Employee performance needs to be measured. Why? You may ask. Because that is how you, as a business owner, determine if an employee is a good fit for the company, if they need more support, and if there are any barriers that prevent them from effectively executing the task at hand.
Performance is measured against predetermined and clearly communicated metrics. These are quantifiable metrics that show contributions to organisational performance and identify areas for development or improvement.
Why Measuring Employee Performance is Important
Performance measurement is important for the following reasons:
- It identifies high performers and areas needing improvement
- It supports data-driven decisions in promotions, training, or disciplinary actions
- It enhances transparency and accountability within teams
- It aligns individual performance with organisational success.
Common Performance Metrics
Metrics, sometimes referred to as key performance indicators, are the quantifiable numbers that you will use to determine if an employee has achieved the expectations that their line manager had for them.
1. 360-degree Feedback
This assesses an employee’s performance based on feedback from peers, subordinates, managers and customers. It is seen as an accurate, multi-perspective view of performance and skills.
2. 180-degree Feedback
Much simpler than the 360-degree feedback tool, it relies on feedback from the individual’s direct manager and the employee’s self-assessment. It is considered to be a more focused and straightforward evaluation process.
3. Absenteeism Rate
There is a strong correlation between absenteeism and performance. Data has shown that, generally speaking, highly motivated and engaged employees take fewer sick days. In some cases, the difference is even up to 81%.
4. Net Promoter Score (NPS)
Net promoter score, a number between 1 and 10, can be an indicator of employee performance. It is a client’s willingness to recommend a company’s service to other potential clients. Clients who give a score of 9 or 10 are highly likely to be promoters for the company.
5. Customer Satisfaction Score (CSAT)
Customer Satisfaction Score measures the level of satisfaction that customers have from interaction with a specific employee. It is usually based on specific interactions, services, or support provided. This is also usually a scale rating, such as 1 to 5 or 1 to 10.
6. Number of Sales
You can measure an employee’s performance based on the completed sales that a salesperson has made. It is a simple way to determine a clear metric about what the individual’s goals for the company are.
7. Task Completion Rate
Task completion rate measures the percentage of tasks successfully completed, but this can differ from task to task or person to person.
In theory, a high task completion rate indicates effective performance, while a low rate may signal challenges such as workload issues, time management difficulties, or skills gaps.
8. Number of Units Produced
Measuring employee performance through the number of units produced is a good metric to use in an environment that has repetitive tasks and products to produce. This is typically a factory or another type of manufacturing business.
A big risk with this measurement is that the output isn’t as simple as measuring packages packed, items assembled or products made.
Steps to Measure Performance
Here are a few steps to measure performance.
Set up a Time
Performance measurement usually happens in a formal setting. Schedule a meeting when the evaluation will happen.
Communicate the Metrics
For an employee to understand what is expected of them, they need to know what these expectations are. Ensure that you communicate ahead of time (when they start with the company, enter a new position or start a new project) what the metrics for performance evaluations are.
Keep Goals in Mind
When you are measuring employee performance, you must keep in mind why you are trying to measure it in the first place. The metrics must relate to your business goals, which, in turn, should be set up to help your business grow.
Record the Data
Record the measurements of your performance evaluation. You can do this on a checklist, table, score sheet or a form set up specifically for this reason. This means, depending on the metrics that you are measuring, the way you document the feedback will differ.
It is possible to include a section that refers back to previous goals or revisits a previous score, so you can compare evaluations over time to track growth or improvement.
