9 Employee Performance Metrics That Go Beyond Productivity
Employee performance metrics are an important tool for employers, HR professionals, managers and supervisors to monitor and manage their team's performance to ensure productivity. However, when it comes to effectiveness, productivity is only part of the equation. There are other aspects of employee performance and relationships that need to be understood.
Labor shortages, rapid technological change and the current economic climate require employers to continually assess their employees' skills and reskill them to meet new internal and external demands. Failure to do so can cost them dearly - not only in lost productivity, but also in the high costs of layoffs and new hires, a vicious circle that can impact both profits and public opinion.
What are employee performance metrics?
Employee performance metrics are key performance indicators (KPIs) that can be used to measure an employee's performance relative to established goals.
An effective talent management process can help companies maximize employee satisfaction, engagement, performance and retention. This process requires using relevant HR metrics to get a better overview of what is working and what isn't in your company.
Performance metrics provide companies with the opportunity to quantify the impact of their employees on various business metrics and outcomes and take action to improve that impact.
How to measure employee performance metrics
Using people analytics involves evaluating data from your company's digital HR tools and applying algorithms, calculations and machine learning to better understand this data and make decisions about talent. Often this data is transferred to an HR dashboard, a tool that helps managers better visualize and monitor the data over time.
Categories of employee performance indicators
Employee performance metrics can be divided into three categories:
- Work quality metrics
- Work efficiency metrics
- Organizational performance metrics
Let's now look at the individual types of employee performance metrics.
Work quality metrics
Work quality metrics provide an assessment of the quality of work performance of individual employees.
“Quality” is determined based on the type of work and output for which the employee is responsible. This can refer, for example, to the absence of defects or the total number of units produced.
The absence of errors is an objective measure. Quality metrics can also be subjective, e.g. when evaluating the quality of a marketing initiative, which can have both objective (leads generated) and subjective (aesthetic value) measures of quality.
Work efficiency metrics
Labor efficiency metrics provide information about how efficiently the output was produced. For example, how long it takes to process a service request 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 company performance. For example, to what extent do a business development manager's efforts impact the company's bottom line or customer satisfaction metrics?
Within these categories, there is a wide range of metrics that can be used to evaluate employee and company performance.
9 employee performance metrics
There are many different employee performance metrics that can help companies monitor and manage the value and performance of their human resources. Here are nine of the most important employee performance metrics to consider.
1.Management by Objectives (MBO)
Management by Objectives (MBO) is a results-oriented form of performance appraisal that relies on results rather than feelings. It was developed by management guru Peter Drucker.
All too often, organizations rely on their instincts to make business decisions. Considering real data points based on outcomes or goals can help shift the focus to measurable and meaningful results that align with business priorities. Managers and employees work together to develop metrics to be used to monitor employee performance.
2.360 degree feedback
360-degree feedback is part of an employee performance evaluation process that seeks feedback or input from a wide range of people who have insight into the employee's performance. This can include peers, direct reports, customers, suppliers, etc.
3.180 degree feedback
180-degree feedback is a term that refers to the more traditional approach to performance appraisal, which involves interviewing both 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 for assessing consumer or employee sentiment and loyalty based on the answer to the simple question "Would you recommend...?".
On a scale of 0 to 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 a company's eNPS score, the lower the risk of voluntary turnover.
5.Forced Ranking
Forced ranking is a somewhat controversial method of employee evaluation used most notably by GE CEO Jack Welch, who eliminated the bottom 10% of performers each year. For example, in a group of 10 employees, everyone would have to do a forced rating, with only one employee receiving a grade of 10, 9, 8, etc.
6.Work efficiency
Work efficiency is a measure of the efficiency of employees in completing their work. It is easier to measure in production environments where a specific time can be allocated for work performance than in areas that are more service-oriented, e.g. Management and supervisory functions.
7.Sales per employee
Revenue per employee is a performance metric that assigns a value to employees based on the amount of revenue they generated from their work and that can be traced back to the bottom line. Ultimately, this key figure measures how much money each employee generates for the company. For example, a sales representative might be assigned a value for sales per employee based on the amount of sales generated in a quarter.
8.Absenteeism rate
The absenteeism rate is the measure of the number of employees who are not present at their workplace at a given time. The Bureau of Labor Statistics (BLS) defines the absenteeism rate as “the ratio of employees with absences to all full-time, paid employees.”
9.Human capital ROI
Human capital ROI is a broad metric that companies use to calculate the overall contribution of their human resources or capital and relate it to the bottom line. It compares an employee's contribution to the resources the employer has spent on them, including compensation, benefits and training.
Tracking employee performance metrics is just the beginning
As you gain experience and advances in the use of employee performance metrics, consider how predictive HR analytics could play a role in your performance evaluation processes. Using predictive analytics helps companies make predictions about employees and general trends in the workforce.
Performance metrics go beyond productivity. Here we have presented a number of different options for supplementing your performance management metrics with additional metrics that can help you get a broader, more comprehensive view of the value of your human capital investments.
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