Three key principles can help you better measure employee performance

Just as there is no one-pill-solution when you’re sick, there is no one-size-fits-all approach to measuring your employees’ performance. Like a doctor asking probing questions to determine how healthy you are, your HR department must ask specific questions to measure employee performance – and in effect, your organisation’s performance (and health) too.

But in employee performance appraisals, the evaluation process can be subjective, and it’s often the manager’s opinion that matters in the final performance measurement. Without defining performance measures that are quantifiable and qualitative based on pre-determined objectives, it’s easy for a review process to become subjective, and a good employee could receive poor performance results.

Objectives and key results

John Doerr, chairman and founder of Kleiner Perkins, addressed the importance of setting the right goals in order to achieve success in a TED Talk1. His method? Objectives and Key Results (OKRs) – a goal-based performance and measurement strategy implemented by the likes of Google and Intel.

In many ways, the OKR model is the reason why Google Chrome is one of the most popular web browsers in use today, as the objective was to make Google Chrome the number one browser in the world, with the key results based on the number of users on the platform.

But how do you know what objectives to set?

In their simplest form, your goals and objectives should aim to answer the question ‘Why?’ You should also have clearly defined metrics for assessing the key results, which can guide employees in reaching their objectives. In terms of the standard HR performance appraisal process, there are four categories of employee performance metrics2:

  1. Work quality metrics – measure the quality of the employee’s performance.
  2. Work quantity metrics – a number-based measure of an employee’s performance, such as meeting sales targets or the time taken to resolve client issues.
  3. Work efficiency metrics – this combines qualitative and quantitative measures, considering the resources required to produce a specific output.
  4. Organisational performance metrics – the organisation’s performance is assessed based on the performance of employees, considering factors such as revenue per employee, return on investment and absentee rates.

When implemented correctly, employee performance metrics can have benefits for the organisation and the employee, assisting with growth strategies and development for both. Using an HR suite of solutions allows you to measure an employee’s performance against their peers’ performance and to compare performance of the organisation’s different departments.

Three principles to improve employee measurement

As Eric Ries, author of The Lean Startup, said: “Meritocracy is a good thing. Whenever possible, people should be judged based on their work and results, not superficial qualities.” This couldn’t be more true than when it comes to measuring an employee’s performance. There are three principles that organisations can follow to help improve employee measurement, which can help guide your talent management strategy while also improving employee productivity as they work towards clearly defined objectives.

1. Align work with numerical performance

When it comes to measuring an employee’s performance, it is easy to be subjective if there are no clearly defined performance metrics in place. However, this can be easier said than done, as not all roles incorporate clearly measurable tasks. But aligning work with numerical performance metrics can remove subjectivity from the measuring process, allowing an employee to be more fairly assessed.

When setting performance measures, it’s helpful to have paired performance indicators, as focusing on only one performance indicator could see other areas of the business fail as all attention is on improving one thing3.

There are different ways to incorporate numerical performance metrics, whether this is a scale system (using a 1-5 or 1-10 scale) or if there are number targets that need to be met (like sales targets or online engagement). The approach used will be determined by the objectives and performance being measured.

2. Involve two or more people in the employee scoring evaluation

An employee’s relationship with their manager can blatantly influence the evaluation process at times – an out-of-work friendship or personality clash can sway the results of a performance appraisal if only one person is involved in the evaluation process. By involving two or more evaluators in the process, organisations are more likely to get an objective and accurate measure of an employee’s performance, which can better guide the company’s growth strategy.

During the evaluation process, it’s also helpful to assess and compare an employee’s performance with their peers’ who have worked on the same objectives or faced the same working conditions to identify high performing team characteristics3.

3. Don’t use a single number

When measuring employee performance, it’s important to avoid labelling them with a single number. When objectively evaluating an employee, organisations should use multiple performance metrics across various areas of an employee’s tasks and objectives. This helps to offer a more holistic view of an employee’s performance, as they may fail to meet the desired performance results in one area, but exceed expectations in another, identifying skills gaps in the workplace.

It can be difficult to settle on the right objectives and performance metrics for employees, so why not include the employees in the process?

The Hartford Business Owner’s Playbook recommends Management by Objectives (MBO) – also known as Management by Results – where managers and employees determine objectives and performance metrics together4.

Not only can this help the manager, but it ensures that the employee is aware of their objectives and how their performance will be evaluated and can help to increase employee engagement and motivation.

No matter what your organisation is or what your employees do, implementing these three principles can help define and improve your employee performance measurement process, in turn improving efficiency in the workplace and improving employee productivity.