Assessing Service Performance

The service industry is the most important economic sector worldwide. Thus, economic growth within developed economies is almost exclusively based on services. In the production of services, employees have a crucial influence on the perceived quality of the output, since they are the core of the interaction with the customers. In this context, employees´ knowledge and skills are primary resources for an organization´s ability to compete and generate profits. The adequate evaluation of employee performance, employee empowerment and a concern for training therefore becomes a necessity for each service organization. However, traditional approaches for evaluating employee performance mostly originate from the manufacturing sector and therefore often fall short in accounting for the advanced requirements of evaluating service performance.

Adopting a mixed methods approach, this research investigates the suitability of Data Envelopment Analysis (DEA) for evaluating employees´ performance in the service sector. Although this method has widely been used to evaluate the performance of organizations in a variety of contexts, there is very little experience regarding the application of DEA on individual level and employee´s response to it.

To gain empirical evidence, DEA was applied to performance data of service employees in a German Cooperative Bank. Subsequently, focus group interviews among bank managers and members of the workers´ council as well as a questionnaire study among employees were carried out to investigate DEA´s perception by all major stakeholders and thus provide substantiation of its technical and organizational suitability.