Performance measurements are an essential part of a successful management strategy: “you can’t improve, what you can’t track” and “what gets tracked, gets accomplished.” Nonetheless, measurements don’t tell the whole story. Either way, an effective and efficient performance review process can be challenging, but can also act as the backbone for individual improvements. Nearly all modern companies have a kind of employee measurement metric in place. Google uses performance metrics in a modern way, while Goldman Sachs uses a harder approach, by eliminating the bottom percentage of so-called “underperformer”.
What is employee performance measurement?
Performance measurement is the process of evaluating the performance of an individual against established goals and standards. This can include evaluating performance in terms of productivity, efficiency, effectiveness, and quality of work. The process typically includes setting specific, measurable goals/objectives, collecting and analyzing data, and providing feedback and coaching to employees. The goal of the performance measurement is to provide insight into how well an organization or individual is performing, identify areas for improvement, and help drive continuous improvement. Performance measurement can be applied to both individuals and teams, and can be used for a variety of purposes, including evaluating employee performance, identifying training needs, and making strategic decisions.
Why is a performance measurement important?
There are many reasons to assess and measure performance. Here are the top seven reasons:
- Goal alignment: Performance measurement helps ensure that employees are working towards goals that are aligned with the organization’s overall mission and objectives.
- Accountability: Performance measurement allows organizations to hold employees accountable for their work and ensure that they are meeting the expectations set for them.
- Continuous improvement: Performance measurement provides valuable information that can be used to identify areas of improvement and make necessary changes to processes, procedures, and training.
- Employee development: Performance measurement can be used to identify employee strengths and weaknesses, and to develop training and development plans that help employees reach their full potential, while also preventing employee turnover.
- Fairness: Performance measurement helps ensure that employees are being evaluated fairly and that promotions, raises, and bonuses are being distributed in a way that is based on merit.
- Decision making: Performance measurement data can provide insight into the effectiveness of different strategies, tactics and overall organizational performance and help make informed decisions.
- Productivity: Measuring performance can help identify bottlenecks, inefficiencies and identify ways to improve productivity.
Overall, performance measurement is a critical aspect of human resource management and can help organizations achieve their goals, improve processes, and develop their workforce. Furthermore, it helps you to acknowledge and reward the dedication of your top-performers which leads to increased employee retention and the growth of these high performers into potential leaders. This information enables you to set a benchmark for performance and begin to contemplate ways to enhance your staff’s performance.
Video: Terry Hansen on how to measure employee performance
The Different Types of Employee Performance Metrics
There are a variety of different types of employee performance measurement, from quantitative measurements such as key performance indicators and productivity metrics, to qualitative measurements such as surveys and interviews. The term performance management describes the process of setting, measuring and evaluating employees work. There are many different types of employee performance measurements you could use.
Key Performance Indicators (KPIs) for Performance Management
KPIs (Key Performance Indicators) are metrics used to measure the performance of an organization, department, or individual. KPIs can be used to measure anything from customer satisfaction to financial performance.
Goode examples to measure employee with KPIs:
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- Individual Productivity: Number of tasks/projects completed by an individual in a given time period.
- Quality of Work: Percentage of errors made by an individual per task/project.
- Efficiency: Percentage of time saved by an individual for each task/project completed.
- Customer Satisfaction: Percentage of customers who are satisfied with the service provided by an individual.
- Revenue Generated: Amount of money generated from sales or services by an individual.
- Goal Achievement: Percentage of goals achieved by an individual in a given time period.
- Professional Development: Number of courses/certifications completed by an individual.
- Feedback: Number of positive feedbacks received by an individual.
- Collaboration: Level of contribution made by an individual to group tasks.
- Time Management: Percentage of tasks/projects completed by an individual on time.
Key performance indicators are quantitative, which means they are good employee performance metrics when used correctly. They can provide insights into how an employee is performing and help to identify areas for improvement. KPIs can also be used to track progress and evaluate the success of different initiatives.
Objective and Key Results for Performance Reviews (OKRs)
OKRs (Objectives and Key Results) are a goal setting system used to measure and track employee performance. It is a framework that helps businesses set and track goals. Goals are set in the form of objectives, and then measurable results are specified to track progress towards those objectives. OKRs are a good way to measure employee performance as it encourages employees to focus on results, rather than activities. It also allows for a more transparent view of individual and team performance, so that employees and managers can easily identify areas for improvement.
Examples for good OKRs:
| Objective | Key Result #1 | Key Result #2 | Key Result #3 |
|---|---|---|---|
| Increase Customer Engagement | Increase customer loyalty program sign-ups by 10% | Increase total customer interactions by 20% | Increase customer satisfaction ratings by 5 points |
| Increase Revenue | Increase total sales by 10% | Increase average order value by 5% | Increase customer retention rate by 8% |
360-degree feedback as part of Performance Metrics
360 feedback is a method of collecting performance information on an employee from multiple sources, typically including the employee’s supervisor, peers, and direct reports. It is used both as a tool for employee development and as a way to measure overall performance.
To do a 360 feedback, the process involves setting up a survey for the employee and the relevant sources to answer. The survey should include questions about the employee’s job performance and strengths and weaknesses. Once the survey results are collected, the performance data can be analyzed to get a comprehensive picture of the employee’s performance.
To measure employees performance with 360 feedback, the performance data can be analyzed to determine areas of strength and areas of improvement. The performance data can also be used to assess the employee’s overall performance and provide feedback on areas of improvement. In addition, the performance data can be used to compare the employee’s performance to other employees in the same role, helping to identify areas of potential growth and development.
Self-evaluation as employee metric
This method involves having employees complete a self-evaluation of their own performance, which can then be compared to feedback from others to get a more well-rounded view of their performance.
- Establish a process: Before implementing self–evaluation as an employee performance metric, it is important to establish a process for how it will be conducted. This process should outline the scope of the review, who will be involved, how the assessment will be structured, and how feedback will be collected, recorded, and used.
- Set clear expectations: Make sure that employees understand the expectations of the self–evaluation process and the criteria that will be used to evaluate their performance. Provide examples of what constitutes a successful self–evaluation and what qualities and behaviors you expect to see in their assessment.
- Collect feedback: During the self–evaluation process, it is important to collect feedback from the employee. Ask questions that are directly related to their performance and encourage them to provide honest feedback about their strengths and weaknesses.
- Use the feedback: Use the feedback from the self–evaluation process to inform the employee’s performance review. Provide meaningful and constructive feedback so that employees can learn from their mistakes and become more successful in their work.
- Follow up: Once the self–evaluation process is complete, it is important to follow up with the employee. Discuss any areas where improvement is needed and provide resources and support to help them reach their goals.
Performance appraisals measurements
Performance appraisals are a formal process used to evaluate an employee’s performance against a set of predetermined criteria. This process can help employers identify areas of strength and areas of improvement in their employees’ performance and set goals to help them reach their full potential. Performance appraisals typically involve feedback from both the employee and their supervisor or manager, and should be conducted at least once a year.
To conduct a successful performance appraisal, employers should do the following:
- Set clear expectations: Employers should be clear about their expectations for the employee’s performance. Goals and objectives should be established and communicated to the employee prior to the appraisal.
- Collect feedback: Employers should collect feedback from both the employee and their supervisor or manager to ensure a comprehensive evaluation.
- Document results: Employers should document the results of the performance appraisal to ensure accuracy and provide a record of the evaluation.
- Offer feedback and support: Employers should provide feedback to the employee about their performance and offer resources and support to help them reach their goals.
- Follow up: Employers should follow up with the employee after the appraisal to ensure that they understand the feedback, their goals, and the resources they can use to reach them.
Benefits of an Effective Employee Performance Measurement System
An effective employee performance measurement system can have many benefits for employers and employees alike. With performance measurements, employees can better understand their goals and objectives, be motivated to do their best, and feel recognized and appreciated for their efforts. Additionally, performance measurements can provide employers with data-driven insights into employee performance, help them make better decisions, and improve employee retention and productivity. By implementing an effective performance measurement system, employers can help ensure their employees are performing at their best and achieving their goals.
- Improved Performance: Performance measurements provide employees with tangible goals and objectives and track their progress towards meeting those goals. This can help motivate employees to do their best and strive for excellence.
- Improved Productivity: Performance measurements provide visibility into employee performance and can help identify areas for improvement. This can help employers increase efficiency and productivity in their workforce.
- Improved Morale: Performance measurements can provide employees with a sense of accomplishment and recognition for their efforts. This can help boost employee morale and engagement.
- Improved Decision Making: Performance measurements can help managers make better decisions by providing them with data–driven insights into employee performance.
- Improved Retention: Performance measurements can help employers identify top performers and reward them accordingly. This can help improve employee retention and reduce turnover.
You might also be interested in our article “How to create your own Aptitude Test!”.
FAQ
What are 5 performance measures?
The 5 performance measures are:
- Quality of Work: Quality of work is a measure of the accuracy, completeness, and timeliness of the employee’s output.
- Productivity: Productivity is a measure of how much work is accomplished in a given amount of time.
- Attendance: Attendance is a measure of how often an employee is present for work and how punctual they are.
- Professionalism: Professionalism is a measure of an employee’s attitude, behavior, and communication skills.
- Adaptability: Adaptability is a measure of an employee’s ability to adjust quickly to changing situations and tasks.
What are three ways to measure employee performance?
The three top ways to measure employee performance are:
- Productivity metrics: This method involves measuring the amount of work an employee produces per unit of time. It helps employers track how efficiently employees are using their time and resources.
- Quality metrics: This approach focuses on the quality of an employee’s work. It can be measured through customer feedback, error rates, and other standards.
- Goal achievement: This method involves setting specific objectives for employees to achieve and measuring their success against these goals. It can be used to measure both short–term and long–term objectives.
What are the 7 key performance indicators/elements?
- Revenue growth
- Profit margin
- Customer satisfaction
- Return on investment (ROI)
- Employee turnover rate
- Quality assurance metrics
- Market share
They are often part of an employee perfromance review and depend on the impact a person has on those indicators.
What are the 10 characteristics of good KPI?
10 characteristics of good KPIs are:
- Graphic Rating Scale
- Forced Distribution
- 360–Degree Feedback
- Management by Objectives (MBO)
- Assessment Centers
- Checklists
- Behavioral
- Observation Scale
- Self–Evaluation
- Peer Review
- Human–Resource Balanced Scorecard
What are steps to measure employee performance?
There are 10 steps to effectively measure employee performance:
- Establish clear performance goals and expectations.
- Monitor and measure employee performance against those goals.
- Provide ongoing feedback and coaching.
- Use goal–oriented performance reviews.
- Conduct employee surveys and assessments.
- Measure employee engagement.
- Track employee attendance and punctuality.
- Measure productivity and efficiency.
- Reward and recognize high-performing employees.
- Provide professional development opportunities to help employees reach their goals.
