It’s not uncommon for employers to use word of mouth assessments to measure employee performance, but is this the best way to get an accurate idea of how your workforce is functioning?
You can get much more focused, relevant insights into the contributions individuals are making to the business by using HR metrics. These methods of measurement can focus on various aspects of employee performance, including:
- Work quantity - The amount of work an employee is producing, which could be anything from customer calls answered to number of products manufactured.
- Work quality - The quality of that work. For example: how many calls yielded a positive end result, or how many units came off the production line with no defects?
- Speed - How quickly the employee completes their work. Is it in line with the rest of the workforce, and what the company expects?
- Efficiency - How effectively the employee uses the time and resources available to them.
- Cost - Employee payroll and other expenses, relative to their revenue generation for the business.
Within these areas, there are dozens of specific metrics you can use to build the clearest possible picture of employee performance. Here are some of the most useful:
1. Revenue per employee
Calculating the revenue the organization gains for every individual in the workforce is one way of getting an idea of your overall efficiency, and how much value you’re gaining from every person you hire.
If your revenue is relatively low and your number of employees fairly high, compared with other companies of a similar size and type, it’s an indication you’re not getting the best out of your workforce.
Revenue per employee is often used as a general benchmark of business performance. The most successful tech companies, for example, typically gain millions of dollars of revenue for every individual that works for them.
2. Profit per employee
A closely related metric, but focusing on the financial gains your people are delivering for the business once costs have been taken out of the equation.
If you’re achieving a satisfactory profit per employee, you can feel confident the people working for you are achieving results and your overall performance isn’t being held back by workforce-related expenses, such as payroll and cost per hire.
3. Overtime per employee
The amount of overtime the typical employee puts in can be a particularly useful metric, firstly because it gives you an idea of the willingness of your workers to go beyond their minimum requirements to get the job done.
It’s also important to consider that, if you have a particularly high overtime rate (total overtime hours divided by your number of employees), it could be a signal that your staff are working too hard and are at risk of burnout. Lots of overtime doesn’t necessarily equate to high-quality work, so take care to ensure that standards aren’t suffering.
4. Absence rate
If your employees are working too hard or suffering from job-related health problems such as stress, absence rates will go up. A high rate of absenteeism can often serve as an indicator of general dissatisfaction in the workforce and a warning sign of staff turnover.
Conducting detailed analysis using this metric will help you ascertain how much working time is being lost to absence and the financial consequences for the business.
5. Average task completion time
To do essential jobs well and deliver results for your customers, it’s important to take a practical approach to measuring how efficiently your teams are working and achieving their goals.
You can calculate your average task completion time by adding up the total time required to do a particular job over a designated period and dividing it by the number of times the task was performed. If you think it needs to improve, consider whether focused training or making changes to your workflow could help.
6. ‘Units’ produced
Production of ‘units’ seems like a metric that would be most relevant for manufacturing, but it can also be applied to various other sectors, including service-based industries that don’t produce anything physical.
The productivity of software programmers, for example, can be evaluated based on how many lines of code they write every hour, while marketing copywriters can be assessed on the number of blogs they produce each week. Like overtime, a high quantity of work being produced doesn’t necessarily mean high standards of quality, so quantitative metrics should be used in tandem with qualitative ones.
7. Number of errors
There are many qualitative metrics you can use that relate specifically to the work you do - for example, the percentage of sales calls made that result in actual sales.
On a more general level, it can prove beneficial to track the number of errors or defects that occur in the work your employees complete over a set period of time. This could be anything from sub-standard products coming off the manufacturing line, to basic mistakes in written work or bugs in software code.
Identifying these issues and taking action when they become too common will help to maintain standards for the business, as well as supporting employees in their professional development.
8. Net promoter score
Commonly presented on a scale of one to ten, your net promoter score gives an idea of the likelihood that your clients will recommend your products or services to other potential customers.
It’s often used as a customer satisfaction metric and an indicator of revenue growth. As far as employee performance measurement is concerned, your net promoter score can give you an idea of how successfully your workers are meeting client expectations, maintaining relationships and delivering ROI for your customers.
If your net promoter score is too low, it could be a sign that further training or client engagement efforts are required to raise standards and maintain revenue generation.