Performance standard: Overview, definition, and example
What is a performance standard?
A performance standard is a set of measurable criteria or expectations that define the level of work, quality, or outcomes required for a specific task, job, or agreement. Performance standards are used to assess the efficiency, effectiveness, and quality of the work being done, ensuring that employees, contractors, or business partners meet the agreed-upon benchmarks. These standards can be used in various areas, such as employee performance, product quality, customer service, or project outcomes.
In simpler terms, a performance standard is a clear rule or expectation that defines how well something should be done.
Why are performance standards important?
Performance standards are important because they set clear expectations for what is required and provide a way to measure success. They help ensure consistency, accountability, and quality in the work being done, whether by employees, contractors, or suppliers. By defining specific benchmarks, performance standards help businesses maintain high standards of service, production, or output, and they make it easier to identify areas that may need improvement.
For SMB owners, establishing and monitoring performance standards helps maintain quality, increase productivity, and ensure that everyone involved in a project or business operation is aligned with the company’s goals.
Understanding performance standard through an example
Imagine you own a retail store, and you set a performance standard for your sales team that each team member should make at least 10 sales per shift. This performance standard gives the team a clear target and helps you measure how well each employee is performing. If an employee consistently meets or exceeds this standard, it shows that they are performing well. If they fall short, you can work with them to understand the issue and help them improve.
In this example, the performance standard of "10 sales per shift" is a measurable goal that helps assess and improve employee performance.
Example of a performance standard clause
Here’s an example of what a performance standard clause might look like in an employment contract or service agreement:
“The Service Provider agrees to meet the following performance standards during the term of this Agreement: (a) Respond to all customer inquiries within 24 hours, (b) Resolve customer complaints within 48 hours, and (c) Maintain a customer satisfaction rating of at least 90%. Failure to meet these standards may result in penalties or termination of the Agreement.”
Conclusion
Performance standards are essential for setting clear expectations and measuring the success of tasks, jobs, or projects. For SMB owners, defining and communicating performance standards helps ensure high levels of productivity, quality, and customer satisfaction. Whether managing employees, contractors, or service providers, performance standards create a foundation for success and provide a way to monitor and improve performance.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.