Robust approach for efficiency measurement of employee performance under profit sharing system

Abstract

This study estimates the efficiency of employees' performances under profit sharing system using data envelopment analysis (DEA). This method is one of the most common methods used in efficiency measurement analysis. However, a robust approach is used to deal with the complexity of the traditional DEA estimators. Robust Data Envelopment Analysis (RDEA) is very useful when outliers contaminate the data. The sample includes five divisions which cover as many as 102 employees of a shipping company in Malaysia are analyzed by using R program. The results reveal that the initial DEA efficiency is an over-estimate of the true efficiency. RDEA provides better accuracy of the results. Further, the robust approach is appropriate to be used in the measurement of the efficiency of company divisions under profit sharing program.

Performance Efficiency Measurement in Managing Elementary Schools by Using a Robust Data Envelopment Analysis

“…In order to see the comparison of the empirical results from the traditional DEA and RDEA approaches it could be seen in figure 2, figure 3, and figure 4 for all the numbers of replication. DEA model of input-oriented indicated that inefficient units needed to reduce their inputs proportionally to achieve efficient performance when the output variables were constant (Mahmudah & Lola, 2018;Simar & Wilson, 2007). RDEA produced a similar value of the average efficiency score for all the number of replications, which was 0.926.…”

“…Mahmudah & Lola applied RDEA in estimating employee's performance when they received profit sharing from the company by using 102 samples in a shipping company in Malaysia. The results suggested that the robust approach in data envelopment analysis provided better accuracy of the bias-corrected efficiency scores than the traditional DEA (Besstremyannaya et al, 2015;Mahmudah & Lola, 2018). There were 34 provinces in Indonesia with a total of 147,513 elementary schools which consisted of 132,609 public elementary schools and 14,904 private elementary schools.…”

“…This study applied the robust approach to obtain better results of technical efficiency scores as well as to overcome the weakness in the traditional DEA, which tended to produce over-estimate efficiency scores. However, some studies used this method in DEA for analyzing the efficiency score of DMUs in various fields of studies (Bertsimas & Sim, 2003;Mahmudah & Lola, 2018;Mustakim et al, 2019).…”