The quality of your employees can contribute to your company's success. If your business is made up of top-rated talent, you have an excellent chance of running a successful company.
Conversely, if your team is made of underperforming talent, the odds are against you.
Whether or not your team is top-rated, measuring your employee's performance metrics is one of the most critical responsibilities of managers.
Measuring employee performance metrics is crucial because it helps you discover the quality of your team and your business’s present state.
If you want to excel as a company, a regular evaluation is important and can help you provide the support they need to perform their best. You should start by setting clear employee performance goals.
The 15 top performance measurement tips we will share in this piece will help you manage, maximize your team's potential, and elevate your organization's productivity.
Let's begin!
1. Define clear objectives
Defining a clear objective for your team is the heart of a successful performance measurement process. These objectives help align your team with the organization’s vision and mission and serve as a roadmap to success.
Setting a clear objective is crucial to the evaluation process because:
First, it gives your team a sense of direction, enhances their motivation, and makes them feel accountable.
Second, it serves as a guide to excellent decision-making, resource allocation, and performance evaluation.
The goals derived from your objectives and assigned to each team member must be specific, measurable, achievable, relevant, and time-bound.
With the goals set, employees know what’s expected of them and can put their best foot forward by delivering quality work.
Team leads can also evaluate teams’ performance based on specific metrics. Let’s have a quick example:
Let’s assume that a company’s marketing team is being evaluated based on the following metrics:
Clicks
Likes
Brand mentions
Website visits
Leads generated and average sales value.
The above metrics align directly with a marketing team’s core goal of generating leads that convert into sales.
Now, each marketing team member can be tracked and measured for performance to see if their contribution ultimately supports the company’s overarching revenue growth objective.
2. Track relevant KPIs
Next, once your company objectives are clear, your team will know what is expected of them. They will likely be highly motivated and eager to start crushing goals using the OKRs (Objectives and Key Results), especially if they were a part of the goal-setting process.
Tracking KPIs and OKRs provides opportunities for objective discussion, whether positive or negative. This data provides valuable insight into your employees’ efforts and helps you determine which employees are top performers and require support or intervention.
Here are some KPIs to consider:
production efficiency
sales figures
Success rate
Completion rate
Attendance
customer satisfaction scores
Remember the KPIs you track should be relevant to the role and industry and the unique aspects of your organization’s workflow.
If you’re unsure which KPI to track, read: The Art of KPI Selections.
3. Benchmark against industry standards
After determining the KPIs to track, you'll need to establish a benchmark. To do so, you'll need to collect data for a while from the performance you get from the average employee.
Alternatively, you can research or consult industry reports to find the standard benchmark for your selected KPIs using data from other organizations in your industry.
This gives a clear idea of what your team should aim for or what is expected.
Benchmarking is crucial to performance measurement. It keeps your team competitive and motivated and provides a clear yardstick for evaluating performance and identifying areas for improvement.
Once the benchmark is known, proceed to set your peak performance level. These goals should be challenging yet attainable.
At this point, all that remains is to ensure that your team is on par with or surpassing competitors in your field.
Your organization will be ahead of the curve by striving to meet or exceed industry benchmarks.
You may also like: How to Set KPI Targets that Drive Business Growth.
4. Perform regular reviews
Keep going once you have a benchmark set for the key indicators you want to track. Leadership is more than just measuring and benchmarking. You must also determine areas where you can assist your team and advise them on how to improve.
If your team needs to catch up to the set benchmark consistently, Analyze why this is happening. Is it a training issue, a resource problem, or something else?
Also, keeping your team updated on their performance is valuable. This can be done through regular one-on-one meetings that allow you to provide real-time feedback that reinforces positive team behaviors.
Studies show that 92% of employees would like to receive feedback on their performance more frequently.
Frequent reviews help you measure your employees' performance against the industry benchmarks so you can capitalize on the positive results while also addressing the gaps.
5. Conduct 360-degree feedback
360-degree reviews provide a comprehensive view of an employee's performance by collecting feedback from multiple sources, including supervisors, peers, subordinates, and external stakeholders.
It can be challenging to measure work quality for some roles. However, 360-degree feedback help in such case by collecting data from team members who work closely together every day.
Also, similar feedback can be provided by customers who interact frequently with a specific employee or department in your organization.
One way to implement this tip is to have teams fill out surveys answering questions about their co-workers' performance.
Aspects of performance feedback can include an employee's communication skills, teamwork, leadership, or technical abilities.
Team members can submit answers anonymously if desired.
360-degree reviews are excellent for measuring performance metrics because they allow for fair and constructive feedback across hierarchies and help you identify areas for further improvement.
You may also like: 7 Tips for Fostering a Proactive Feedback Culture in the Workplace.
6. Evaluate the quality of work
Evaluating work quality is crucial but requires redirecting your focus from quantity to quality. However, quality is often subjective; hence, you must develop precise, quantifiable measurements for comparing output to expectations.
For example, what percentage of work is accepted by your managers? How frequently does your staff have to redo their work? Is the standard of quality consistent?
To assess the quality of an employee's work, you must first understand what work is expected of them and how it is evaluated and received. Measure performance based on results and not quantity of work alone.
Relate reading: How to Measure Performance Metrics like a PRO.
7. Evaluate using the Net promoter score
The Net Promoter Score (NPS) is a powerful tool that can help you evaluate an employee’s performance level or give you an overall idea of customer satisfaction.
Although not as comprehensive as the 360-degree review approach, NPS is an excellent tool for gathering feedback from colleagues or stakeholders to measure their willingness to recommend the employee as a co-worker or service provider.
To use this method, design a survey that asks the NPS question.
See the examples below.
Employee example:
“On a scale of 1 to 10, how likely are you to endorse [team members name] to others?”
Customer example
“On a scale of 1 to 10, how likely are you to promote [company name product] to others?”
The responses are then grouped into three categories:
Detractors (0-6)
passives (7-8)
and promoters (9-10)
The NPS is derived by subtracting the fraction of Detractors from the percentage of Promoters.
A high NPS implies good performance and a favorable influence, whilst a low score may identify growth opportunities.
Using NPS in performance evaluation develops a feedback culture, stimulates continual improvement, and provides vital insights into employee relationships and workplace effectiveness.
8. Evaluate using the 9-box grid method
The 9-box grid method is an individual assessment model HR professionals use to understand their team members’ current performance against their growth potential.
The Y-axis of the grid shows what kind of growth potential an employee has, while the X-axis indicates what level an employee is performing at.
Using data from the 9-box grid method, you can evaluate whether an individual is underperforming, performing satisfactorily, or exceeding your expectations.
This simple performance breakdown highlights areas for commendation or improvement.
However, note that the 9-box grid is just one performance assessment tool. It should be used with other performance analysis methods for a more holistic analysis.
If you would like to implement this tip in your organization, we make it simple to define and conduct this appraisal within Kippy’s 9-box report.
9. Evaluate using the forced ranking method
Another tool that can help you evaluate an employee’s performance level is the forced ranking method, also known as the vitality curve. This approach involves ranking individuals against their co-workers.
For example, you can rank your employees from “best performing” to worst.” Those in the bottom 10% risk being displaced by top job candidates.
Understandably, this system has a high cost since employees comparing themselves to one another can have a negative impact on morale and business culture.
Therefore, use caution when using this system to measure employee performance metrics.
10. Implement Management by Objectives system (MBO)
Management by objectives, or “MBO,” is an ongoing feedback model that allows managers to evaluate employee performance based on their ability to complete objectives.
Typically, the employee agrees with management on specific objectives. Assigned goals and objectives are given a certain number of points based on their level of importance.
Then, the employee receives an evaluation based on those expectations.
This approach works best in organizations with efficient communication between management and staff.
Related reading: MBO vs OKR: A Comparative Analysis.
11. Conduct a skills gap analysis
Sometimes, it can be difficult for team leads to understand their team members’ skill sets and expertise. Teams are often tasked with multiple tasks comprising various processes and digital tools.
Conducting a skills gap analysis can help you understand your team’s skill sets in different areas of their day-to-day roles.
A skills gap analysis allows managers and HR teams to measure employees’ performance and to understand their team level of expertise in different areas of their core job functions.
These skills gap analysis tests can be performed using a simple online survey or test and will assist in identifying the following:
The skills an employee needs to do their job effectively.
The level of expertise an employee has in each of these areas.
Any gaps in a team member’s knowledge that should be addressed with additional training and development.
With this information, you can provide further training to team members who need to catch up by developing an employee development plan to promote their personal and professional growth.
12. Encourage employee self-assessments
Employee self-assessments are a valuable tool for measuring performance from the perspective of the individuals directly involved in their work.
Encouraging your team to evaluate their performance regularly is valuable; it allows them to reflect on their achievements and identify areas where they need to improve.
Setting performance expectations will help improve employee productivity. The evaluation should be about their individual goals and objectives.
Supplying resources like multiple-choice questions, essay questions, or both can enable reflection, extract insights, and help you provide feedback.
Once you have collected the evaluation report, you’ll need to compare it to your expectations and reviews.
Although there might be discrepancies between the two, it might point you to the main areas for improvement.
A common issue with self-assessments you should watch out for is receiving misleading feedback.
13. Develop training and development programs
Investing in training and development programs is a powerful strategy for measuring and improving employee performance. However, not all businesses implement it.
Understand that measuring employee performance is a process. Before implementing this tip, tip number 8 (conducting a skills gap analysis) must be done by team leads if they want the training to have the maximum impact on employees.
Once you have identified where employees may need more expertise to excel in their roles, develop a training program specifically designed to address these skill gaps.
The training programs must have clearly defined learning objectives and meet the unique needs of your team and organization.
These clearly defined objectives help you measure the effectiveness of the program. Some points to consider when implementing this tip include:
Keeping track of employee participation in training programs.
Using assessments, quizzes, or tests to measure employees' understanding and retention of the material covered in training.
Assessing how well employees are applying what they've learned to their jobs.
Gathering feedback from your team on the training programs.
Analyzing pre-training and post-training performance ratings to measure the impact of the training programs.
Tracking the career progression of employees who have completed training programs.
Fostering a culture of continuous learning within your organization equips your teams to deliver their best work and provide incredible results for your company.
14. Check attendance and punctuality
Attendance and punctuality directly impact team contribution to the overall company goal. If a critical team member falls sick or stays away from work for a good number of days, it impacts productivity, efficiency, and, ultimately, the bottom line.
If you notice that a team member consistently stays absent from work, this is a red signal, and such culture should not be allowed.
Not addressing it immediately can lead to frustration and potential conflicts when other team members have to cover for them consistently. This is besides the impact on co-worker morale and work output.
In addition to attendance, punctuality is equally vital. A culture of punctuality helps teams stay on track and achieve their performance goals.
If your team is not punctual, they will fail to meet project deadlines or deliver results on time.
If you are a client-based business, such an attribute can cause clients to distrust you and feel your team lacks the competency to deliver, harming your business reputation and goal.
To address such behavior, having a policy to track performance based on attendance and punctuality can help you maintain fairness and accountability in the workplace.
You can also use attendance tracking software to monitor employee absences and track any emerging patterns so you can address them swiftly.
15. Track human capital ROI
Evaluating an employee’s performance using human capital ROI entails calculating the financial value a team member provides to the costs connected with their employment.
To evaluate human capital ROI, first establish the employee's total remuneration, training expenses, and other relevant costs. Then, assess their contributions to the organization, such as increased revenue, cost savings, or enhanced efficiency directly related to their efforts.
Calculate the human capital ROI by dividing the net financial benefit by the total costs.
This method provides a data-driven assessment of an employee's impact on the firm's bottom line, allowing for informed decisions about performance, development, and resource allocation.
However, it is critical to remember that human capital ROI should be used in conjunction with other evaluation methodologies to provide a complete picture of an employee's overall contributions and possible areas for improvement.
Takeaway: Boost workplace productivity with top performance metrics measurement
Measuring your team's performance metrics is crucial to the growth and success of any business, whether or not you are a big business. Therefore, you should take performance management seriously.
Several methods that can help in measuring employees' performance exist. The technique you implement will depend on the exact KPI you want to track and evaluate.
To effectively measure performance, first, you must have a clear objective translated into specific goals for each team member. The objective should align with the employee performance goals.
Next, identify, track, benchmark, and evaluate KPIs specific to job roles and departments. From there on, every other performance measurement model can be implemented.
For best results, implement a combination of the top tips discussed in this article. Remember that tracking employee performance metrics is important for your business.
Ready to take your employee performance tracking to the next level? Schedule an interactive demo today.