Setting standards for measuring performance

Most of the white-collar jobs in any business, including most marketing jobs, defy statistical standards. The problem is to measure performance of persons whose output cannot be measured in terms of facts and figures. Standard will, of necessity, be largely subjective rather than objective. Managerial judgments substitute for engineering standards in those jobs where we cannot set quantitative, objective standards.
Where jobs are said to be measurable, that is, where we can set more or less quantitative standards of performance, there is a relatively simple six-point formula for setting standards:
Define the job.
Define company goals or needs.
Define company resources to attain goals or needs.
Select the specific areas of performance that you propose to measure (for example, the over-all job of a district sales manager).
Check with present performers for realism of proposed means of measuring the performance.
Follow up and check results.
In the case of the job of the district sales manager, which is used as an example of the foregoing, a prominent company has set the following standards of performance:
Company policies: A district manager is up to standard if he administers set policy properly in his district.
Personnel: A district manager is up to standard if he maintains enough men to do the job adequately and has qualified trainees for any changes if needed, if he has job descriptions for the men under him, and reviews the performance of each man with this man at least once a year, if he has helped his men to plan their work effectively and to improve their sales skills, and if he handles personnel problems promptly and efficiently,
Sales: A district manager is up to standard if individual sales goals have been set for each salesman, if the sales volume of the district as a whole is satisfactory, if trade relations in the district are satisfactory, and if principal accounts are retained and new ones are added periodically.
Selling expense: A district manager is up to standard if annual budget is based on specific needs, if expenses are planned and administered within the budget, and if sales-cost ratio is in line with company goals.
Product sales: A district manager is up to standard if price-change recommendations are real¬istic and justified by market conditions, if there is reasonable price stability in the territory, and if the district attains a satisfactory product sales mix and consequent satisfactory profit mix.
Thus, we see that in this case the company sets up reasonable, realistic goals, and measures the district sales manager's performance on the basis of five factors: company policy interpretation, personnel administration, sales, cost of sales, and the product and profit mix in the territory. The district sales manager has a clear picture of what is expected of him.