Informal Standards

Every organization has performance standards of sorts. Even when they do not exist formally, supervisors have standards in mind for the various jobs based on their knowledge of the work and past performance. These types of standards are informal. Standards based on supervisor’s estimates and past performance data have weaknesses, however. First, in almost all such situations, methods of work performance have not seen standardized. Therefore, it is difficult to state what output rate, based on past records, is appropriate because past performance data may have been based on various methods. A second major defect in standards based on estimates and past performance records is that they are likely to be too strongly influenced by the working speeds of the individuals who held the jobs. Were those workers high or low performers? The formal methodology of work measurement is designed to offset the disadvantages of informal performance standards.

Work Time Distribution:

We wish to set up standards that are applicable to the working population, not just for a few selected people within that population. The standards problem is comparable in some ways to that of designing a lever with the proper mechanical advantage to match the capabilities of workers. But not just any worker; the force required to pull the lever should accommodate perhaps 95 to 99 percent of the population so that anyone who comes to the help will have the necessary strength.

The results of a study of 500 people doing an identical task where distribution shows that average performance time varies from 0.28 minute to 0.63 minute per piece. If past records reflected data from one or more individuals taken at random from the population of 500, a standard based on their performance might not fit the whole population very well. On the other hand, if we have good data concerning the entire distribution, we can set up standards that probably would be appropriate for everyone. The common practice is to set the standard so that it accommodates about 95 percent of the population. A standard performance time of about 0.48 minute is one that about 95 percent of the individuals exceeded. If we pegged the standard at this level, we would expect that practically all employees on the job should be able to meet or exceed the standard.

Some managers feel that it is not wise to quote minimum performance standards such as these for fear that they will encourage relatively poor performance. In this framework, standard performance is about the average of the distribution (0.395 minute) and we expect that most workers will produce at about the standard that some will fall below, and some will exceed the standard. Both systems of quoting standards are used, although the practice of quoting minimum acceptable values is more common than that of quoting average values.

Using the minimum acceptable level as a standard of performance, we find that the normal time for the data of is 0.48 minute, the level exceeded by 95 percent of the sample. The total standard time is then given by

Total standard time = Normal Time

+ Standard allowance for personal time
+ Allowance for measured delays normal to the job
+ Fatigue allowance

We will discuss the several allowances later, but the central question now is: How do we determine normal time in the usual situation when only one or a few workers are on the job? The approach to this problem used in industry is called performance rating.