What Is Absolute Performance Standard?

The absolute performance standard is a theoretical benchmark for quality control. Although it is unattainable, it can be a good way to measure how well a business and its workers are doing. An organization can measure how far the business and its processes are falling from the mark of perfection the absolute performance standard represents.

Optimally, the business would move incrementally toward the absolute performance standard as it improves its processes. When used in this way, the absolute performance standard can measure an organization's progress, and how effective and efficient it is at running its business.

The absolute performance standard is a good way for a company to measure its progress and efficiency.

Performance standards, though, should be attainable, specific, observable, meaningful, measurable and stated in terms of quality, quantity, timeliness, or cost.

Understanding the Absolute Performance Standard

The absolute performance standard is a quality control concept companies adopt in order to improve their efficiency. Quality control is a business process that ensures there are no defects or errors in production and that product quality is consistent and/or improved. Because it relies on an absolutely perfect operation, the standard is both ideal and unattainable.

In order for a company to successfully adopt an absolute performance standard, there are a few steps it must take.

  • A company must create an environment where both management and workers can achieve optimal results.
  • It must invest in the right materials and resources to help employees achieve their goals. So an older, faulty machine on the production line should be replaced with newer technology to avoid poorly constructed products.
  • The company may also consider ramping up training for its employees. If they are not up to speed with what's required of them and how to achieve their goals, the company will not be able to come close to its absolute performance standard, making it pointless.

Having an absolute performance standard in place means companies have a way to measure their efficiency and performance. They can also find opportunities for improvement and how to implement these strategies. Say, for instance, a production team in a manufacturing company is comprised of 25 members, and only five employees are not meeting their goalsPerformance standards should be attainable, specific, observable, meaningful, measurable, and stated in terms of quality, quantity, timeliness, or cost. The company can find new training opportunities for those employees to boost their performance levels to meet the others based on the performance standards put in place.

Disadvantages of Absolute Performance Standard

As mentioned above, an absolute performance standard is great in theory but is impossible to achieve in reality. No individual or organization can execute a perfect operation with zero defects, errors, or losses. Even though it may be an ideal, there are some disadvantages when it comes to adopting a measure like this.

One consideration companies must keep in mind is what it would cost a company's labor pool. Because there are certain standards employees must live up to, the team may feel pressured to achieve its goals—especially if it involves pay incentives. This may have the reverse effect, and cause more errors in their performance.

Furthermore, implementing these standards requires a considerable investment of capital. Company heads may be required to budget for new training plans and may need to purchase new technologies, equipment, and machinery. Given how long it takes to implement new strategies, it's also a huge time commitment that both management and the employees must make.

Key Takeaways

  • The absolute performance standard is a theoretical quality control benchmark, which ensures zero defects, error, and losses.
  • Although it is ideal and desirable, this standard is unachievable in reality.
  • Companies may choose to move toward an absolute standard incrementally as it improves its processes.
  • The absolute performance standard may come at a cost including training, and new resources and materials.

Examples of Absolute Performance Standard

Many organizations implement different forms of performance standards that measure different parts of their business. One example is putting in a zero defects or losses goal for its team. For example, a manufacturer may implement a zero defects standard as part of its quality control to ensure the products it makes and ships to retailers are complete and without flaws.

The standard may also apply to bank branches which encourage employees to finish each quarter in the fiscal year with no losses. The employees may need to follow best practices to prevent cash shortages and losses from checks.

Other companies may implement a pay-for-performance incentive program. This is based on merit for workers who do well in their jobs.