Successful companies emphasize timely and regular assessment of employee performance to ensure that the business is meeting its goals. That’s because employee performance is directly linked with the productivity of a business, in terms of both revenue and profits.
However, some businesses have a difficult time identifying the right metrics to measure. They simply don’t know which variables will give them a comprehensive view of employee performance in the workplace.
Identifying the right productivity metrics to measure employee performance can help employers evaluate their overall ROI. Additionally, identifying the right metrics can also give insights into employee learning and development needs. This way, you can use available resources accordingly to cater to each individual’s needs, and in extension, the needs of the company.
It is also essential to consider your goals, your industry, and your particular brand before deciding on how to measure employee performances. The good news is that there are dozens of metrics you can use to assess employees. However, the following are considered the most important by businesses around the globe:
- Work Ethic
- Efficiency
- Quality of work
- Impact of training program – Learning capability
- Ability to give feedback
Work Ethic – The most valuable attribute
Work ethic is a valuable attribute to measure when checking employee performance. Employees with an excellent work ethic can boost the company’s performance with their efficiency and work management. A strong work ethic is reflective of discipline, dedication, productivity, and hard work.
It is essential for managers to be aware of how their employees are performing and whether their work ethic aligns with the company’s expectations.
How can it be measured?
Managers and team leaders can use information regarding their employee’s time management skills and the number of tasks they can complete in a given time to evaluate their motivational drive and passion for the job.
Examining work ethic will also make it clear to managers if their employees need additional incentives to complete their job.
If an employee that has usually been very consistent and punctual with his deadlines is suddenly showing up late to work or taking more leaves than usual, the chances are that they are not working to their full potential. These are some of the indicators that represent a change in work ethic:
- Inability to take criticism or feedback
- Unable to meet work deadlines
- Minimized communication with other team members
- Inability to show up at work on time
How to improve work ethic?
In all of the cases discussed above, it is advisable to:
- Offer training sessions to make sure employees understand the core ethics and values of the business
- Conduct therapy or counseling sessions with your workers to figure out what exactly it is that’s affecting their work performance, in case of a lack of motivation and efficiency
- Strengthen the rapport between business leaders and their teams to tell if someone is having mental health issues or dealing with stress
These issues are usually the culprits behind a decrease in work productivity, engagement, and daily functioning. Supportive performance management that focuses on building trust and understanding not only contributes to the employee’s well-being but also enhances workplace culture. This, in turn, boosts the productivity of the organization as a whole.
You can choose some metrics for your organization, such as Employee Satisfaction Index (ESI). The ESI gives you valuable insight into what makes your employees happy and what could make them even happier, that’s true, but it offers something more than that: a glance into each of your employees’ personality.
Employee referrals are considered to be one of the most productive recruiting strategies. The Internal Referral Hires Rate helps managers see the value that is added to the company when existing employees help identify talents. If employees refer successfully, they feel a sense of achievement, like they’ve done something good for you and the company. They are also usually more engaged than other employees.
The New Hire 90-Day Failure Rate is a Human Resources metric that’s used by businesses and companies in order to determine the percentage of new employees that leave the company in a set time period – in this case, in 90 days. This is an important metric as it can be used to determine how efficient the talent acquisition process is and how good the HR team is at finding the right person for the right job.
We can set up OKRs to improve this attribute and measure its impact on employee performance. A sample is provided below:
OKR for improving work ethic:
Objective: Build an amazing organizational work ethic
- KR1: Increase number of internal referrals from 10 to 20
- KR2: Roll out actions for improvement based on previous Quarter’s ESI score
- KR3: Maintain the new hire 90-day failure rate to be less than 3
Profit.co’s performance management module allows the Managers to conduct the performance vs. potential assessment to identify the top performers and prepare them for the leadership pipeline through its unique Individual Development Program (IDP) feature.
Efficiency – Key attribute for success
For your organization to function successfully, your team members must be aligned with your corporate goals and targets. This is reflected in the efficiency with which employees conduct their tasks. Besides, research shows that businesses that prioritize efficiency at the workplace are 21% more profitable.
As long as you know that your people complete their tasks within the given deadline, and know how to prioritize between high-rewarding and low-rewarding projects, there shouldn’t be a problem. However, if an employee regularly works over-time to complete their work, they are either over-burdened or unable to manage their time efficiently.
How can it be measured?
While a take-charge attitude is essential, there are other ways to gauge efficiency. See how an employee works within limited resources and if they perform better and faster than others in similar roles. This should also help you set benchmarks for future targets. Profit.co has an extensive catalogue of 300+ built-in KPIs, from which you can choose to measure the efficiency. For instance, calculating the Employee Productivity Rate, for starters, will give you a clear sense of who’s doing their job and who isn’t. However, you can also customize your own KPIs to suit your organization’s DNA.
Some companies may also make use of modern software, which allows them to ensure that labor time is being utilized effectively by each employee. Profit.co’s software can help employers keep track of staff productivity, giving detailed reports about your team’s performance and efficiency.
How to improve efficiency?
Uncovering the reasons behind poor time management can help solve these efficiency issues. For starters:
- Encourage your employees to de-clutter the space around them and create a distraction-free workspace
- Make sure they plan their tasks clearly to meet their deadlines. Having a clear set of goals can reduce employee burnout
- Have business leaders model the right kind of behavior, i.e., showing up on time for meetings, being courteous and polite, and prioritizing customer care
These are just some of the ideas to boost employee engagement and efficiency in the workplace. Employee Satisfaction Surveys (ESS) are a valuable tool for gauging the overall happiness of your workers. However, they can be of no actual help when they don’t ask the right questions. Be careful to avoid having ESSs come to you in bulk. When employees take the time to fill out surveys and their concerns go unaddressed because they have not been reviewed, you have a predicament.
Managing performance is a complex process by which you can work together with your employees as a team. The purpose is to plan, monitor and set your employees’ objectives and contribution to the organization. The percentage of workforce below performance standards is a measure which keeps tabs on the number of low-performing employees in a specific organization. Your goal is to focus your attention on decreasing this percentage and optimizing your business.
We can set up OKRs to improve this attribute and measure its impact on the employee performance. A sample is provided below:
Objective: Improve Employee efficiency
- KR1: Ensure number of late check-ins per employee is at most 3 in a quarter
- KR2: Ensure 1 ESS is conducted and submitted to the CHRO
- KR3: Decrease Percentage of Workforce below Performance Standards to zero
Quality Of Work
The quality of work produced is a metric that is the hardest to define because it has a lot to do with personal motivation, hard work, and communication skills.
This would include not only your employee’s ability to achieve results but also the path taken to achieve it. You’ll also need to assess the time taken to achieve a particular outcome, the relationship built with the client, and the way it would affect future sales/clientele relationships according to the nature of your business.
If an employee is spending too much time on one particular task and is still unable to produce high-quality work, the chances are that they are demotivated, stressed, or experiencing burnout – all instances that reduce productivity.
For an organization to maintain high levels of quality, it is vital to ensure that there is open communication between team members and team leaders. This goes a long way in ensuring that employees are motivated in the job that they do, and their hard work is rewarded accordingly.
Studies suggest that employees who are motivated and can make a connection between the quality of their work and the company’s goals are far happier, and hence more productive for the business.
How can it be measured?
Since measuring the quality of work cannot be a one-time thing, managers must regularly review employee deliverables. As a manager, you should check if employees are showing consistent improvement in their work, such as incorporating previous feedback. Quality of work is significantly improved when employees use out-of-the-box thinking and come up with innovative and creative solutions. Taking ownership of assigned tasks and doing those on time is also an indicator of quality work.
To measure quality of the operations within an organization, metrics specific to that function can be used. For instance, metrics like average time to fill and average time to hire will give insights on the efficiency and the quality of the hiring program done by the talent acquisition team. This Recruitment KPI is important for realistic business planning.
How to ensure a constant improvement in quality of work?
Following are some signals that organizations can use to inspire their workforce and ensure continuous improvements:
- Recognition and positive reinforcement are useful motivational tools that can garner a sense of positivity and inspire the staff to make improvements and strive for greater productivity. Try using verbal praise, a bonus, or the promise of a promotion (should the good work continue) to see quality skyrocket.
- If your people learn to get regular feedback, whether it’s positive or negative, they learn to appreciate your expertise and look forward to it. They understand that their employers are interested and involved in every aspect of the work that they do.
- Holding training sessions and team-building workshops can help employees form a bond with their team members. Such events are also an opportunity for them to get to know their bosses, making leaders seem approachable to employees.
This leads to a healthy work balance that ensures feedback is delivered, and improvements are made at every stage, resulting in a higher quality of work. There is no doubt that employee motivation is reflected in the quality of work that they produce.
We can set up OKRs to improve this attribute and measure its impact on the employee performance. A sample is provided below:
Objective: Create a formidable organization with high quality employee performance
- KR1: Maintain employee turnover rate at less than 3%
- KR2: Increase average tenure of employees by 80%
- KR3: Decrease average time to hire from 45 days to 30 days
Impact of training sessions
As you probably already know, simply hiring someone may not be enough to boost the performance of a certain department of your company. In this case, you definitely have to rely on training. Training sessions are important for employees to help them identify their mistakes and know exactly how to make adequate improvements. These training sessions lead to job satisfaction and help employees reach their performance goals effectively. Millennials and Gen-Z aren’t just the future of industries– they already make up a significant chunk of the workforce. The way they look at training programs has evolved considerably, compelling employers to adapt their L&D strategies in a bid to attract and retain top talent.
However, training does not come for free nor can it be performed by some of your company’s employees. The impact of training programs is an important metric to consider when evaluating employees’ performance at work and you’ll have to come up with a strategy and use the right KPIs to measure its effectiveness. Ernst & Young’s (EY) new research findings state that members of Gen-Z want to be the best at whatever they do. They are more passionate about achieving results rather than becoming rich and famous. Consequently, many employers now incorporate training sessions as an essential employee performance metric, since it affects all subsequent metrics like efficiency and quality of work produced.
How can it be measured?
The best way to measure the effectiveness of training sessions is to see how well employees are participating in these sessions. Greater participation shows dedication and motivation to do better at work while also boosting work productivity. Follow up with employees after a training session to better gauge its effectiveness. For instance, one metric that is relevant to measure the training efficiency and how it influences your company’s staff is Training Cost Per Employee. The other metric is the percentage of employees trained. It is just fundamental to assess the knowledge accomplished through training, to determine whether certain changes ought to be made or not. For this, the metric can be knowledge achieved with training.
It is also important to assess how effectively workers use the knowledge that they learn during the training sessions. This can be done by comparing the performance ratings of skill before and after the relevant training session. For example, quality of work can be improved after a training session, so work quality and impact of training sessions can be correlated and used to measure an employee’s productivity.
How can it be improved?
Many times employees avoid corporate training programs because oftentimes, these sessions tend to turn into tedious, time-consuming conferences instead of offering practical suggestions. You can make training sessions fun and participative by:
- Taking feedback from your employees. Ask them which skills they think they need to learn to have a significant impact on their productivity
- Bringing in industry leaders for lunch discussions to make sessions more interactive
- Offering employee development opportunities as incentives to increase participation in training sessions
Bonobos, an established retail industry for e-commerce products, offers various training programs for its employees. These include “Fit For Success,” which focuses on employee performance management, and “Know Your Customer,” which trains employees to understand the customer experience better. These training sessions have helped employees manage different skills and increase their efficiency and productivity.
You need to determine whether your employees are understanding the company-wide organizational culture. You can do that by calculating the percentage of employees trained in company culture. Basically, it estimates the importance and understanding of company-wide organizational culture. So, it will show you how important training is for your company, and how much of it would be enough to improve your employees’ skills and thrive.
We can set up OKRs to improve this attribute and measure its impact on employee performance. A sample is provided below:
Objective: Implement an impactful training program
- KR1: Ensure at least 50% employees of each department have completed training for one core skill.
- KR2: Achieve percentage of exam pass rate higher than the average score percentage for the quiz taken after training
- KR3: Increase percentage of employees trained in company culture from 10% to 90%
Ability to give feedback
Optimizing employee performance requires an in-depth understanding of the way your team works and how the leader prioritizes every individual’s growth and development. This is possible by promoting an environment that is conducive to boosting productivity.
One of the significant indicators of a communicative environment is a dual-feedback system. As team leaders, you must be aware of the importance of giving critical feedback to your employees that can help them identify their weaknesses and strengths and work on them.
It is also essential to understand here that allowing employees to give input about a project can make them feel personally invested in the work that they do, hence increasing their contribution to it.
If your employees are freely giving their opinions over the way your work-space is designed, or the way tasks are divided – that is usually a key indicator that your employee is motivated and dedicated to fulfilling their role in the workplace.
Goldman Sachs, a company that was founded in 1869, transformed its traditional system of assessing employee performance management by “providing high-quality and constant ongoing feedback” that, the CEO claims, is the main driving force of the company.
How can it be measured?
This requires that the employee’s productivity be evaluated by everyone they interact with. All team members, from the receptionist to an IT manager, give feedback in terms of how well the employee was able to fulfill their tasks and how well they were able to contribute to the overall environment of the company.
However, this method of appraisal is only effective when everyone knows ‘how’ to give constructive feedback. For the sake of employee satisfaction, it’s crucial that companies assess the benefits satisfaction rate of their employees every so often. This will give the employer a better sense of what their workers want, and what they should offer to incoming employees.
When a valuable person with vast experience leaves, a company finds it incredibly difficult to cope with.HR specialists calculate the turnover rates to understand the impact of this employee exit. To be able to retain high performing human assets, the best way is to provide them with feedback and ask for feedback constantly. In this way, your company will not only win their trust, but it can also boost morale and work efficiency over the top – which will cause the turnover rate to diminish considerably. An ideal score of 0% is desirable, however, keeping this rate close to the ideal case is a challenge. One way to address the turnover rates is to collect feedback by providing an exit interview for every employee that leaves.
Objective: Establish a robust feedback system within the organization
- KR1: Complete 360 degree feedback for least performing 3 departments
- KR2: Implement top 3 benefits picked up from the benefits satisfaction survey
- KR3: Maintain the turnover rate at a maximum of 3%
How can employees improve on giving useful feedback?
A constructive feedback system can be beneficial if all the employees and managers are trained to give a positive as well as critical feedback. Holding training sessions at the workplace can improve the dynamics between employers and employees and help communicate with each other effectively.
Here are some useful tips to remember when structuring a dual-feedback system:
- Your employees should be trained to keep a boundary between their personal and professional lives. Any feedback that they give to the other should not be unsolicited or unrelated to work performance.
- Make sure everyone knows how to offer “specific” feedback. Merely saying “Your work needs to be improved” can leave an employee confused about which aspect of work needs to be improved. Managers should be specific about their needs and should be able to communicate it.
- Positive feedback is as necessary as corrective feedback. If managers keep giving corrective feedback without any encouragement, employees are likely to lose motivation for putting in additional efforts.
To Conclude
Implementing the very best practices to review employee performance improves the quality and productivity of work, and that can make a huge difference in ROI.
Performance management in Profit.co enables an organization’s management to assess and review its employees with a 360-degree assessment that helps to evaluate individual performance and organization. One of the reviews, the affinity-based review provides the opportunity for peer reviewers to evaluate their coworker, and also indicate how closely they work with that coworker. This way, a manager can receive feedback from all of the peers of the employee they’re reviewing, and also know how extensively each reviewer has interacted with the reviewee.
Workflow Chart of affinity-based Performance Review:
Performance Management, when blended with OKRs, will be highly beneficial to track employee performance and can be effectively used by HR to the benefit of the organization.
With several of Profit.co’s customer experiences, we have found out that it’s very important to look at each situation from two perspectives:
- OKR Knowledge of the Organization
- Willingness to invest in and learn best practices for employee engagement
More on how to create an amazing employee performance tracked by OKRs can be read here.
For an organization to function efficiently, it is vital that employees are fully satisfied. Therefore, measuring employee performance must also take into account several emotional, physical, and practical factors.
Cultivating a healthy and friendly environment with engaging communication, setting concrete goals, rewarding improvements, and providing consistent training will keep employees motivated to learn, grow and achieve. Implementing the very best practices to optimize employee performance improves the quality and productivity of work that can make a huge difference in ROI.
Before you embark on your quest to steer your organization towards sustained success, knowing and defining what success looks like is important. So, read on to understand what does success look like?