9 Employee Performance Metrics To Track Beyond Productivity
Employee performance metrics are critical to manage team performance to ensure productivity. But when it comes to effectiveness, productivity is just one part of the equation.
Employee performance metrics are an important way for employers, HR professionals, managers, and supervisors, to monitor and manage their team’s performance to ensure productivity. But when it comes to effectiveness, productivity is just one part of the equation. There are other aspects of employee performance and relationships that are important to understand.
Labor shortages, rapid technological change, and the current economic landscape require employers to continually evaluate employee skills, and reskill or upskill employee competencies to meet new internal and external demands. Failing to do so could cost them—not only in terms of lost productivity, but also in terms of the high costs of layoffs and hiring, a vicious circle that can be costly in terms of both the bottom line and public sentiment.
What are performance metrics for employees?
Performance metrics for employees are key performance indicators (KPIs) that are used to track how well an employee is performing relative to their defined goals.
An effective talent management process can help organizations maximize employee satisfaction, engagement, performance, and retention. That process requires the use of relevant HR metrics to get a better view of what works and what doesn’t in your organization.
Performance metrics offer a way for organizations to quantify the impacts that employees have on various business metrics and outcomes, and take measures to help improve that impact.
How to measure employee performance metrics
Using people analytics involves pulling data from your organization’s digital HR tools and applying algorithms, calculations, and machine learning to better understand that data to help make talent decisions. Often, this data is pulled into an HR dashboard, a tool that helps business leaders better visualize the data and monitor it over time.
Categories of employee performance metrics
Employees performance metrics can be broken down into three categories:
Work quality metrics
Work efficiency metrics
Organizational performance metrics
Let’s dig into each type of employee performance metric now.
Work quality metrics
Work quality metrics provide an assessment of the quality of the work output for individual employees.
“Quality” is determined based on the type of work and output for which the employee is responsible. This might be related to lack of defects or total number of units produced, for instance.
Lack of defects is an objective measure. Quality metrics may also be subjective—evaluating the quality of a marketing initiative, for instance, which might have both objective (leads generated) and subjective (aesthetic value) measures of quality.
Work efficiency metrics
Work efficiency metrics provide an assessment of how efficiently the output was produced. For instance, how long it takes to process a service application, or how long it takes to produce a widget.
Organizational performance metrics
Organizational performance metrics are used to align and evaluate employee performance efforts with the impact on overall organizational performance. To what extent, for instance, does a business development manager’s efforts impact the organization's bottom line or customer satisfaction metrics?
Within these categories there are a wide range of metrics that could be used to assess employee and organizational performance.
9 employee performance metrics to use
There are many different employee performance metrics that can help companies monitor and manage the value and output of their human resources. Here are nine of the most import employee performance metrics to consider.
1. Management by objectives (MBO)
Management by objectives, or MBO, is an outcome-based form of performance evaluation that relies on results rather than feelings. It was developed by management guru Peter Drucker.
Too often, organizations rely on feelings when making business decisions. Considering real data points based on outcomes, or objectives, can help shift the focus to measurable and meaningful outcomes aligned with business priorities. Managers and employees work together to come up with the metrics that will be used to monitor employee performance
2. 360-degree feedback
360-degree feedback is part of an employee performance evaluation process that gathers feedback, or input, from a broad range—360-degree—of people with insights about the employee’s performance. This could include peers, direct reports, customers, vendors, etc.
3. 180-degree feedback
180-degree feedback is a term used to refer to the more traditional approach to performance review, where input is gathered from the employee and the employee’s manager.
4. Net Promoter Score (NPS)
Net promoter score (NPS) or employee Net Promoter Score (eNPS) is a method of evaluating consumer or employee sentiment and loyalty based on the response to a simple question of “would you recommend…?”
Using a scale from 0-10, employees are asked to indicate whether they would recommend their employer as a great place to work, with 10 being the highest possible score. This metric has been shown to be highly correlated with loyalty—the higher an organization’s eNPS score, the less likely they are at risk of voluntary turnover.
5. Forced ranking
Forced ranking is a somewhat controversial method of employee evaluation, most notably used by GE CEO Jack Welch who used an approach of eliminating the lowest 10% of performers each year. In a group of 10 employees, for instance, each would need to be force-ranked with only one employee receiving a score of 10, 9, 8, etc.
6. Work efficiency
Work efficiency is a measure of how efficient employees are at getting their work done. It’s easier to measure in manufacturing environments where a specific time can be applied to work outputs—and more challenging to measure in roles that are more service-related, including management and supervisory roles.
7. Revenue per employee
Revenue per employee is a performance metric that assigns a value to employees based on the amount of revenue of their work efforts that can be tracked to the bottom line. Ultimately, this metric measures how much money each employee generates for the business. A salesperson, for instance, might be assigned a revenue per employee figure based on the amount of sales generated in a quarter.
8. Absenteeism rate
Absenteeism rate is the measure of employees who are absent from their position at any given point in time. The Bureau of Labor Statistics (BLS) defines absence rate as “the ratio of workers with absences to total full-time wage and salary employment.
9. Human capital ROI
Human capital ROI is a broad metric that organizations use to calculate the overall contribution of their human resources, or human capital, and connect it to the bottom line. It looks at an employee's contribution compared to the resources employers spent on them, including compensation, benefits, and training.
Tracking metrics for employee performance is just the start
As you become more experienced and advanced in your use of employee performance metrics, consider how predictive HR analytics could play a role in your performance evaluation practices. Using predictive analytics helps organizations make predictions about employees and broader workforce trends.
Performance metrics go beyond productivity. Here, we’ve offered a number of different options for augmenting your performance management metrics with additional metrics that can help you get a broader, and more comprehensive, sense of the value of your human capital investments.
Read more about productivity and HR metrics:
On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.
