What are employee performance metrics?

Employee performance metrics are a type of measurable or key performance indicator (KPI) used in performance management to track and evaluate employees. These analyses provide important insights into how team members are contributing to your organization’s overall performance and goals. They highlight strengths, weaknesses and opportunities.

The type of performance metrics best suited to your organization depends on its industry, size and overall goals and strategies. In general, you can organize employee performance metrics into the following categories:

• Quality of work
• Quantity of work
• Efficiency of work
• Organizational level
• Learning and development
• Teamwork
• Adherence to deadlines

Benefits of metrics for employee performance

Measuring employee performance can help identify key strengths and opportunities for staff members. By outlining important metrics, you can set targets and goals for your employees and improve the overall productivity of your organization.

Several key advantages of tracking performance metrics include:

• Defining expectations: Establishing performance metrics in turn defines standards and expectations that can help employees meet performance targets.
• Improving retention: Employees can gauge how they’re performing against set metrics and standards, allowing them to address improvement areas and enhance morale through positive reviews and assessments.
• Promoting development: Identify skills gaps to determine employee training needs and create a skilled workforce. Likewise, you can identify strengths to optimize employees’ career progression.
• Boosting productivity: The combination of defined performance benchmarks, communication and development can lead to more productive and efficient employees.

Related: How to Create a Performance Improvement Plan (With Template)

26 employee performance metrics to track

There are many kinds of metrics to track employee performance and create improvement and development plans. Organizations typically use a combination of metrics according to their unique needs.

Quality of work

The quality of work refers to how well employees complete tasks. This metric is important, as it can affect organizational productivity, reputation and customer satisfaction. You’ll need to set quantifiable standards for measuring quality of work, such as quality consistency or the percentage of work that is rejected or revised, to create accurate and comparable data.

To best indicate employee performance, quality of work metrics should align with the type of work the employees do. For instance, you may assess a developer according to the number of bugs in their product or a customer service representative by customer satisfaction surveys.

Some effective quality of work metrics include:

1. Management by objectives: Translates organizational goals into individualized goals and gives weight or points to completed tasks, creating a tangible and data-driven performance assessment
2. 9-box grid: Evaluates employee performance and potential based on a 3×3 table to determine who is best suited to their current role and who is likely to move more quickly through organizational levels
3. Subjective appraisal: A common type of evaluation where managers provide employees with feedback about their work based on set criteria, often during a scheduled performance review
4. Product defect rate: Calculates the number of product defects—indicating poor work equality—per employee, typically used for manufacturing, engineering and software development
5. Error rate: Similar to product defect rate, this number reflects mistakes to give insight into how to avoid future errors
6. Net promoter score: Refers to the likelihood of customers recommending a service or product and gives insight into how effectively employees understand and respond to customer expectations
7. 360-degree feedback: Provides feedback from employee peers, customers, managers and others who interact with them, giving a multidimensional perspective of employee performance
8. 180-degree feedback: A simplified analysis that provides feedback from direct managers and colleagues, typically used for employees who don’t interact with customers
9. Forced ranking: Also called a vitality curve, this analysis compiles employee performance data by asking managers and other relevant employees to rank their best to worst employees in order

Read more: How to Conduct 360 Performance Reviews: A Guide for Leaders

Quantity of work

Quantity of work refers to employee output and, as such, is usually easier to measure, but relevant metrics vary between industries. For example, a salesperson is better measured by the number of sales, while a doctor is better measured by patients seen.

Insightful metrics include:

10. Number of sales (simple metric):Refers to simple outcomes, such as the number of sales by an employee in an hour, or complex process outcomes. such as long-term sales efforts

11. Number of sales (process metric):Can refer to any metric represented in more complex sales lifecycles, such as the number of active leads, outgoing phone calls, company visits and more

12. Units produced:A traditional metric that organizations use to measure units such as the amount of manufactured products, lines of code or blogs written in a given period

13. Handling time:The average time customers spend on the phone with employees, this metric is often used for customer service representatives

14. Service level:Assesses how quickly calls or other service requests are answered, such as a phone call answered in less than 30 seconds or a repair request answered within two hours

15. First-call resolution:Calculates the number of problems employees resolve with the first customer call

Efficiency of work

Quality and quantity of work metrics individually don’t provide a comprehensive picture of employee performance, but comparing these metrics can yield better insight into overall efficiency. Crucial to the success of your organization, efficiency describes the output gained from employee input or the return on investment from the employee. Assessing efficiency can pinpoint areas of improvement in employee performance, helping your organization perform better and improve its bottom line.

16. To measure efficiency:

• Determine the output or quantity of work.
• Select a time period to measure within.
• Find the average output of the workplace to establish a benchmark.
• Measure the output against the benchmark.
• Calculate employee input, such as hours worked or wages paid.
• Divide the output by the input to calculate a per-hour efficiency rate.

Organizational level

17. Revenue per employee:Calculates the revenue per full-time employee to estimate how much value an individual employee represents

18. Profit per employee:Calculates the profit per full-time employee to estimate the profit each employee represents

19. Human capitalROI: Calculates revenue and divides it by the total compensation paid to employees to determine the return for each employee

20. Absence rate:High absence rates may suggest underlying issues such as low employee motivation or morale

21. Overtime per employee:Calculates hours of overtime per full-time employee, potentially highlighting issues with labor management, morale and retention

22. Adherence to timelines:Measures values such as how often employees miss or meet deadlines to provide insights into time management, task prioritization and workforce needs

23. Pulse surveys:Gathers feedback from employees about factors such as how often workers help out or support others to gauge the quality of teamwork in your organization

Learning and development

High-performing employees should be able to adapt and learn so they may grow with your organization. To track and analyze learning abilities and outcomes, you can measure the results of training programs and other development opportunities.

24. Post-training assessments:Evaluates employees’ knowledge and skills with assessments such as exams or simulations

25. Completion rates:Allows you to measure employees’ engagement with modules and activities and determine how invested they are in the materials

26. One-on-one meetings:Provides feedback about their development experience and helps you provide guidance in their role

Related: 14 Performance Appraisal Tools for 2023

FAQs about employee performance metrics

What are the components of a performance management system?

Effective performance management systems include the following components:

• Fairness
• Accuracy
• Efficiency
• Multiple data sources to eliminate bias
• Transparent feedback
• Development opportunities
• Defined expectations
• Ongoing communication
• A compensation guide if performance reviews determine raises

What are the best practices for employee performance metrics?

To get the most from your employee performance metrics, consider the following strategies:

• Narrow your performance reviews to relevant metrics
• Create unique metric formulas based on your unique organizational needs
• Prioritize metrics based on organizational KPIs
• Communicate results and feedback with employees