What is Employee Performance and how to Measure Employee Performance?

Want to ensure exponential growth for your business? Looking for ways to empower your growth to be sustainable? –Then you must understand the importance of measuring Employee Performance and channelizing it in a result-oriented fashion.

The performance of an organization is always measured by the performance of the employees working in the organization. The performance of the organization can be measured by the revenue it is earning and the profits that it is enjoying. This is quite significant and is not hidden from anyone.

But is it that easy to measure and judge the performance of the employees. The HR department of the organizations is responsible for =track down the employee performance so that the right decision can be taken. If the employee has been showing great performance activities, he or she can be rewarded or if the person is losing interests, more motivation can be provided.

There can be also a number of such employees who do not perform even the organization has invested a lot of resources in motivating the employee. Such employees become a burden on the company and hence necessary actions are taken against them depending upon the situation.

But why is actually such a performance evaluation needed for all the employees in the organization? Is it actually worth?

This can be known by the various benefits and also the demerits of such employee performance evaluation.

Importance and Benefits Of Employee Performance

Why should be actually the employee performance measured? Here are some of the potential reasons.

1) Knowing the productivity of the Employees

Often managers do get extremely busy in their daily activities and hence do not have much time in hand to talk anything extra apart from the projects and the workload. But it is very much important to discuss the performance of the employees so that it can be known about how the employees are performing and if they are performing low, what is the possible reason behind it.

This is the reason, a number of the organization maintain an evaluation system either once in a year or even at a time twice a year. Based on the performance evaluation, the managers talk to the employees to discuss their performance.

2) Staff Development

With the help of the employee performance knowledge, it can be known which staff is performing in what way.

Based on such an evaluation, the manager can focus on the weakest employee and try different tactics and ways to boost up the employee and help the person get developed and show up higher performance in the team.

3) Motivation For The Staff

How will you know which staff needs more motivation and which staff can be provided with an appreciation? This is the reason, it becomes important to measure up employee performance.

There will be employees who are doing really great and because of them, the organization is getting high revenue from time to time. You need to appreciate such employees so that they can keep up this job.

On the other hand, there are some employees who are not performing that well. It is important to motivate such employees through different ways such as rewards, words, and others so that they can also perform equally as your star employees.

4) Documentation Of The Performance

There are a number of times when you may need to take a decision of upgrading an employee to a senior position. But you cannot simply upgrade an employee only because the position higher to the employee has got vacant.

You need to have a proper evaluation, whether the person will be able to handle the position well or not. If the person is capable to take care of the position, then only you should raise his responsibilities, otherwise, this can be a waste for your organization.

This cannot be known by one-time performance evaluation. It is important to have a record of the performances to check out the consistency of the employee.

5) Taking Bigger Decisions

There are times when the employer needs to take bigger and crucial decisions such as eliminating an employee from the team.

Again this cannot be done just by one-time evaluation. It is important to check out the consistency of the employee performance so that the right decision can be taken up.

So, now as you are aware of the importance of employee performance, let us find out the ways through which you can measure the performance of your employees-

How to Measure Employee Performance

1) Use a Checklist

You can use a checklist with Yes-No criteria to quickly find out the productivities and deficiencies of the employees in different performance areas.

This way you can find out the employees who required some special training and development session to be more effective.

2) Asking Employee to do Self Evaluation

You can also ask your employees to rate their performance on different parameters.  Using a form with MCQs along with Essay Type Answers can be useful here.

Later you can compare that with your own objective appraisal system to find out key things to pay attention to.

3) 360-Degree Feedback

In this technique, you can find out the details of the performance of your employee from their peers, seniors, supervisors, co-workers and other employees with whom they work.

Then you will get the details of the areas where improvement is needed, plus also areas where the same employee is quite efficient. This way, you can take the right measures to improve employee performance.

4)  MBO or Management by Objectives

In this technique, managers and employees decide objectives jointly. They finalize individual objectives, alignment of their objectives with company goals, and how the performance will get measured.

This way, employers get to know what was expected from the employee and what he or she has done finally. This can be quite helpful in gauging the alignment of employee performance with the company goals.

5) Using Graphics Rating Scales

You can use a scale that has numbers from 1 to 5 or 1 to 10 for rating the performance of an employee.

Different behavioral elements of a job profile such as ‘participating in decision making’, ‘understanding a task’, etc can be tested with such scales.

For measuring Employee Performance, four metrics come in play and they are-

Four Metrics to Measure Employee Performance

1) Work Quality Metrics

• Management by Objectives
• Subjective Appraisal by Manager
• Product Defects
• Number of Errors
• Net Promote Score (NPS)
• 360 Degree Feedback
• 180 Degree Feedback
• Forced Ranking or Vitality Curve

2) Work Quantity Metrics

• Number of Sales
• Number of Units Produced
• Handling Time
• First Call Resolution
• Contact Quality

3) Work Efficiency Metrics

• Individual Efficiency
• The balance between Quantity and Quality
• Overtime Hours
• Overall Labor Effectiveness
• Sales Growth

4) Organization performance Metrics

• Revenue per Employee
• Profit per FTE
• Human Capital ROI
• Absenteeism Rate
• Overtime per Employee

So, these are some of the metrics that will help you gauge employee performance.

Now, the time has come to know the techniques that can help you improve employee performance. So, let us delve into those as well-

How to Improve Employee Performance

To learn the tips for optimizing employee performance, the first thing you should know is why employees underperform.

– And the reasons behind this are Inadequate Capabilities, Unclear Goals, and Uncertain Accountabilities.

So, to improve employee performance, you need to resolve these issues. Below given tips will help you do that-

1) Always let employees know your Expectations Clearly

2) Have a consistent employee performance appraisal system

3) Employee Development has to be in your priority list

4) Have a mechanism that can boost up the employees’ morale

6) Ensure employee empowerment and motivation

7) Have Employee Engagement well in place

8) Use technology to communicate properly

9) Do regular meetings, discussions and don’t wait for appraisal day to communicate

Now, let us have a look at the perspective of some naysayers who talk about the downsides of employee performance measures-

Are There Any Disadvantages Also?

The record of the employee performance can offer you with so many benefits in the organization. But there are also a number of disadvantages that one may notice in such an evaluation.

1) Time-Consuming Method

The process of evaluation of the employee performance can seem time-consuming at times. There are a lot of steps that need to be followed by the evaluation method and this may require a lot of time to be invested.

Though the performance evaluation finally offers a number of benefits and has a lot of importance in the organization, on the other hand, a number of people consider that it is highly time-consuming and also a waste of effort and other resources.

Though the major number of organizations considers it to be beneficial, there are some firms that do not feel it be that important.

2) Discouragement

There can be a number of employees who are trying their best to put in their best efforts but still may fail to perform well due to a number of others reasons such as wrong environment, peer pressure, and any others. In such a situation, if it is shown that the employee is performing poorly, it puts on more pressure o the employee and it acts as a discouragement for the employee.

Hence, it is always said that whenever an employee is confronted for poor performance, they should be motivated so that they do not feel low, rather should boost up themselves.

However such downsides are of no significance when it comes to boosting the performance and revenues of a company because the company’s performance is directly proportional to their employee’s performance.

In Conclusion…

The method of employee performance evaluation can be a great tactic to have a proper check on the employees and their actual performance.

This not only offers you an insight about which employee is performing in what way, but also it lets you know what you should do to boost up the confidence of the employees so that they can perform well.

At times, knowing about the performance can also tell you about the work culture and the work environment of the office and can take up steps to change it or improve it accordingly.

So, what do you think the best technique of optimizing employee performance? Tell us in the comments below.