5 Ways to Measure and Evaluate Employee Performance

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HR Insights for ProfessionalsThe latest thought leadership for HR pros

Wednesday, June 3, 2020

To improve understanding of your workforce and get the best out of your human resources, you need a clear strategy for measuring and analyzing data on employee performance.

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Data is at the heart of many fundamental aspects of business and how modern organizations operate and gain results.

Just as you rely on the accurate collection and analysis of figures to understand things like how much departments are spending, or how much revenue the business generates in a given period, you need data to get a clear picture of how your workforce is functioning.

Getting to grips with employee performance will put you in a better position to gain maximum value from your people. Here are five methods you can use to improve your understanding of how your staff are performing:

1. 360-degree feedback

The 360-degree feedback model can help you build up a comprehensive picture of how a member of staff is performing, based on input from a range of other people with whom the individual employee works.

You can collect a wide range of feedback from the person's colleagues, line managers, direct reports, customers and other sources to develop a good understanding of their various strengths and weaknesses.

A colleague could tell you about the employee's skills in areas like collaboration and general attitude, for example, while client feedback could prove more useful for understanding the individual's aptitude for sales or customer service.

2. Quantity metrics

The particular metrics you use to gauge how your employees are performing will depend on the nature of the company and the roles that are vital to its success.

In some cases, it's possible to use quantitative metrics that provide a clear and easily understandable representation of how employees are contributing to the business. Where salespeople are concerned, for instance, you could use metrics like:

  • Number of sales
  • Number of sales calls made
  • Number of company visits
  • Percentage of leads converted into sales

Quantitative metrics can also prove useful if your business model is based on making things, which could be anything from software (in which case you might measure how many lines of code your programmers write) to physical products like clothing or cosmetics.

3. Quality metrics

Quantity metrics are useful when you want to get a basic idea of employee productivity and how much work people are doing, but you also need to have a way of measuring the quality of that output.

One way to go about this is to introduce dedicated processes for measuring the number of defects or errors that appear in key products and services. If this number is unacceptably high or is consistently increasing, you'll know you have a quality problem that needs addressing.

Measuring defects or mistakes is likely to be trickier for service providers than it is for firms that make a physical product. If you offer a service, you could find that an effective gauge of quality is your net promoter score (NPS): an indicator of client willingness to recommend you to others. A strong NPS could indicate that your service is performing well and meeting customer expectations.

4. Management appraisal

Employee appraisals conducted by line managers are a well-established feature of the workforce assessment landscape. Regular performance reviews have become so familiar to many workers that there's a risk of them being seen as redundant and counterproductive.

But management-led appraisals can be highly useful if they're used in the right way - reflecting not only the interests of the business and what it hopes to learn about its workforce, but also the professional goals and priorities of your staff.

One of the most important steps you can take to modernize and improve your performance appraisals is to adopt a forward-thinking approach that links the process to organizational and individual goals.

5. Self-evaluation

Inviting members of the workforce to conduct evaluations of their own performance can lead to some interesting insights, because employees often provide thoughts and perspectives on their work that might not occur to their managers.

It's not unusual for employees to take a more critical, analytical view than their superiors when it comes to evaluating their own conduct and results.

Outcomes from staff self-assessments can be combined with the results of objective appraisals to give a more comprehensive view of employee performance, based on similarities and discrepancies between the various accounts.

The insights and conversations that come out of this process can unlock valuable benefits in terms of staff development and the company's understanding of its workforce.

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