As a manager and leader, how can you know when your employees are meeting their targets and contributing to the company’s bottom line? This is where employee performance metrics come into play.
Employee performance metrics are objective and data-driven initiatives that allow you to track progress toward your organizational goals. By tracking these metrics, you can identify trends and patterns to help you evaluate your employees’ performance and identify areas for improvement.
In this article, we’ll cover five employee performance metrics you should track. These metrics can help you assess and improve your employees’ productivity and effectiveness.
We’ll also provide tips on how to track these metrics effectively, so you can keep your employees on target and contributing to your organization’s success.
What are employee performance metrics?
Employee performance metrics are tools used to track progress toward achieving business goals and benchmarks. You can use these metrics to evaluate your team members’ work performance, engagement, and retention.
They can help you identify trends, patterns, and areas for improvement—ultimately contributing to the organization’s overall success.
Employee performance metrics aren’t just about tracking progress toward goals, though—you can also use them to help workers grow and succeed. Using metrics to identify areas for improvement lets you provide training, mentorship, and other support to help workers develop new skills and abilities.
Employee performance metrics can be quantitative and qualitative. Quantitative metrics (like sales figures and attendance rates) are objective and measurable. On the other hand, qualitative metrics are more subjective and can include employee engagement or customer satisfaction.
Tracking employee performance metrics lets you make informed decisions about performance management and development. These metrics can also help you identify high-performing employees who might be candidates for promotions or other opportunities within the organization.
Importance of tracking employee performance metrics
Performance metrics are an important tool for assessing and improving employee performance. Some of the top benefits of tracking employee performance metrics include:
- Providing clarity on expectations. When employees understand what you expect from them, they can focus their efforts and work toward achieving specific targets. For example, employees might be more motivated to deliver on time if they know you’ll evaluate their ability to meet deadlines.
- Helping promote objective evaluation. Metrics provide an objective way to evaluate performance, helping managers avoid biases and subjectivity during the evaluation process. We all have unconscious biases that can affect our perception of others’ performance, and relying on subjective evaluations can let our biases leak through. Using objective metrics helps you provide fair employee evaluations driven by metrics, not just opinions.
- Guiding employee development. Metrics can help and empower employees to grow in their skills and capabilities, allowing them to take ownership of their career advancement. You can use metrics to create individualized plans for growth and development. For example, if an employee’s performance metrics indicate they might benefit from improving their communication skills, they could attend training sessions or work with a mentor to develop these.
- Recognizing and rewarding good performance. Metrics can help you recognize and reward employees doing a great job. By tracking employee performance, you can identify those who consistently exceed expectations and achieve results. Provide incentives, such as bonuses, promotions, or public recognition, to help motivate employees to continue performing at a high level.
- Boosting motivation and engagement. Employees are more likely to feel motivated and engaged when they have access to clear expectations, goals, and objective performance feedback. Why? Because when they don’t know what their job is or what’s expected of them, it’s hard for them to know if they’re doing a good job. Having a clear sense of what they need to achieve and how they’re doing helps employees focus their efforts and stay on track.
- Contributing to the organization’s success. Employees who feel supported and valued are more likely to be motivated and enthusiastic about their work. This can translate into improved job performance, increased productivity, and a more successful organization. Think about it this way: Employees with a positive work environment and clear expectations driven by concrete metrics are more likely to feel excited and energized about their work, helping them contribute to the organization’s overall success.
- Identifying areas for improvement. Employee performance metrics aren’t just about identifying low-performing employees, but are also about providing opportunities for all employees to grow and improve. Even the best performers can benefit from feedback and support to develop new skills and improve their performance. In fact, their drive for improvement is part of what makes them stand out in the first place.
Key performance indicators (KPIs) for employee performance
Key performance indicators (KPIs) measure departmental and organizational goals. Many KPIs aggregate employee performance (which is measured using metrics).
For example, total sales might be a KPI for a business department. How much an individual in the department contributes to sales is a metric.
The below list organizes metrics into categories based on which KPI they connect with.
KPIs for employee performance:
1. Sales and revenue
Sales and revenue can help sales-related departments measure employees’ ability to generate revenue, meet sales targets, and close deals. Consider tracking the following metrics to gauge individual employees’ effectiveness in helping your company meet these KPIs:
- Average order value. When an employee completes a sale, what is the average dollar amount the customer spends? This number is easy to find—simply add up the revenue from an employee’s sales and divide it by the number of sales made.
- Number of sales. How many sales has an employee made in a given period? Most companies track sales during a specific cycle to gauge performance.
- Sales calls made. How many sales calls did an employee make in a specific time period? Before tracking this metric, consider communicating a specific number to employees so they know what standard they should meet.
- Conversion rate. How often are employees converting leads into sales or customers? This can show you how effectively an employee can close a deal.
- Gross margin. This metric gauges how much money employees bring in against how much they’re spending on supplies and expenses. Team members with a high gross margin can generate revenue for your organization while keeping costs low.
2. Productivity, efficiency, and quality of work
Employee productivity and efficiency are important in any organization. Below are a few metrics human resources (HR) departments and companies can track to evaluate individual employee efficiency and productivity:
- Accuracy rate. How often does an employee complete tasks without error? This can be particularly important in positions such as data entry, quality control, and manufacturing. Measuring accuracy can help identify areas where employees need additional training or support.
- Percentage of errors or rework. What percentage of an employee’s work requires revision or correction? This metric can help you identify areas where employees may need additional training or support to improve the quality of their work.
- Number of tasks completed. How many tasks did an employee complete during a specific time? Was that number more or less than what you expected? You can also measure whether they raised or lowered their total from the last allotted period.
- Efficiency ratio. Efficiency ratios measure an individual’s ability to use assets while managing liability. In other words, this metric evaluates how effectively an individual manages company assets and uses them to generate revenue.
- Adherence to quality standards. Determine how often your employees meet your quality standards and see what you can learn about employees when they fall short or ignore the rules.
3. Attendance and punctuality
Many companies measure employee attendance and punctuality. Some specific metrics you can track in this category are:
- Absenteeism rate. What percentage of scheduled work days did an employee miss? Tracking absenteeism can help you identify employees who might be struggling with attendance or who may need additional support or accommodations.
- Tardiness rate. How often was an employee late to work or scheduled meetings? Tardiness can disrupt a team’s workflow and productivity, leading to frustration and decreased morale among colleagues. It can also reflect poorly on the manager or organization, potentially causing lost business or dissatisfied customers. Tracking tardiness can help you identify employees needing improved time management skills, additional support, or accommodations.
- Breaks and meals. Did employees take appropriate breaks and meals within company policies and regulations? You don’t want employees taking longer breaks than what’s allowed. In business, time is money. A three-hour lunch isn’t going to result in top-level productivity. However, keep in mind that short and skipped breaks can lead to increased liability for your company (depending on what the laws require).
4. Customer satisfaction
You need to keep your customers or clients happy if you want your business to be successful. Here are some metrics you can keep an eye on to track your employees’ performance:
- Net promoter score (NPS). Net promoter score measures customer satisfaction based on survey responses. You can apply the same idea to evaluate individual employee performance by asking customers about their interaction with a particular employee and using that feedback to identify areas for improvement and develop action plans.
- Customer satisfaction score (CSAT). Like NPS, customer satisfaction scores can tell you how satisfied customers are with the service or experience they receive from your company. This number can also reflect on the company and the individual, so clarify the parameters before using this as a metric.
- Average response time. How long does it take employees to respond when they receive customer messages? Are you delivering on client promises based on your employees’ response times?
How to track performance metrics
Now that you know a few employee performance metrics to measure, you might wonder how to implement a tracking system. We’ll provide some ideas for collecting data and using your findings to improve employee performance.
- Collect and analyze data. Evaluate how employees perform using self-assessments, peer reviews, sales figures, performance data, manager evaluations, and other data collection forms.
- Use software and tools for tracking. Research performance management software, customer feedback tools, and productivity tracking software to give you quantitative and qualitative data about employee performance.
- Provide regular feedback and coaching. Consider tools like performance reviews or 360-degree feedback to best help you communicate this feedback with your employees.
- Create effective goals. Implement the SMART goal framework for individual performance to set goals in key areas. Consider what (if any) training programs and initiatives may help employees develop new competencies or build on current abilities. Set performance goals so your employees know the end goal.
- Recognize and reward good performance. Use incentives like bonuses, promotions, and public recognition to reward employee performance and encourage others to do their best work. The key is to align the size of the reward with the size of the accomplishment.
- Set up a regular time (or process) for employee review. If you have urgent feedback you need to share with an employee, don’t wait for a prescheduled performance appraisal. As much as possible, have necessary conversations with people in real-time. But also create a system for regular implementation and one-on-one discussions so everyone knows when (and how) their supervisors will evaluate their performance at their annual review.
Keep on top of employee performance with Upwork
If you need help with performance evaluation or metric tracking, consider working with an appraisal specialist through Upwork. Our talented independent professionals can help you create effective organizational development strategies that foster a community of learning and personal growth among your employees.
You may also be interested in using Upwork Full-Time to fulfill any outstanding contract-to-hire needs. Rather than immediately entering a permanent working relationship, you and the employee can explore a trial working period to see if the arrangement fits both sides.
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