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Comparing performance to standards is a way of objectively evaluating the performance of an employee or a process. When you do this, you have objective standards that can be measured and you compare what has actually happened to the standards that are expected.
This is a better way of evaluating things than going "by your gut." For example, let's say you are a manager and you feel like every time you look at one of your employees he is not really seeming to work hard. That is a gut feeling. If you act on it, you might demote him or reprimand him or even fire him. But it would be better to compare his performance to an objective standard. Look at the amount of work he has gotten done. Has he gotten everything done on time and to a high quality? This would be an objective standard and you would be able to compare his actual performance to that standard.
This would allow you to judge this employee more accurately than you would if you go on your gut feeling about him.
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