All the Employee Performance Metrics You Need to Track

Performance management can be daunting. While 98% of business owners think it’s important to measure performance, few feel they’ve got the right system in place. In fact, according to a recent Gallup survey:

More than 50% of employees report that their performance reviews are subjective.

While both subjective and objective measures of employee performance have their place in performance reviews, it can be difficult to know exactly what metrics to use.

Ready to improve the overall performance of your organization with more accurate employee performance measurement? We’ve compiled a comprehensive list of 23 employee performance metrics to help you optimize your performance management.

What Are Employee Performance Metrics and Why Are They Important?

Employee performance metrics measure the efficiency, productivity, and engagement of your employees. Accurate performance management is essential to organizational performance and efficiency. Using a combination of different performance metrics can drive company success by capitalizing on your employees’ strengths in addition to identifying pain points at the organizational, team, and individual levels.

Employee performance is often measured in three broad categories:

  1. Management by Objectives (MBO): Focuses on a larger, overarching company goal
  2. Key Performance Indicators (KPI): Measures specific, predetermined metrics that help a company achieve its goals
  3. Objectives and Key Results (OKR): Like MBOs, focuses on a goal set by CEOs and upper management, but employees define their individual action plan

MBO, KPI, and OKR can be further broken down into specific metrics to meet your organization’s unique needs.

23 Employee Performance Metrics to Track

There are many ways to measure employee performance. By understanding each of the following metrics, you can track the most important data points to support employee and organizational success.

1. Management By Objectives

This metric translates a larger organizational goal set by CEOs or upper management into individual, team, or department goals set by employees and managers together, with emphasis on the overarching goal of the company. Performance is measured by progress toward or completion of these goals using a point-based system — when an employee completes a milestone, they are awarded a certain number of points. This approach empowers managers to make goals more tangible and helps employees better understand their performance.

2. Work Quality

Getting tasks done quickly does not always mean they are done well. This metric evaluates whether employee output meets company standards. Work quality can be further broken down into even more specific metrics:

Different factors may lead to employee underperformance, from skills development to disengagement. The good news? There are ways to help underperforming employees succeed.

3. Work Efficiency / Effectiveness

An employee’s work efficiency or effectiveness measures both the quality and quantity of the work they do. This metric weighs resources (operational cost) against output (results/ profit/ revenue) to assess an employee’s performance. Work efficiency or effectiveness is useful because improving work efficiency directly impacts organizational goals.

4. Time Management

Time management — or an employee’s ability to plan, prioritize tasks, and control the time spent on those tasks — is a worthwhile skill to develop in all employees. The better employees are at managing their time, the more efficiently they can produce quality work. On the other hand, poor time management can result in missed deadlines, communication breakdowns, and other disruptions to team effectiveness.

The good news is that BambooHR has the tools to help make time management a breeze. Our quality time tracking software can help you efficiently manage time within your organization, and we have plenty of tips to help employees kick time-wasting habits.

5. Problem Solving Skills

This metric measures how well employees can identify and take initiative to develop solutions to problems on their own. Problem solving skills are often measured during recruitment and onboarding in the form of skills assessments, but these skills can also be measured by how well employees collaborate to solve problems. Creative problem solvers are a valuable asset to your organization because this crucial skill helps improve organizational efficiency, productivity, and adaptability to change, and often drives innovation.

6. Teamwork

Measuring an employee’s teamwork requires evaluating their collaborative work practices. The best way to measure teamwork is to look at team productivity, and consider each employee’s contribution to that team. Promoting collaboration and teamwork improves individual employee persistence and resilience when completing tasks, contributes to employee satisfaction, and results in higher retention rates.

7. Errors Made

One way of assessing an employee’s work quality is assessing errors. This metric can be measured by comparing the number of errors made to error-free work produced within a predetermined time period.

It’s important to remember that errors aren’t always an employee’s fault — accidents happen, and some errors are beyond our control. On the other hand, if one employee or team repeatedly makes the same mistake (or makes significantly more errors) it’s worth considering ways to help them improve. While the number of errors alone isn’t a comprehensive measure of employee performance, it can be a helpful tool when used in combination with other metrics discussed in this list.

8. Number of Sales

The number of sales per employee is a classic measure of employee performance in certain industries. Ways to measure the number of sales include completed sales per employee, potential leads or client contacts per employee, company visits per employee, and more. This metric is purely quantitative, so it’s most useful for simple sales and isn’t always reliable for businesses with longer sales cycles.

9. Number of Units Produced

Like the number of sales, the number of units produced is a quantitative measure of employee output. This can be useful in different industries, such as traditional manufacturing or even customer service (the number of customers served, for example). The clear drawback of this metric is that like in sales, the number of units produced is purely quantitative and does not consider the quality of the units produced.

10. Revenue Per Employee

Revenue per employee assesses how much revenue an employee brings into the company. Another option is to measure revenue per full-time equivalent (FTE), especially if a significant portion of your employees work less than full time. This metric is calculated as total revenue divided by FTE. Revenue per employee is a useful part of an employee value report.

11. Profit Per FTE

Like revenue per employee, profit per employee measures employee value for a company. This metric is calculated as total profit divided by FTE. Because profit considers operational costs, taxes, liabilities, and other expenses, profit per employee is much more difficult to use as a measure of individual employee performance.

12. Absenteeism

Absenteeism, or chronic unexcused tardiness or absences, is a challenge for many organizations today. This metric can measure the number of absences per employee, per team, or within the organization overall. Assessing each level is useful — is this a question of individual employee engagement, or is this a widespread problem that will require fundamental change?

13. Overtime

Overtime is calculated as the total hours of overtime divided by FTE. While overtime compensation is sometimes used to motivate employees, excessive use of overtime can result in low morale and even burnout. If overtime is needed on a routine basis to get expected work done, meet normal deadlines, or improve work quality, this is an indication of poor organizational performance and a lack of operational efficiency. Measuring overtime is useful on the individual, team, and organizational levels.

14. Subjective Appraisal (9-Box Model)

The 9-box model is a type of assessment tool. Also known as the 9-box grid, this tool measures employee performance in an effort to determine their future at an organization based on past performance and future potential (the two axes of the grid). Managers or reviewers rate employees’ performance on a scale of low to high and plot the results on the grid. While this tool can be useful, it should not be used as the only method of data collection for performance reviews because it doesn’t completely protect against conscious or unconscious bias. Additions or alternatives we recommend are:

15. Product Defects

Like errors made, this metric assesses quality of output by measuring failures. As a measure of performance, it can be calculated as the number of defects per employee or per team within a predetermined time period. Being aware of the number of product defects is useful for understanding output quality, but like errors, product defects can occur for a number of reasons outside of an employee or team’s control. On its own, it’s not a reliable measure of employee performance — we recommend using sparingly and only in combination with other performance metrics.

16. Net Promoter Score (NPS)

The Net Promoter Score (NPS) measures whether a client would recommend a company’s services or products. NPS is regularly used to assess employee performance, particularly in sales or other client-facing positions, and is usually measured on a scale (1-10) of client satisfaction. NPS can provide useful insight into employee performance that quantitative measures and manager or peer observation might miss.

Where NPS measures client satisfaction with employee performance, Employee Net Promoter Scores (eNPS) and Employee Satisfaction Surveys measure employee satisfaction with your organization, and can provide key insight into organizational performance, employee satisfaction, and help guide other aspects of your performance management system.

17. 360 Feedback

360-degree feedback is a performance management framework that collects feedback from peers, subordinates, managers, clients, and other relevant stakeholders to evaluate employee performance. This metric is especially useful because it provides an often-accurate, multiple-perspective view of individual employee performance.

18. 180 Feedback

180-degree feedback is similar to 360-degree feedback, but is much more focused. This tool collects feedback only from key stakeholders, direct colleagues, and managers to assess employee performance. 180-degree feedback provides a focused, multiple-perspective view of individual employee performance. Including a range of perspectives helps provide data-driven insights for performance reviews that actually make an impact.

19. Forced Ranking (Vitality Curve)

Also known as the “rank and yank” approach famously popularized by General Electric, forced ranking is a severe method of performance management. In this approach, managers rank their employees from best to worst — the bottom 10-20% of employees are placed on an individual performance improvement plan (PIP) or even terminated and replaced using an existing applicant pool. While it may technically improve numbers in some cases, forced ranking is sure to jeopardize morale, employee satisfaction, and employee well-being, so we don’t recommend it. We think performance management should be a positive part of company culture, not something employees and managers dread.

20. Phone Handling Metrics

These metrics evaluate the length and quality of customer interactions, particularly over the phone or on the computer. Phone handling is used primarily in sales and other client-facing positions. Phone handling can be broken down into even more specific metrics to collect relevant employee performance data:

21. Human Capital ROI

Human Capital ROI is another measure of employee value to a company by quantifying the value of employees’ knowledge, habits, and attributes. Human Capital ROI is calculated as revenue minus expenses and compensation and benefits costs, divided by total compensation and benefits cost. Although it seems like a holistic approach to evaluating employee performance, it can be difficult to quantify and is not a reliable metric.

Instead of relying on Human Capital ROI to measure employee performance, consider using Human Capital Management (HCM) to optimize recruitment, retention, and talent development within your organization.

22. Engagement

Employee engagement measures an employee’s feelings toward and investment in the company, their job duties, their colleagues, and the company culture — or, what motivates an employee to do good work. Engagement is typically assessed through surveys, check-ins, and one-on-ones. Fostering engagement encourages commitment to the company’s mission, values, and goals, and helps maintain good company culture overall.

Though it can be easy to confuse employee satisfaction with employee engagement, engagement is a more relevant metric to track when it comes to performance.

Looking to improve engagement in your organization? Download our FREE eBook: Employee Engagement Tips - 7 Drivers of Engagement

23. Learning and Development

The final metric of employee performance doubles as an assessment tool and a plan for continuous improvement. It’s worth including in your performance management considering organizations with a culture of learning are 52% more productive and 17% more profitable.

Learning and development is assessed by managers and employees together, leading to improved employee engagement, productivity, and retention. When using learning and development as a framework for employee performance management, be sure to emphasize improvement rather than highlight employee failures. Once you’ve identified the learners in your organization, you can create learning and development programs on a broad scale and employee development plans on an individual or team level.

Stronger Employee Performance Drives Organizational Success

It’s clear that stronger employee performance drives organizational success. Now that you have a comprehensive understanding of these 25 performance metrics, consider how you can integrate key metrics into your performance management process.

Our FREE Definitive Guide to Performance Management eBook is a great place to start! This eBook will empower you to develop or improve a robust performance management process that tracks the most relevant data points and drives employee and organizational success.

In this guide, you’ll also get access to exclusive content:

Download our guide to get started today!

https://www.bamboohr.com/blog/how-to-improve-performance-management
https://www.bamboohr.com/blog/best-principles-for-performance-management
https://www.bamboohr.com/resources/guides/definitive-guide-to-performance-management
https://www.bamboohr.com/blog/improving-underperforming-employees