processing system, supporting new
clients during the initial stages in receiving payrolls and performing the client need analysis.
3
Furthermore, it is their duty to perform administrative functions such as documentation,
scheduling and receiving client calls among many other duties. Due to the nature of account
executive duties, it is best for managers to assess account executive performance using the
Result Based Approach.
The result Based Performance approach is the best for this case given the nature of job
executives who work at Paychex, Inc. That is, account executives work with minimal
supervision from the managers. Hence, the managers should analyze results of their duties in
the organization to assess their performance.
Result Based Approach is efficient for measuring the performance of employees who
work with little or no supervision. Managers can begin by identifying account executive goals
and list the resources required for the account executives to achieve this goal. The employee
performance is gauged by the number of goals he/she has accomplished within the stipulated
time frame. To achieve this goal, managers can employ Management by Objectives technique
as one of the tools to measure performance using Result Based Approach. Managers at Paychex
can come up with corporate goals, set and align account executive goals, monitor their
performance and measure their performance based on their outcome (Searcy, 2012 pg 247).
Also, managers should reward account executives who perform best to encourage them to
perform even better at work.
Results based approach is advantageous because; takes less time, the cost of
performance measurement is low, and the information collected are objective oriented (Zairi,
2012 pg 94). This approach is appropriate for assessing executive because: they are skilled in
the necessary behavior. Behaviors defining account executives and the results of their jobs are
4
related. It is expected that account executives should always exhibit a consistent improvement
in their results over time. Managers also expect account executives to do their duties in the
right way and ethically.
Having a good relationship between an organization and external business environment
plays an important role in creating an enabling environment for business. The success of a
company in business activities depends on developing a good and strong relationship with other
companies within the industry. Good organization relationship with the external environment
helps an organization to fill gaps within the market and, therefore, enable an organization to
focus on producing core products and services.
Paychex Inc can enjoy the following by having a good relationship with other
organization within the industry. Having a good relationship with other key players within the
industry can enable an organization to access resources such as raw material, capital,
intellectual property, buildings and many others (Rice, 2013 pg 64). A good relationship with
other organizations within the industry can help the organization to expand into the
international market. This expansion would not have been easy without having a good
relationship within the industry. A good relationship with clients enables a company to develop
products that fit customer needs. Therefore, the company will be able to develop better
products that are tailored towards the customer needs and hence fit the entire market.
Companies often work under the umbrella of industrial associations to help in increasing
credibility. On the same note, industrial associations help companies to spread risks and
rewards as well as increase the rate of adoption of new technology and innovations (Rice, 2013
pg 92).
5
Furthermore, good relationship in the internal environment can help a company to
improve teamwork, employee morale and, therefore, increase the company productivity.
Teamwork often results in better performance by employees. A dynamic team of well-
motivated employees plays an important role in improving the organization’s reputation and
improve the organization sustainability.
For Paychex, Inc it is best for them to employ absolute standards appraisal method as
compared to a comparative system. Absolute standard systems employ appraisal methods such
as Behaviorally Anchored Rating Scale (BARS), Management by Objectives (MBO) and
Critical Incidents. Behaviorally Anchored Rating Scales (BARS) compares individual
performance in the workplace against specific examples of traits that are anchored to numerical
ratings. The best appraisal tool for evaluating account executive is Management by Objectives
(MBO). MBO measures actual performance and achievement against the defined objectives
(Carmen, 2014 pg 438). Therefore, Management by Objectives is ideal because it aligns
organizations objectives with the quantitative measures such as profits and defects in units
produced as well as the number of sales. Management by Objectives is beneficial because it
improves employee commitment and motivation. In our case, it also ensures better
communication between the managers and account executives. However, it as a weakness as it
emphasizes more on attaining set objectives rather than having a systematic plan of attaining
such objectives (Austin, 2013 pg 67).
The issue of results not paying off immediately or translate directly into sales may not
be a challenge on performance review. This is because result based approach does not focus
only on the short run results but the long run. MBO focuses on the set objective and working
towards the attainment of long-run goals rather than short-run (Bititci et al., 2012 pg 307).
6
To conclude, the best performance measurement approach that can be adopted to
measure the performance of account executive is the results-based approach. This is because it
is less costly, objective oriented and takes less time to measure performance. Be as it may,
organizations should have good relationships within the industry it operates. This feature
enables an organization to network and acquire items that would not have been otherwise easy.
As a final point, Paychex should employ absolute standard method of performance appraisal
such as Management by Objectives (MBO)
7
References
Austin, R. D. (2013). Measuring and managing performance in organizations. Addison-
Wesley.
Searcy, C. (2012). Corporate sustainability performance measurement systems: a review and
research agenda. Journal of business ethics, 107(3), 239-253.
Bititci, U., Garengo, P., Dörfler, V., & Nudurupati, S. (2012). Performance measurement:
Challenges for tomorrow*. International Journal of Management Reviews, 14(3), 305-
327.
Zairi, M. (2012). Measuring performance for business results. Springer Science & Business
Media.
Carmen, A. (2014). Management by Objectives. Ovidius University Annals, Economic Sciences
Series, 14(1), 433-436.
Rice, A. L. (2013). The enterprise and its environment: A system theory of management
organization (Vol. 10). Routledge.
