It’s tempting (and often easier) to believe that more means better, notably when making a profit. But that’s not true when choosing the best employee performance metrics for your firm.
Getting the right balance between quantity, quality, and efficiency performance metrics helps evaluate your workforce accurately. You need all three elements working together to help the enterprise thrive.
Getting that balance right helps you develop an agile, productive, skilled workforce—the seeds for business success and resilience. Getting that balance wrong can lead to problems.
If you only track quality metrics, for example, you’ll know how well (or poorly) people are performing and encourage a culture of excellence. But you’ll have no evidence-based grasp of productivity or efficiency issues, limiting business potential. Producing too few products or services does not generally drive profit unless your low-volume specialty is in high demand (for example, an innovation or a unique service).
Tracking only quantitative metrics, such as the number of products your employees make within a set time, then you run the risk of stress employees racing to produce as many products as possible of lower quality.
When you track only efficiency, you can end up efficiently being non-productive.
Balance is critical when it comes to selecting your employee performance metrics. As there is no magic ratio, each organization must determine its optimal ratio metrics. Those will vary depending on your industry, business goals, size, state of digital transformation, corporate culture, and exceptional circumstances.
Although it will involve effort, with some trial and error, achieving a balanced menu of employee performance metrics is worth it. It will help you more accurately track employee progress, identify issues requiring your attention, and build workforce skills for a capable, future-ready business.
Three categories to consider
There are three broad categories of employee performance metrics to consider. The categories relate to:
- Measuring the quantity of work done,
- Assessing the quality of the work, and
- Determining the efficiency of the processes to do the work.
1. Quantitative metrics
This metric measures the number or amount of employee outputs over time. It’s the easiest to measure, and many companies use them.
For example, a standard quantity metric is how many products or services an employee made (or delivered, sold, or completed) this month compared to last month.
Quantitative metrics often relate to productivity—the output rate per unit of input. The input here is time, and the output is the number of products made or services rendered.
Three common examples of quantitative metrics are:
- Number of leads contacted. This tells you how active your sales reps are. It also shows you if there’s something wrong with your sales funnels.
- The number of units produced. This is the number of units or products made by each employee.
- Number of calls answered or tickets resolved. This tracks the number of calls each CSR answers. For IT help desk staff, a similar metric would track the time between initiating and resolving a ticket.
2. Quality metrics
Quality metrics measure the excellence or worth of your employee’s products or services. They’re all about setting consistently high standards. They help you answer the question: How significant is the experience of this product or service that an employee worked on? Is the service or product so good that customers desire more?
Three examples of quality metrics are managerial appraisals, tracking product defects, and tracking the number of errors.
Performance reviews by a manager or supervisor are a classic example of a commonly used quality performance metric that is useful but subjective.
One way of making appraisals more objective and transparent is using the Key Performance Indicators approach. KPIs translate overarching company goals into specific goals for individual employees. The plans often take the form of indicators that managers and employees agree on together.
We like this approach for its clarity, alignment with business goals, and collaboration, which improves employee buy-in and motivation and helps keep the objectives realistic and achievable.
The goal-based approach helps establish a clear set of measurable process performance metrics.
Tracking product defects in manufactured objects
According to the Sedgwick Brand Protection US Recall Index 2022, in 2021, the number of units recalled across the five US business sectors of Automotive, Pharmaceutical, Food and Beverage, Medical Devices, and Consumer Products was one billion. The Sedgwick Index predicts a much higher number for 2022 since the first quarter alone saw 913.8 million units recalled—the highest number of units in a single quarter in the past ten years.
Manufacturing examples of product defects, improper installation of brakes in a car, or improperly installed electrical circuits in a device. In the US, automotive recalls for Q1 2022 jumped to 9.3 million units, an increase of 114.2%.
In the Medical Devices sector, in Q1 2022, there were eight recalls for rapid antigen COVID-19 tests, affecting over 2.3 million units. Causes for the recalls included tests not approved by the FDA, mislabeling, and device failure.
Product defects in the food processing industry include chemical, microbiological or physical contamination, improperly sealed containers, and poor temperature management leading to partially cooked items. For example, on December 5, 2022, Kraft Heinz Foods Company recalled 2,400 pounds of ready-to-eat ham and cheese loaf products due to possible cross-contamination with under-processed products.
Defects due to human error or faulty processes may creep into product design, manufacturing, and labeling stages of production and may lead to customer injuries, deaths, and lawsuits.
Tracking product defects helps you identify processes or equipment that needs improvement. That way, you can produce consistently better product quality while mitigating the headache, high expense, and brand damage of product recalls and lawsuits.
Number of errors in intellectual products
This metric is similar to the previous one but applied to intellectual products. Examples include tracking the number of bugs in computer code or monitoring the number of edits needed before an article is ready for publication.
This quality performance metric for web content such as marketing blogs is a good indicator of reader interest. It measures how many viewers came to your website, took a look, had no interaction, and left. A low bounce rate of 25%-40% is considered excellent. A high bounce rate (over 70%) may mean you must rethink your content strategy.
This quality performance metric gathers opinions on a person’s performance from peers, bosses, subordinates, and anyone they interact with regularly, including customers. It lessens the potential bias from a single managerial appraisal and gives broader insights into an employee’s contribution.
A simpler version of this approach is the 180-degree feedback tool, where only an employee’s direct coworkers and management offer feedback.
Efficiency metrics measure input versus output. In industry, where machines do the work, efficiency is the ratio of useful work to the total energy expended.
Efficiency metrics balance the gap between quality and quantity metrics by considering the resources needed to generate a specific result. With human employees, efficiency is a calculation of the inputs required to get to outputs. It’s often the best sign of how well a worker is performing.
The bottom line is that efficiency empowers employees to get work done faster, meaning they can do more work, use the time saved to produce better quality work, or engage in other higher-value activities.
An efficient worker has good time management and organizational skills, is engaged in their work, does the job well, and shows good teamwork. They know how to prioritize tasks to get things done.
Employee efficiency improves with training, better time and task management tools, remote work options for focused individual work, and financial incentives.
Some efficiency performance metrics might include the following examples:
Hybrid work metrics
What works? What doesn’t? Gather the data on what works best in-office versus remotely. How should we redesign work, spaces, and performance management methods for the hybrid era?
Frequency of meeting deadlines
Meeting a deadline itself is not a metric of efficiency. The work produced must also meet standards.
Amount of overtime needed.
More overtime may indicate that the assigned workload is too much or the worker needs help with organization, mentoring for best practices, or even retraining for a new role.
Learning and development metrics
With proper training, employees can significantly improve their knowledge and efficiency. There are many L&D metrics to consider. The metrics are easier to track if the firm uses an automated LMS or LXP platform to deliver specific job training content or user-initiated learning experiences. Examples of L&D metrics include:
- How quickly new hires get up to speed after initial training.
- Analyzing employees' training completion percentage rate to see who completed training and did not. You can later correlate this with your retention rate.
- Measuring individual knowledge ratings before and after training through tests or quizzes.
- Post-training surveys of managers and colleagues on if and how the employee’s performance changed after the training.
- Measuring departmental performance measures before and after training to demonstrate improved performance and ROI.
Which employee performance metrics do you need?
We hope we’ve shown why employee performance metrics are helpful and why it’s critical to identify the right mix of all three metrics to advance work quality, quantity, and efficiency.
Employee performance metrics help you understand work trends, monitor performance successes, identify employee challenges, and know when to adjust your talent development plan or working conditions. Performance metrics can inform evidence-based promotions, training decisions, or dismissals.
Employee performance dashboards are an increasingly popular way to track, analyze and report on employee progress over many KPIs. To make assessment easier, dashboards let you see individual or team data in a single display, often with graphics and visualizations. Modern dashboards leverage an HR analytics platform to let you combine data from all systems and explore them deeply.
Our last words depart from conventional performance metrics to observe the rise in customer performance indicators (CPI) in the past few years. These are metrics that customers care about, as opposed to metrics companies like to track.
For example, a customer-centric metric might be how fast customers can get a price quote or how often customers get the first-time resolution on a service call.
The more your company focuses on outcomes important to your customers (CPIs), the better your company will likely perform on outcomes important to the business (KPIs).
—Gene Cornfield, Accenture Interactive
Food for thought!
Pixentia is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.