Selecting and Measuring Key Employee Performance Metrics
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employee perfromance metrics

The Secret To Selecting and Measuring Key Employee Performance Metrics

Measuring critical employee performance metrics offers organisations key benefits for attracting and retaining top talent while meeting operational imperatives. The primary benefits of employee performance metrics are tied to fostering better employee engagement, which enhances productivity, innovation, creativity, employee loyalty and longevity. In the past, companies usually measured employee engagement by analysing turnover rates. Unfortunately, that strategy relies on 20/20 hindsight instead of identifying practical ways to reduce turnover proactively. That’s why today’s software applications for measuring key performance metrics are so valuable.

Types of Employee Performance Metrics

Key performance metrics include qualitative, practical, directional and actionable indicators, but the most commonly used categories are KPI, KRA and goal metrics. KPIs, or key performance indicators, track individual performances against strategic company objectives. There are thousands of potential KPIs, and companies must select the right indicators that answer the most important business goals.

KRAs, or key result and responsibility areas, however, focus more on internal and external factors that are critical to success. These typically concern long-term strategic objectives and projected time frames, which are translated into incremental operational goals. Using KRAs effectively, managers can assign duties to employees and segregate responsibilities based on abilities, efficiency and other employee performance metrics.

Goals for performance metrics are generally short-term objectives for achieving the demands of key responsibility areas in employee performance metrics. Managers and executives can align organisational goals and individual goals in ways that ensure the objectives are realised. The most effective key performance metrics enable authorised staff members to manage all these types of key performance metrics from customised dashboards to simplify the process.

Keys to Selecting Great Performance Metrics

In many HR management whitepapers, key performance metrics are defined with the acronym ‘SMART’ for specific, measurable, actionable, relevant and timely. The words vary based on what’s being measured. The following terms are useful for designing employee performance metrics to measure employee performance and engagement:

1. Specific or Relevant to Strategic Goals

Your performance metrics software must be capable of monitoring and recording specific behaviours that relate to employee performance metrics and engagement. The system must be flexible enough to add relevant details and import relevant material from social media, blogs and other internal and external sources.

2. Measurable or Meaningful

If you can’t measure performance metrics accurately, no information is relevant. Some employee performance metrics are so convoluted that you simply can’t measure the results with any degree of accuracy.

3. Actionable or Achievable

Gathering data isn’t useful unless you can act on the intelligence in some way. For example, knowing who, what, where, when and why are critical questions in defining employee performance metrics. Determine what you want to accomplish, and define key employee performance metrics that are actionable or achievable by enlisting manager, coaching or administrative support.

4. Reproducible or Realistic

Context is critical in measuring employee performance metrics. Carefully crafted KPIs can be reproduced, and they are relevant and realistic.

5. Timely or Comparable

You should be able to compare today’s performance metrics with past performances to measure growth, stagnation or failure to work at previous levels of performance. Business trends can evolve dramatically, and past indicators might fail to assess what’s important in the current market.

Cascade Architecture – Understanding Performance Metric Flow

Tracking cascading KPIs is the most efficient way of measuring performance. That’s why the right software and architecture are critical to the processes of tracking leading and lagging KPIs and other operational metrics. A robust architecture generates many operational benefits that include deploying and aligning metrics across different departments, branch offices and other business units within your organisation. Best practices for designing performance metric flow include:

Reviewing Overall Business Strategy

Developing business strategy is an ongoing process, and even today’s firm goals can evolve over time. Periodic reviews are critical because organisations struggle continuously to identify the drivers of future performance objectives.

Assigning Short- and Long-Term Goals

An organised process for developing business strategy involves identifying the behaviours and activities that should lead to a desired result. These can be broken down into short- and long-term performance and operational goals. In cascade architecture, designing an early warning system contributes to success by identifying when goals need to be redefined.

Focusing on Key Business Objectives with Performance Metrics

The steps your company takes must include actionable processes that are triggered by key performance metrics. Cascading architecture enables your engineers – whether company-based or outside consultants – to integrate these objectives in operational dashboards, automatic alerts and custom reports.

Rules for Determining Key Performance Metrics

The most effective performance metrics include both strategy-based and goal-based benchmarks. Other areas might include measuring training efficiency, engagement levels, ability to work well as part of a team and other metrics. The following rules can help to determine which metrics would be most useful for your company:

  1. Focus on desired outcomes.  Metrics should contribute to actionable intelligence.
  2. Keep it simple. The more complex the metric, the less likely it will be to deliver the desired results.
  3. Involve the employees and managers. Knowing what’s expected of each team member is critical in achieving goals.
  4. Align metrics to organisational goals and processes. Defining goals and expectations is critical to the process, so it’s important to establish regular communications and feedback to ensure that everyone is working toward the same strategic goals.
  5. Empower employees to act. Engaging your employees with expanded authority and responsibility helps to foster a can-do attitude in achieving company goals.


How Do You Measure Performance Metrics?

Specific methods of measuring key performance metrics vary based on your company, goals, industry, worker demographics and other criteria, but the most common methods of measuring performance include:

  • Efficiency: Efficiency can be measured by the number of sales, production units, satisfied customer interactions, value of each sale, costs of achieving a desired goal, staffing ratios and how much productivity is accomplished based on each type of equipment.
  • Effectiveness: Effectiveness measurements can include the number of customers each employee serves successfully, the time it takes to accomplish programs or projects, quality of work, customer satisfaction and other benchmarks.
  • Productivity: Productivity doesn’t just measure wages against production. It should focus on overall abilities such as manager input, returns, equipment maintenance and other indirect processes involved in production.
  • Ability to take on added responsibilities: This metric is critical for determining whom to promote, cross-train and groom for succession to key company positions.
  • Team performance: Team dynamics often differ considerably from the sum of each team member’s abilities, so team performances should be assessed separately.
  • Learning metrics: This performance benchmark analyses how quickly and efficiently a company’s employees learn new skills.
  • Compensation and benefit metrics: This metric relates directly to money and profit, so it’s critical to measure performance as it applies to costs.
  • Retention rates: There are many metrics involved in monitoring employee happiness and job satisfaction, and metrics might include projected retirement ages and how each employee conforms to the company’s core values.

Devising key performance metrics offers many benefits for your efforts to attract and retain top talent, but the details can be tricky. An effective system uses the latest technology tools and human-based intelligence and support to balance the efforts of fostering the highest level of employee engagement. If you put some effort into defining your goals, designing a relevant strategy, measuring results accurately and linking desired outcomes with performance benchmarks, you can make great strides in proactive employee performance management.

Ari Kopoulos

CEO at EmployeeConnect