An Integrated Model of Weighted Composite Index and Stochastic Frontier Analysis for Performance Evaluation and Reward Allocation

Authors
Hadis Pouresmaili
Reza Pourmousa
Shahid Bahonar University of Kerman
Abstract
Background and Objective: Performance evaluation and reward allocation in human resource management often rely on subjective judgment. This study examines a combination of two approaches, a weighted composite index (performance index, PI) and stochastic frontier analysis (SFA), for assessing employee performance and efficiency.



Methodology: A mixed-method design was applied in a private mining company in Kerman province. All 43 administrative employees participated (census sampling). The Analytic Hierarchy Process (AHP) assigned weights to seven performance indicators. SFA analyzed input-output data (working hours, task complexity, support assistance, work experience). The PI combined accuracy, speed, quality, satisfaction, delay, collaboration, and error. Bootstrap with 1000 repetitions examined model stability.



Findings: With α = 0/5, final scores ranged from 0/54 to 0/92. A one-sided LR test rejected the no-inefficiency hypothesis (LR = 24/6, p-value < 0/001). Bootstrap 95% confidence intervals remained within ±0.02 of point estimates. The exponential distribution for the inefficiency component showed a better fit than the half-normal distribution (AIC: 45/2 vs. 48/7).



Conclusion: The PI-SFA model provided rankings of 43 employees by performance and efficiency. These results are specific to one company. Application to other organizations would require separate investigation.
Keywords
Performance evaluation
Stochastic Frontier Analysis
Reward Allocation
Weighted Performance Index
Technical Efficiency
Future Studies
Human Resources
Human Analytics
رفرنس های متنی مثل خروجی کراس رف را در اینجا وارد کرده و تایید کنید
سرمد، زهره؛ بازرگان، عباس؛ و حجازی، الهه (۱۳۹۵). روش‌های تحقیق در علوم رفتاری. تهران: آگاه.
هومن، حیدرعلی). ۱۳۹۵.(مدل‌سازی معادلات ساختاری. تهران: سمت.
رفرنس های متنی مثل خروجی کراس رف را در اینجا وارد کرده و تایید کنید
سرمد، زهره؛ بازرگان، عباس؛ و حجازی، الهه (۱۳۹۵). روش‌های تحقیق در علوم رفتاری. تهران: آگاه.
هومن، حیدرعلی). ۱۳۹۵.(مدل‌سازی معادلات ساختاری. تهران: سمت.
Aguinis, H. (2019). Performance Management (4th ed.). Pearson Education.
Aguinis, H. (2019). Performance Management (4th ed.). Pearson Education.
Aigner, D. & Lovell, C. A. K. & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6(1), 21-37.
Aigner, D. & Lovell, C. A. K. & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6(1), 21-37.
Armstrong, M. & Baron, A. (2005). Performance management: The new realities. CIPD.
Armstrong, M. & Baron, A. (2005). Performance management: The new realities. CIPD.
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Efron, B. (1979). Bootstrap methods: Another look at the jackknife. The Annals of Statistics, 7(1), 1-26.
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Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society: Series A, 120(3), 253-281.
Hooman, H. A. (2016). Structural Equation Modeling. Tehran: Samt Publications. (In Persian)
Hooman, H. A. (2016). Structural Equation Modeling. Tehran: Samt Publications. (In Persian)
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Jondrow, J., Lovell, C. A. K., Materov, I. S., & Schmidt, P. (1982). On the estimation of technical inefficiency in the stochastic frontier production function model. Journal of Econometrics, 19(2-3), 233-238.
Kaplan, R. S. & Norton, D. P. (1996). The balanced scorecard. Harvard Business Press.
Kaplan, R. S. & Norton, D. P. (1996). The balanced scorecard. Harvard Business Press.
Saaty, T. L. (1980). The Analytic Hierarchy Process. McGraw-Hill.
Saaty, T. L. (1980). The Analytic Hierarchy Process. McGraw-Hill.
Sarmad, Z., Bazargan, A., & Hejazi, E. (2016). Research Methods in Behavioral Sciences. Tehran: Agah Publications. (In Persian)
Sarmad, Z., Bazargan, A., & Hejazi, E. (2016). Research Methods in Behavioral Sciences. Tehran: Agah Publications. (In Persian)
Vroom, V. H. (1964). Work and motivation. Wiley.
Vroom, V. H. (1964). Work and motivation. Wiley.
Yin, R. K. (2018). Case study research and applications: Design and methods (6th ed.). Sage Publications.
Yin, R. K. (2018). Case study research and applications: Design and methods (6th ed.). Sage Publications.
سرمد، زهره؛ بازرگان، عباس؛ و حجازی، الهه (۱۳۹۵). روش‌های تحقیق در علوم رفتاری. تهران: آگاه.
هومن، حیدرعلی). ۱۳۹۵.(مدل‌سازی معادلات ساختاری. تهران: سمت.
سرمد، زهره؛ بازرگان، عباس؛ و حجازی، الهه (۱۳۹۵). روش‌های تحقیق در علوم رفتاری. تهران: آگاه.
هومن، حیدرعلی). ۱۳۹۵.(مدل‌سازی معادلات ساختاری. تهران: سمت.
Aguinis, H. (2019). Performance Management (4th ed.). Pearson Education.
Aguinis, H. (2019). Performance Management (4th ed.). Pearson Education.
Aigner, D. & Lovell, C. A. K. & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6(1), 21-37.
Aigner, D. & Lovell, C. A. K. & Schmidt, P. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6(1), 21-37.
[5] Armstrong, M. & Baron, A. (2005). Performance management: The new realities. CIPD.
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[8]Efron, B. (1979). Bootstrap methods: Another look at the jackknife. The Annals of Statistics, 7(1), 1-26.
[8]Efron, B. (1979). Bootstrap methods: Another look at the jackknife. The Annals of Statistics, 7(1), 1-26.
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[9] Farrell, M. J. (1957). The measurement of productive efficiency. Journal of the Royal Statistical Society: Series A, 120(3), 253-281.
[10] Hooman, H. A. (2016). Structural Equation Modeling. Tehran: Samt Publications. (In Persian)
[10] Hooman, H. A. (2016). Structural Equation Modeling. Tehran: Samt Publications. (In Persian)
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[11] Jondrow, J., Lovell, C. A. K., Materov, I. S., & Schmidt, P. (1982). On the estimation of technical inefficiency in the stochastic frontier production function model. Journal of Econometrics, 19(2-3), 233-238.
[12] Kaplan, R. S. & Norton, D. P. (1996). The balanced scorecard. Harvard Business Press.
[12] Kaplan, R. S. & Norton, D. P. (1996). The balanced scorecard. Harvard Business Press.
[13] Saaty, T. L. (1980). The Analytic Hierarchy Process. McGraw-Hill.
[13] Saaty, T. L. (1980). The Analytic Hierarchy Process. McGraw-Hill.
[14] Sarmad, Z., Bazargan, A., & Hejazi, E. (2016). Research Methods in Behavioral Sciences. Tehran: Agah Publications. (In Persian)
[14] Sarmad, Z., Bazargan, A., & Hejazi, E. (2016). Research Methods in Behavioral Sciences. Tehran: Agah Publications. (In Persian)
[15] Vroom, V. H. (1964). Work and motivation. Wiley.
[15] Vroom, V. H. (1964). Work and motivation. Wiley.
[16] Yin, R. K. (2018). Case study research and applications: Design and methods (6th ed.). Sage Publications.
[16] Yin, R. K. (2018). Case study research and applications: Design and methods (6th ed.). Sage Publications.