Question

What would be an example of A performance metric to monitor employee performance?

Answer 1

Employee performance metrics are key to tracking how well employees are performing. Implementing them the right way is tricky. However, when done right, employee performance metrics benefit both the organization and the employee.

01. Quality

This is one of the most difficult metrics to measure, as it appears to be entirely subjective. However, in an era with no shortage of meaningless numbers, quality is also one of the most important metrics to keep in mind.

Trust your managerial instincts when making judgments about an employee’s work. Perhaps the challenging aspect of this is regularly keeping track of each employee’s performance. One way you can do this through having employees set individual goals, then following up with them.

02. Revenue per employee

On the opposite end of the spectrum is this straightforward way to measure your whole team’s performance. This is a simple calculation: total revenues for a given time period divided by the number of employees. This provides a snapshot of how well you’re doing overall.

03. Attendance

This metric is most useful for determining employee engagement. How many days are employees missing? Are they coming in late or leaving early? All of these are usually indicators of a problem, whether it be related to health or motivation.

Conversely, you can also see employees who never miss a day, always show up early, and always leave late. While they might be doing great work, these employees are candidates for burnout.

04. Turnover

The Society for Human Resource Management has a helpful sheet for calculating turnover cost. While there’s plenty of data out there about the cost of turnover, determining the actual cost for your business is important.

Keeping track of the quality of employees you lose and why they leave is important too. Use exit surveys to find out if there’s anything the business could improve on to retain a talented workforce. Or better yet, use an effective tool to solicit employee feedback before that rock star team member leaves.

05. Efficiency

Like quality, this isn’t always easy to measure. Each employee has a slightly different approach. An employee who works slowly but methodically is still getting the job done.

But there are certain indicators that efficiency is down. For example, if an employee is consistently missing deadlines or using a lot of overtime, it may be time to talk to them about time management.

1. Management by objectives
A way to structure the subjective appraisal of a manager is to use management by objectives. Management by objectives is a management model aimed at improving the performance of an organization by translating organizational goals into specific individual goals. These goals often take the form of objectives that are set by the employee and the manager.

The employee works towards these goals and reports back to the manager on their progress. These goals can even be given a certain weight (a number of points). Upon successful completion of these goals, points are awarded to the employee. In turn, managers are able to make goals more tangible and make performance reviews more data-driven.

2. Subjective appraisal by manager
In most companies, performance is assessed several times a year during (bi-)annual performance reviews. Employees are assessed on several criteria, the quality of their work being the most common.

An adaption of this scheme is the so-called 9-box grid. The 9-box grid is based on a 3×3 table in which the employee is assessed on performance and potential. Employees with high performance but low potential are perfect for their current function.

Employees in the top right corner, those who score high on both performance and potential, are often designated to quickly advance through the organizational ranks as they can add more value higher up the ladder.

3. Product defects
It is tricky to measure (production) quality objectively. An approach often seen by more traditional manufacturing industries would be to calculate the number of product defects. Defect, or incorrectly produced products, are an indication of low work quality and should be kept as low as possible.

Even though increased standardization of production processes has rendered this metric almost useless, the approach to measuring employee performance can be applied to other areas.