How to Measure Employee Performance: Metrics, Methods, and Tools for Performance Evaluation and Assessments
Continuous performance feedback is a vital component of effective performance management. However, to truly maximize its value, organizations must transform qualitative feedback into actionable data.
In this article, we'll learn how to measure employee performance. By measuring employee performance, companies can identify areas for improvement, and foster a culture of continuous development.
How to measure employee performance
Start by creating an enterprise performance management plan. Then apply the basics of continuous performance management. Here’s how to measure the progress along the way:
Step 1: Role-relevant goal setting to gauge employee performance
Goals are vital to performance because good goals help engage employees in their work. This should be a collaborative process versus you assigning them goals that might not align with their work. You want the employee to come out of goal-setting thinking, "I want to do that" instead of "I have to do that."
When creating the goals, start by defining each OKR meaning to reflect the positive change you want to see. Then break down each goal into smaller, achievable milestones.
It's a good idea to set a handful of soft metrics to measure intangible factors. To increase accuracy, set at least five aspects. Common metrics include: behaviors, attitudes, skills, knowledge, and administrative areas.
Then translate this information into KPIs to track individual progress. If you’re not sure which KPI to choose, here are a few suggestions to get you started:
Productivity and work quality
One of the main ways to assess your employees is to see how productive they are and what their quality of work is like. Generally speaking, productivity is easier to gauge than work quality simply because it is easier to quantify.
For example, an employee might produce more reports than his peers in a week. However, that doesn’t necessarily mean those reports are of quality.
To inspect the quality in that case, you have to ask the following:
- How many insights were in the report?
- Was the way forward actionable and realistic?
- Did they back the insights up with thorough research?
- Did they present those insights well?
- Were the stakeholders convinced?
Skill development and improvement
Upskilling should be an ongoing, year-round priority for all employees. Skills development is a proactive strategy to enhance employee performance by equipping individuals with the tools they need to excel in their roles.
To get a sense of how an employee is developing consider:
- Willingness to attend training sessions and apply the knowledge to daily tasks
- Participation during events
- Responding positively to feedback
Additionally, Workhuman's latest product feature provides organizations with real-time updates on employee skill recognition. This data-driven approach helps identify skill gaps and highlights individual learning initiatives, enabling targeted development opportunities.
Achievement of goals and objectives
Define individual goals and objectives for your employee to tackle over a specified period. Then you can expand those goals as you advance.
Keep in mind that quick achievements isn't always a key indicator of solid progress. Consider an individual's workload and what priorities might need to be shifted around for each employee to reach their goals without risking burnout or an unhealthy work-life balance.
Teamwork and relationships
Meshing and communicating well with peers is just as, and possibly even more, important that an employee’s productivity metrics and goals. A lack of connection or belonging to the people and teams you work with is a detriment to engagement and the employee experience.
One way to get a sense of how an employee gets along with their peers is by collecting peer-to-peer feedback and recognition. Using digital tools that support ongoing peer-to-peer feedback, like Workhuman’s Conversations®, give employees the opportunity to initiate feedback no matter where or when they’re working.
A bonus of peer-to-peer feedback? A boost to engagement. Our research with Gallup found that employees who strongly agree they get valuable feedback about their performance from the people they work with are five times as likely to be engaged.
Learn more in this white paper, "9 Tips for Giving Feedback (Without the Stress)"
Establish personalized performance metrics
Even in the same industry, each company will have its own way of conducting business. The last thing you want is to implement a certain KPI that doesn’t apply to your workflow just because other organizations are using them.
Personalized metrics can keep the process flexible. As a result, you can reduce the sense of unfairnessOpens in a new tab that might come with performance management. You can even ask employees to provide feedback about the KPIs.
Step 2: Set benchmarks
After you come up with the aspects you want to measure, you’ll need to set a baseline. To do that, you’ll have to track data for a while from the performance you get from the average employee.
You can also use data from other organizations in the field to find your benchmark. Then you can go ahead and set your peak performance level.
All that’s left is to compare how your employees are doing with how they should be doing. Look for the areas with the biggest gaps between the actual and the ideal. Those are the areas that you can focus on to help employees.
Step 3: Give employees a guide on how to improve and monitor their progress
Good leadership doesn’t stop at measuring and benchmarking. You also have to direct your employees on how they can improve.
It’s best if you also provide them with regular updates. This way, you can capitalize on the positive changes and work on the gaps together.
When you have everything set into motion, try to automate the process and find a suitable interval. Some companies go with the classic annual review model. However, surveys point out that 92% of employeesOpens in a new tab would rather get feedback about their performance more often.
Remember that measuring work efficiency regularly pays off. After all, a lot can happen in a year, and you might want to adjust the goals as you go.
Best methods for performance measurement
Measuring usually requires hard numbers. However, that’s not very applicable when it comes to the performance management process.
What HR professionals usually aim to do is to quantify the qualitative. Thankfully, there are some key performance management methods that help with that.
1. Graphic rating scales
You can use sequential numeric scales (1-5 or 1-10) that measure performance metrics. For instance, you can rate the employee in aspects like “time management,” “task completion,” or “helping peers.”
Alternatively, you can use frequency scales, like “always,” “frequently,” “occasionally,” or “never.” These can be a good fit if you don’t think that numbers can accurately describe the metric.
After all, the rating scale itself is the static part, and you can tailor the metrics to your organization’s needs.
2. 360 feedback
The name 360 refers to the fact that this feedback isn’t one-sided. Instead, it takes into consideration the input from coworkers, managers, and maybe even customers. Ideally, you want to hear from people who interact with the employee.
The main principle behind 360 feedback is that combining insights from multiple sources can give you a clearer picture. This way, you can avoid blind spots in an employee’s strengths and weaknesses.
3. Self-evaluation
One of the most effective ways of providing feedback is to encourage employees to evaluate their own performance on a regular basis. You can use multiple-choice questions, essay questions, or both to extract insights.
Then, you’ll need to compare the self-evaluation to your expectations and reviews. The discrepancies between the two can show you the main areas for improvement.
However, the most common issue to watch out for here is receiving deluded feedbackOpens in a new tab.
4. Management by objectives (MBO)
Management by objectives or results is a very straightforward and efficient way of providing feedback.
Typically, the employee agrees with management on certain objectives and how to measure them. Of course, all these should align with the company’s goals. Then, the employee receives an evaluation based on those expectations.
This approach works best in organizations with efficient communication between management and staff.
5. Checklists
This method is quite basic and relies on a yes/no checklist. It’s simple enough and helps you see where your employees are meeting performance expectations and where they aren’t. Next, you can pinpoint the skill sets and areas where the staff needs guidance.
However, this method takes away the ability to grade performance. So, you might want to limit it to very rigid metrics only where any deviation from the ideal is unacceptable, like sticking to an important deadline.
6. Behaviorally anchored rating scales (BARS)
The BARS method rates an employee’s behavior and uncovers how it relates to job performance. It’s represented in statements that describe the behavior as specifically as possible.
One of the benefits of this method is that it measures the intangible, which is typically overlooked. For example, an employee might take the time out of their day to help out colleagues. So, BARS would be great at tracking this positive behavior.
However, it would be a little hard to keep track of these minor instances throughout the day. So, it’s best to use it alongside another performance measurement method.
Why is it important to measure employee performance?
Accurately assessing performance can help align the workflow with the company’s objectives. It can also save resources while predicting problems that could arise later in the work culture.
One of the appeals is that it helps the HR managers spot the areas that need tweaking. For instance, the results can point to certain training programs that the employees need.
Yet another company-wide benefit to look forward to is identifying the top performers. Then you can use these insights to boost the company’s culture with employee recognition. That said, you might need a software solution, like Workhuman’s Social Recognition®, to streamline the process for HR teams.
Plus, analyzing the results can help you identify the metrics that don’t provide a heavy indication of the employees’ performance. This way, you can save time and effort on measuring those and focus on the more relevant aspects instead.
Keep in mind that evaluating performance can be quite expensive and time-consumingOpens in a new tab. So, you’ll want to weed out any unnecessary metrics or activities in the process to balance the benefits with the drawbacks.
Discover how Conversations® and the rest of Workhuman® Platform can transform your organization’s culture into one with gratitude at the center.
FAQ
What are 5 performance measures?
The five types of individual performance measures are the outcome, quality, efficiency, output, and input.
On a business process level, the term would refer to processes that are measurable, specific, attainable, time-based, and relevant.
What is a performance evaluation form?
A performance evaluation form is a document that states the weaknesses and strengths of each individual employee. Overall, it can facilitate giving feedback and tracking employee performance.
However, the corporate has to tailor the form to the specific role requirements to extract accurate insights.
How to measure initiative in employees with performance management methods?
It’s hard to capture initiative if you rely on numerical values only.
Instead, you can opt for other methods like 360 feedback from peers and superiors. You can also ask managers to note which employees take initiative and how often they do it.
Conclusion
Understanding how to measure employee performance is crucial for reaching organizational objectives and cultivating a positive work environment. Once you identify the appropriate metrics and methods for your company, you can acknowledge high-performing employees.