9 Vital Metrics for Measuring Employee Performance and How to Use Them Effectively
One of the most critical responsibilities for People Operations is providing the support needed for employees to perform their best. You are a force multiplier, helping every employee under your guidance reach their full potential and contribute the most to the company.
Understanding how to measure employee performance is the first step to achieving that.
After all, how can you support employee growth and performance if you don't know how well they are performing?
This article will discuss why measuring employee performance is crucial and discuss different theories and methods from an HR perspective.
We will also provide some examples and solutions for performance measurement in the workplace that you can use for your company's benefit right now.
📈 What is employee performance?
Simply put, employee performance is a worker's ability to perform their duties efficiently and effectively.
Factors commonly used to measure overall performance include:
- quality of work;
- speed and quantity of work;
- ability to meet deadlines;
- communication skills;
- reliability and problem-solving;
Different roles have different expectations, and an employee's performance will determine how well they can meet or exceed those expectations.
Your workers' skills and training will also significantly impact their ability to perform well.
💡 Note: You can use a skills matrix to document your people's essential skills.
🔍 Why measure employee performance?
You may think measuring employee performance is simply a way to enforce a certain quality standard.
However, while you can use employee performance to weed out underperforming workers, measuring employee performance has other significant benefits too.
For employees to thrive and grow, measuring performance can be used to look for opportunities for improvement.
For example, suppose an employee excels in their work quality, but their overall output is low. Focusing on improving their efficiency without lowering the quality of their work can make them more valuable and successful team members.
You should work with employees to align performance goals and strategize how to achieve them.
These types of individual goals help employees stay focused and motivated. Plus, with support from People Ops, they can improve their skills, benefiting career growth and adding value to the company.
Employee performance may also help identify weak areas in the company. Such weak areas can be weak links in a team or inadequate training that may lead to poor performance.
You can optimize training programs and reduce turnover by addressing these issues and strengthening underperforming employees.
👀 How is performance measured?
There are many different ways to measure employee performance. But it all boils down to defining performance for your organization and your employees' specific roles and responsibilities.
Here are some examples.
Different roles and duties can vary significantly in the importance of work quality.
Results as simple as accuracy in the case of a job like data entry or order fulfillment can be much easier to measure than more complex tasks like the quality of copywriting or graphic design.
In many cases, the quality of an employee's work is one of the most critical factors, as it can rely on skill and talent.
Speed and work quantity
Another important metric for many roles is efficiency.
After all, the value of many employees depends on the amount of work they can complete.
Work quantity is generally easier to improve than work quality.
For example, you can improve it by sitting down with an employee to optimize procedures and streamline processes.
Teamwork and communication
While not directly influencing performance in most cases, teamwork and communication skills can affect a team's overall efficiency.
Generally, poor communication can have a very negative impact on team and employee performance. In contrast, good communication keeps things running smoothly.
You can improve teamwork through meetings, software upgrades, and soft skills training.
Reliability and ownership
In many cases, consistency and reliability are crucial to an employee's role performance.
Showing pride in one's work and taking ownership of the outcome can be vital to a quality performance that meets expectations.
In contrast, an employee whose work is unpredictable in quality or turnaround can be difficult to rely on.
Autonomy and problem solving
Low employee confidence or excessive micromanagement by team leaders can result in a lack of initiative and independence among workers.
For employees to reach their full potential and contribute to the company, they need to have problem-solving skills. They will also need enough freedom to make decisions that fall under their role.
A fear of taking risks or lack of innovation and autonomy can slow company growth and won't build trust in the workplace.
🎯 9 Metrics and KPIs to evaluate employee performance
What are performance metrics and performance KPIs?
KPI stands for key performance indicator; in other words, a way to indicate performance in a quantifiable way.
You can use KPIs to measure employee performance as benchmarks for expectations in their role.
Performance metrics are more general, often acting as guidelines that give management a way to track an employee's ability or progress on a task.
Performance metrics are often simple formulas to calculate employee productivity or quality of work.
The success rate is a relatively simple measure of how often employees can achieve their individual performance goals, KPIs, and objectives.
Setting simple pass-or-fail guidelines can be a more straightforward way to measure performance for duties more challenging to quantify.
Tip: You can then average the results of multiple projects or time periods to get a percentage success rate.
A simple completion rate could effectively measure performance for more objective tasks with less bearing on quality.
For example, you could use quotas for repetitive tasks or an overall completion rate for an assortment of duties that each involve their own subtasks.
Completing all or more such duties in a satisfactory manner will indicate strong performance.
Attendance can be an important factor in some roles and organizations. When this is the case, having an attendance policy that tracks performance is essential for fairness and keeping employees on track.
For example, a point system that tracks overall attendance performance based on tardiness, absences, and no-shows will quantify reliability in this category.
Calculating an improvement score is vital for rewarding ambition and measuring long-term success.
Employee growth can be as simple as additional training to improve skills or tracking other performance metrics over time and comparing the results.
An employee with above-average performance but stagnant improvement may not be as valuable as an employee who started with average performance and is showing steady progress and ambition.
Measuring teamwork and communication can be tricky.
You often have to rely on the opinions of others, which can come with both positive and negative bias.
Since teamwork performance is easier to notice when there is a problem, a strike system that tracks failures in communication can help monitor if anyone is struggling in this area. This will be your first step to correcting the issue.
In many roles, deadlines are vital for good business and happy clients. You can use deadline success rates to express the importance of staying on schedule for employees who tend to procrastinate or fall behind.
A simple success rate or +/- of days early or late on projects will show who is good at time management and could use extra guidance.
Quality of work
Measuring quality isn't always easy. Depending on the role, quantifying or even recognizing quality can be difficult, especially for those without specialized knowledge in that field.
A school grading system (A+, B-, D, etc.) may be appropriate in some cases.
In other cases, you may need to get creative in measuring and recording performance quality.
360-degree performance reviews
Sometimes, qualitative feedback from their coworkers is the best (or only) way to measure an employee's performance.
360 reviews allow for fair and constructive feedback from upstream, downstream, and peers.
Coworkers fill out surveys answering questions about their coworkers' performance. They can submit answers anonymously if desired.
A feedback tool will be the best way to collect this data in helpful job performance reports for team leaders to review.
➡️ Learn how to conduct 360 performance reviews in nine steps.
The 9-box model is a classic HR tool used to measure individual employee performance and potential on a simple grid.
Usually, the Y-axis represents potential, while the X-axis represents performance.
Both categories are broken down into:
- high performance
This breakdown results in combinations like:
- medium performance with high potential (promising rookies);
- medium performance with medium potential (average Joes);
- low performance with low potential (bad hires).
📏 5 Methods for measuring employee performance
Quantifying employee performance isn't always obvious or straightforward.
It is essential to find fair ways to reflect on a worker's contributions and share positive feedback that encourages growth and improvement.
Below are five common methods for measuring employee performance.
A letter grading system or performance rating scale is a simple form of traditional appraisals that can work but tends to suffer from a top-down approach and subjectivity. You can also use these metrics in 360-degree feedback surveys for a broad overview of an employee's abilities from different perspectives.
Skill gap analysis
Another common option is to assess whether an employee exceeds, meets, or fails to meet performance expectations in different categories.
A five-point scale can help identify areas in most need of improvement. But, again, using this method with a top-down approach can suffer from some subjectivity and a lack of perspective.
➡️ Learn more about company values and competencies in our competency model guide.
It is better to use quantifiable data where possible.
For example, you could measure the time to complete a task or the number of jobs completed in a day.
That way, it is fair and easy to say Employee A can complete Task X in one hour, which is faster or slower than the company average.
A measurement like this is fair and easy to acquire. You can use it to improve efficiency for employees or the overall process.
If all else fails, create a pass/fail system that calculates the percentage of goals an employee succeeds.
For example, if Employee A has a 75% success rate and Employee B has a 25% success rate, you know where to divert more of your HR attention.
Our 360-degree performance review software provides a platform that enables you to limit bias and provides more meaningful insights.
With 360 reviews, employees can provide feedback to coworkers across hierarchies.
- Assign who provides feedback to whom.
- Define the questions used to gauge performance (or get inspiration from the templates).
- Decide whether or not the submissions should be anonymous.
The 360 approach to performance reviews is a great way to develop a fair process that crowdsources performance reviews rather than relying on a single person or department.
➡️ Compare the benefits of 360-degree feedback versus traditional performance appraisals.
➡️ For more methods, learn how to enhance employee appraisals for inspiration.
🏢 How do influential companies measure employee performance?
Below are three examples of how successful businesses measure employee performance and use the results.
Though Facebook only runs performance reviews bi-annually, it is a very in-depth process incorporating 360-degree feedback tools and a complex rating system.
Learning & development is one of four main pillars used in these reviews, showing the importance of employee growth and upskilling.
Facebook uses a simple seven-tier scale ranging from "does not meet expectations" to "greatly exceeds expectations." Their scale also includes a pinnacle called "redefine" for employees whose performance is quite literally off the scales.
💬 Read the complete case study about employee performance measurement at Facebook.
Netflix has also implemented 360-degree feedback. However, they use it as a replacement for performance reviews rather than a supplementary resource.
This approach gives management a well-rounded view of each worker.
Employees can submit reviews for as many coworkers as they wish.
These reviews are not limited to a yearly schedule, allowing for frequent feedback and constant accountability.
Rather than using a rating scale, Netflix focuses on constant support and feedback to keep employees moving forward.
Though the "Keeper Test" asks managers the very real question, "How hard would you fight to keep this employee if we had to make cuts?"
🎥 Tune in for the complete case study on measuring employee performance at Netflix.
Unsurprisingly, the American-based tech company Cisco heavily embraces technology and automation when measuring employee performance.
"Team Space" is their digital feedback system which manages performance measuring for over 70,000 employees.
The software focuses on employee strengths and offers real-time feedback. This way, managers can address issues as they arise and find opportunities to enhance and utilize their workers' skills.
Focusing on employee growth, rather than scores and ratings, drives Cisco's performance measurement program.
📡 Learn more in our case study on Cisco performance reviews.
➡️ Enable a culture of high performance with Zavvy
Management cannot effectively support their workers if they don't know who is performing well and who needs help.
If this sounds like your business, but you don't have the infrastructure or manpower to conduct modern performance reviews, Zavvy can help.
Our performance review software has everything you need to run effective employee performance evaluations.
You have full control over which tools and methods you want to use. Plus, our automations and analytics will make getting results quick and easy.
Schedule a demo today to see how our software can help your company and employees reach their full performance potential.