Data Envelopment Analysis as a Tool for Evaluation of Employees Performance

Abstract

Employee performance evaluation systems, which are well designed and properly used, are essential for the effective functioning of the organization. Due to some disadvantages of traditional methods, there is a need to develop new evaluation procedures. The main contribution of this paper is to apply a multidimensional approach, represented by the method of Data Envelopment Analysis (DEA) to measure the performance and efficiency of employees. This approach overcomes several weaknesses of traditional systems of the employees' performance evaluation and provides a comprehensive indicator of the performance of individual employees, their technical efficiency score. The input variables of the used model were the motivational factors (salary, working conditions and benefits); the output was the indirectly assessed performance through work motivation, job satisfaction and organizational commitment. Furthermore, we applied the nonparametric methods for compliance testing of mean values to validate the stated hypotheses. In a baking company using the DEA method, we identified 12 efficient employees and 48 employees who need to improve their outputs to achieve their maximum efficiency.