Career Development

What Are Performance Metrics?

Quick Navigation:


Finding new and creative ways to measure your job performance can help you identify areas for improvement and provide meaningful feedback during employee evaluations. Performance metrics can be divided into quantified and qualitative categories to evaluate the overall value to an organization. Learn about performance metrics, their importance to employee evaluations and how to calculate each one for quantitative results.

What are performance metrics?

Performance metrics which are also called key performance indicators (KPI) are both quantitative and qualitative measurements that are used to determine an employee’s effectiveness within the workplace. These can include general metrics that could be applied to any company’s employees, or they can include more personalized or company-tailored metrics than an employer establishes based on their company’s unique goals and procedures.

Why are performance metrics important to employee evaluations?

Performance metrics can be important to employee evaluations as they are used to measure the level of success of an individual. You can compare it against the traits and values that your company has deemed to be important to its productivity and continued success. Performance metrics can be customized as needed to reflect the objectives of a given department so that evaluations are focused on individual goals and results.

Quantitative performance metrics

Here are some quantitative performance metrics that you can use for the evaluation of your employees:

Turnaround time

Turnaround time is a performance metric that measures the amount of time it took for an employee to complete a project. This can be useful in monitoring an employee’s time management abilities.

Number of sales

The number of sales can be used as a quantitative performance metric to determine the success rate of an employee in closing sales with customers. This can be beneficial to use as a metric because it can help you determine which members of your sales team need additional training or new sales strategies.

Number of projects completed

You can also use the number of projects completed as a quantitative metric to determine an employee’s time management and general skill level. This is important as you can identify which employees are falling behind in terms of projects completed and you can come up with solutions to help them better manage the allotted time for their projects.

Number of mistakes made

You can determine an employee’s attention to detail and necessary areas for improvement by weighing the number of mistakes they made in a given time period that hindered company productivity. This can be a useful way to show your employee how to be more aware when it comes to their job duties.

Average daily attendance (ADA)

You can also measure the average daily attendance of your employees within a given time frame to evaluate whether their absences have affected their work performance. You can use (ADA) data to talk with employees who have taken more than their allotted time off about your expectations as an employer.

Quantitative performance metrics are measurements of numerical factors that are used to evaluate to value that an individual employee has to offer an organization.

Qualitative performance metrics

Here are some qualitative performance metrics that you can use for the evaluation of your employees:

Work ethic

Work ethic can be considered as a qualitative metric by which to measure the motivation of your employees. You can use information regarding their time management skills and their daily tasks completed paired with your personal evaluation of their drive and passion for the job at hand to determine whether or not they need new incentives to complete their job.

Optimism

You can use an employee’s enthusiasm as a qualitative metric in evaluating their performance. This can be useful in awarding those who act as a positive influence in your office while also setting a standard for the kind of attitude you expect in your workplace.

Communication

Communication can be seen as a qualitative metric by which you can asses your employees. You can use what you have observed in daily interactions with your employees, how your employees interact and work with others and their ability to speak and write in a way that is effective and prevents miscommunication.

Skill demonstration

Another qualitative performance metric you can use to evaluate your employees and their contributions to the company is in their demonstration or lack-there-of in professional skills. This can be useful in helping employees realize where their weak areas are and how to improve them. These skills could be technical such as MS Office Suite, data recording or interpersonal skills such as communication or critical thinking.

Problem-solving

This is an example of a very specific qualitative metric that you can use to weigh an employee’s effectiveness in an area such as problem-solving. This metric could be useful in evaluating employees in managerial or other leadership-related roles. 

Qualitative performance metrics are measurements of non-numerical factors that are used to evaluate the value that an individual employee has to offer an organization.

Organization-level performance metrics

Here are some organization-level performance metrics that you can use for the evaluation of your employees:

Revenue per employee

This metric can be used to gauge the amount of money the company has gained or lost due to being over or understaffed. This is a great metric to use to measure overall productivity.

Formula: Revenue per employee = Total company revenue / number of employees

Human capital ROI

This organization performance metric is used to measure the expertise and level of talent within your company. This can be useful in identifying areas that can be strengthened by bringing on new and qualified candidates.

Formula: Human capital ROI = Total company revenue – (operation + benefits + compensation) / Total compensation and benefit costs paid by the company to employees

Overtime per employee

Overtime per employee is a performance metric used to measure the amount of overtime that was accumulated by company employees within a given period. This can be useful in determining overall employee work ethic and motivation.

Formula: Overtime per employee = Total hours of overtime / Total number of full-time employees

Profit per full-time employee

This metric is used to measure the amount of profit (total revenue-expenses) that a company makes in a given period of time. A high-profit per FTE means good financial health, while a low profit per FTE means that a company is financially weak.

Formula: Profit per full-time employees = Total profit / number of full-time employees

Return on investment

The amount of profit your company earned as a result of a purchased investment such as. a project, new equipment, purchase of another business. This is useful in determining whether an investment was worthwhile.

Formula: Return on investment = (total net profit / cost of investment) x 100

Organization-level performance metrics are measurements of numerical factors that are used to evaluate the overall performance or a company, its employees and its financial procedures.