Rating an employee's performance is only possible when HR can measure the employee's performance. This is an important discourse within HR circles. But without first setting relevant performance metrics, you really can’t even measure anything in the first place. Performance review is key to business growth, and that is why many workers dread it. You know how workers would normally put up their best shows during an audit? Exactly, that’s it!
No one wants to miss out on a promotion or a possible pay raise. But the essence of conducting performance reviews often transcends just promotions and pay raises. In fact, a good performance review would evaluate organizational performance and workflow.
We also understand that some soft skills like adaptability and conflict resolution may be hard to track, but measuring employees' success in these areas is essential, especially if they are key performance indicators. Clearly, no HR executives would want to keep an employee on their payroll simply because they’re well-dressed or have cute faces (not that these are not important. In fact, they’re requirements for some types of jobs. But I know you get the drift). You want to make sure that staff productivity is not below their paychecks.
Okay, let's dive right in already!
Importance of Setting Performance Metrics
I’ve already touched on this in the introduction, but let’s take a deeper look before getting into the metrics themselves. For starters, there’s no way an employee would know what is expected of them or do their job correctly if they do not know what HR is looking for. So it would be best if you spelled it out clearly.
Setting expectations is the first and probably the most important benefit of having employee performance metrics in place. The second benefit follows the first; when employees understand how their performance is measured, it is easier for them to do their job as expected. As a result, you’ll have fewer dissatisfied workers, which ultimately results in reduced turnover.
The third benefit I’d like to highlight here is that defining performance review metrics helps to improve overall performance. Managers looking to address complacency among workers need to be sure that their employees have a clear understanding of what is expected of them. Once the standard is set, the staff will have to work to measure up.
Lastly, setting employee performance metrics makes it easy for HR to measure performance, determine promotions, give appraisals, and offer pay raises. But I’d like to think that these are pretty obvious and secondary, in the sense that they only come after you’ve been able to set the standards.
5 key Performance Metrics You Should Measure
1. Quality of Work
This should be a key component of your company’s employee performance review metrics at all times. Quality ought to be measured in line with an employee's job duties. I’m sure you already know that poor quality can impact customers' experience and even the ability of coworkers to do their part.
When a team member isn’t performing optimally, it takes measuring the quality of their work, for instance, the number of sales calls that actually results in sales and the number of satisfied clients that the staff interacted with, to know how well they're doing their job.
2. Effectiveness
This metric focuses more on employees' ability to solve work-related challenges. Improved effectiveness often automatically translates to high-quality products or services and increased customer satisfaction. Effectiveness also factors innovative solutions that help them complete their task faster and more efficiently.
When measuring staff effectiveness, many other sub-metrics can be used to understand how well they are performing. By and large, it mostly depends on the role of the employee in the company. For instance, it can be an employee's ability to meet deadlines, communicate effectively with coworkers, and prioritize work correctly. It could also be evaluating the ability of the worker to produce less defective products and avoid errors.
3. Improvements
From time to time, HR teams develop and facilitate development programs that help employees enhance their skills and improve overall productivity at work. It is wise to have training and development programs specifically targeted at assisting employees in getting better at doing their job.
It is important to note that measuring improvements may not be possible if the company does not invest in training and development. For instance, HR can measure improvements in work quality after workers have been made to go through the necessary training. Additionally, to improve the entire process, HR might need to administer surveys and quality assurance programs that reveal the efficiency of the training.
4. Innovation
How innovative is your workforce? Are they willing to go out of their way to meet deadlines and overcome challenges? This is an important metric to include in your next performance review because it will eventually reflect on the results and productivity of the company. Smart initiatives should be identified, and HR can measure how introducing these into business processes impacts productivity.
But innovations are not always obvious, so you want to pay close attention to initiatives that aren’t so obvious or massive in impact. It is also important to encourage and reward innovations as much as possible. As we mentioned earlier about defining metrics, it will help spell out the kind of innovations that the company needs.
5. Number of Sales
This is a quantitative metric, and it comes last because it is where everything leads. All your efforts certainly will translate into more clients coming through your door. As you push out resources and develop staff capacity, you'd agree that one of the most critical ways to measure performance is to evaluate your sales per expenditure.
With the aid of some HR metrics software, measuring sales and other important performance metrics has been made pretty easy.
Final Thoughts
As I stated at the beginning of this post, it will help a great deal if HR managers can set the tone for their employees. Once this is established, it becomes very easy to measure these very important metrics. Also note that the ones mentioned here are not exhaustive, so you should include those specific to your organization.
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