Employee Performance Metrics: 5 Crucial Metrics for Measuring Employee Performance

Critical Employee Performance Metrics

Measuring employee performance and continually improving it, is of significant importance to any organization. Performance management helps align the daily work of employees with the strategic goals of the business and supports compensation and promotion decisions, helps identify areas where skill development is needed, and helps monitor productivity and quality of work.

As such, effective performance management also contributes to the overall job satisfaction of workers and ultimately to retention. Key to functional performance management is the measurement of relevant employee performance metrics. For most businesses, these include helpfulness, efficiency, quality of work, innovative thinking, and adherence to company values.

Components of Employee Performance Management

Many people associate performance management with the dreaded annual performance review, a somewhat outdated process of formally assessing an employee’s strengths, weaknesses and work from the prior year. Though performance management might include a formal annual evaluation, such an evaluation represents only a small component of a larger system that reviews performance as an ongoing process.

Performance management is a systematic process that involves optimizing the impact of your people in improving the organization’s effectiveness, thereby helping your organization best achieve the company mission and goals. Employee performance management includes:

  • Goal setting and articulation of clear expectations
  • Regular feedback and monitoring of individual performance against those goals
  • Development of training programs to enhance skills and open career paths better aligned with both company and individual interests and needs
  • Periodic rating of the staff’s performance on established metrics as a way of letting your people know if they are meeting expectations and providing support in areas where they need help
  • Rewarding good performance, tying compensation and advancement to achievement on the metrics

Selection of Specific Metrics

The use of metrics is essential to the performance management process. The most useful metrics are those that are objective, behavioral-based, observable, and ideally drawn from multiple sources. Their use allows for progress to be fairly tracked over time.

Your selection of employee performance metrics depends on your company, the type of work you do within the company, the industry and environment within which you operate, the resources available for gathering data, and the makeup of your staff. Despite these variables, certain metrics are crucial to measure for most businesses.

1. Helpfulness

Helpfulness in the workplace fosters a culture of teamwork. This allows your staff to work more effectively as a team, which in turn enables workers to tackle difficult tasks together. Helpfulness is also an indicator of engagement and employee motivation. One possible method of measuring an individual’s helpfulness is to request anonymously input from co-workers in a 360-degree review. Using this approach, you ask all of your people to rate how helpful co-workers with whom they regularly interact are to them.

2. Efficiency

Efficiency helps organizations accomplish more work in a given unit of time with the same – or fewer – resources. Your people need to complete their work on time and meet deadlines. They also must be aware of the limitations in available time and resources and prioritize the completion of their work accordingly. How you measure the efficiency of a worker will vary according to the type of work they do, but essentially this metric quantifies how much work a worker can complete on a daily, weekly, or even monthly basis.

3. Quality of Work

The quantity of work that is completed is important, but the quality of that work can often be crucial. Measurement of quality is often subjective, depending on a worker’s specific duties. One way to capture work quality is to ask each worker’s direct supervisor to score his or her work on a consistent scale. Other methods include capturing the percentage of work output that must be redone, error rates, or customer satisfaction levels.

4. Innovative Thinking

A company that fails to innovate falls behind the competition. Innovative thinking may be an intangible concept but it can be measured both by outcomes (of the organization) and by individual inputs (by the workers). Innovation is industry and organization-specific, so metrics will vary widely from one company to another. A possible measure of innovative thinking could be a count of the new ideas your team members have contributed in the past month, quarter, or year. The success of the ideas is less relevant for the purposes of this metric than is the fact that your people are actively and opening thinking of, sharing, and when appropriate acting on innovative ideas.

5. Adherence to Company Values

A company’s core values shape individual behaviors and help in decision-making as well as goal setting. The overarching values influence the corporate culture. Your people embracing and adhering to company values is essential for sustaining that culture. Measuring how closely your team follows your company’s values is thus an important measurement in performance management.

If you find yourself struggling to define your company values, come explore our insights on building a company values statement. Your employees can’t be expected to follow values that haven’t yet been clearly defined.

Developing appropriate and relevant performance metrics that you can consistently measure over time can be challenging, but the potential rewards for both your people and your company are well worth the time and planning required. Learn more about the 10 Levers of Optimal Business Performance and see how companies like Stryker have benefited from our performance management consulting services.

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