Employee performance reviews are a crucial function of an organisation’s Human Resources department. These reviews help to gauge employee performance, provide feedback, and set goals. However, simply conducting performance reviews is not enough. To truly leverage the benefits of performance reviews, it is important to measure the right areas and use the results to develop employees over a rolling period.
It’s not uncommon for organisations to struggle when it comes to measuring employee performance. It can be difficult for managers to evaluate things like productivity and efficiency, and this can lead to bias creeping into the appraisal process.
There is no true consensus when it comes to measuring employee performance. For years, the HR frameworks that existed hinged on an annual performance reviews, but as we have explored previously, continuous feedback produces better results and stronger development.
This shift has also seen businesses adopt less conventional methods to track employee performance, with organisations paying more attention to intangible benefits like leadership, mentorship, and cultural fit, which cannot be easily quantified.
This change has seen completely data-driven approaches fall out of fashion somewhat. But not using the right metrics can impact individual’s performance – a poor or unfair review can harm motivation and productivity and impact an organisation’s bottom line.
The point of performance reviews should be to help develop employees – to highlight both their strengths and the areas that they can improve in order to help them progress within their roles and within the organisation. This does require managers using the right metrics to track performance.
Using the right metrics from your reporting and analytics will help to empower your team members and ensure that they are on the right track; that there is transparency and honesty in terms of what they are doing well, and to take the necessary actions to improve where needed.
So, let’s try and understand the best metrics you can use to track employee performance, evaluate team members, and create an objective measurement of team performance.
What Are Performance Metrics?
Let’s start at the beginning and define what performance metrics are. They are the KPIs ( Key Performance Indicators) that help to measure and benchmark the performance of your team members.
These KPIs help to provide insight on individuals and how they are performing in terms of their contributions and goal achievements within the business.
Sometimes these metrics can be easily quantifiable – if a sales person is tasked with making 40 outbound calls a day, for instance, it can be plainly easy to see how they are performing by tracking their number of calls, and reviewing how often they are achieving that goal.
Other roles can require tasks that can be harder to measure; a role that involves soft skills like critical thinking, team work, or coaching can be harder to objectively assess. It can be challenging to ascertain whether a person is succeeding or not.
Yet trying to capture intangible benefits is still valuable and can have a positive impact. It just requires different approaches. For instance, employee recognition tools can be used to track how well a person is embodying the values of your business, or going the extra mile for their colleagues. This kind of data can help paint a better picture of some of those hard-to-quantify skills and contributions.
So, what are the benefits of tracking these types of performance metrics?
The Benefits of Tracking Performance Metrics
Performance metrics help you to make real time measurements of employee performance. They are a solid indicator of productivity and team performance, as well as other less easily quantifiable ideas like company culture.
Using them can not only help individuals and teams progress, developing new skills, or becoming more efficient, but they can also help managers and leadership teams to make strategic decisions to improve team performance.
The major benefits of measuring performance using these metrics are:
This one’s obvious, but it would be remiss of me to ignore this benefit. These metrics are indicators of how well an individual is performing; how are they are faring in terms of goal setting and achievements.
KPIs give managers a clear and objective idea of what is being achieved and what should be evaluated. This can lead to additional training, development of certain skills, and a clear path for an employee to develop within their roles
Makes Expectations Clear
Boundaries are extremely valuable in professional settings. Employees need to have a clear understanding of what is expected of them and how they are expected to achieve what is asked of them.
Performance metrics define these expectations and make it transparent to employees what they need to do and how they will be measured in terms of their performance.
People generally want to perform well – they want to be good at their jobs, and they want to be recognised for their performance. Clearly defined metrics and goal setting makes this possible.
Reduces Employee Turnover
Employee turnover is expensive – businesses are well aware of this, and the ‘Great Resignation’ has only further highlighted this problem.
That clarity and transparency that performance metrics provide helps to reduce turnover because fair performance appraisals can help maintain strong levels of employee engagement.
A lack of metrics can make performance reviews feel arbitrary, and worse, can leave employees feeling they are stagnating and not developing or progressing. This can harm employee engagement, morale, and lead to people struggling with motivation and productivity.
Ultimately, this is a path that leads to employees looking for work elsewhere. That means establishing the right metrics can help organisations combat turnover and employee churn.
Essential Employee Performance Metrics to Track
Attendance is one of the most basic but important metrics to track. It measures how often an employee is present and on time for work. Consistent absenteeism and tardiness can negatively impact productivity and morale, as well as disrupt the workflow of the team.
On the other hand, consistent attendance and punctuality indicate a strong work ethic and commitment to the job.
To track attendance, you can use time and attendance software that automatically records when employees clock in and out. You can also use manual methods such as a sign-in sheet or spreadsheet. Keep track of patterns in attendance, such as frequent absences on certain days of the week or at certain times of the year. This can help you identify potential issues and address them proactively.
Productivity measures how much work an employee can complete in a given period of time. It is important to track productivity to ensure that employees are meeting their goals and deadlines. High levels of productivity indicate that an employee is efficient and able to complete their work in a timely manner.
To measure productivity, you can use metrics such as the number of tasks completed, the number of sales made, or the amount of work completed in a given time frame. You can also use project management software that tracks progress and completion rates. Keep track of trends in productivity, such as changes in output over time or differences in productivity among team members. This can help you identify areas where employees may need additional support or training.
Quality of Work
Quality of work measures how well an employee completes their tasks and how accurately they follow instructions. It is important to track quality of work to ensure that employees are meeting the required standards and producing high-quality work that meets the needs of the organization.
To measure quality of work, you can use metrics such as error rates, customer satisfaction ratings, or feedback from managers and co-workers. You can also use quality control software that identifies errors and inconsistencies in work. Keep track of trends in quality of work, such as improvements or declines in error rates or changes in customer feedback. This can help you identify areas where employees may need additional training or support.
Employee engagement measures how committed and motivated employees are to their work and the organization. It is important to track employee engagement to ensure that employees are satisfied with their jobs and feel valued and supported in their roles. High levels of engagement can lead to increased productivity, reduced absenteeism, and lower turnover rates.
To measure employee engagement, you can use metrics such as employee satisfaction surveys, retention rates, or feedback from managers and co-workers. You can also use employee engagement software that measures employee sentiment and provides insights into areas where engagement may be low. Keep track of trends in employee engagement, such as changes in survey scores or turnover rates. This can help you identify areas where improvements can be made to increase engagement and retention.
Training and Development
Training and development measure the extent to which employees are receiving the training and support they need to perform their jobs effectively. It is important to track training and development to ensure that employees are continually improving their skills and knowledge and can meet the changing needs of the organisation.
To measure training and development, you can use metrics such as the number of training sessions attended, the number of certifications earned, or feedback from managers and co-workers. You can also use learning management software that tracks employee progress and completion rates.
If you’d like to understand more about how XCD’s performance management system and other solutions can help to transform your approach to talent management, book a demo today or look at our case studies to see the impact our software has had for a wide range of businesses.