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What is Employee Performance? How to Measure & Improve

Performance Management
November 21, 2021
Rad time: 10min
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When top-performing athletes are having a hard time mentally, their on-court performance tends to suffer. As they say sport is 9/10ths mental. The same can be said about employees within a workplace. Measuring and maintaining employee performance is hugely influenced by supporting their mental health. But, what is employee performance? And, why is it so important? 

We’ll touch on all the big questions surrounding employee performance, including how you can measure it, improve it, and use technology to better monitor it. 

What is Employee Performance?

Employee performance is a measure of how an employee fulfils the duties of their role and behaves within a workplace. It is important to every aspect of the business because it can affect customer satisfaction, the company’s bottom line, company culture, and staff retention rates, to name a few consequences. 

Employee performance includes the quality, efficiency, and effectiveness of an employee’s output. An employee's performance is also indicative of how valuable they are to the organisation. Employees are an investment, so their return on investment is essentially calculated by their performance. 

Naturally, every business would like to hire and retain employees who provide high employee performance. And, while a company can’t totally control output, they can play a large role in supporting employees to do their best by ensuring that they are well supported. When employees are happy, they perform better. 

How Do You Measure Employee Performance?

To gauge how an employee is doing, there are various ways to measure employee performance. The metric you choose to use will likely depend on the nature of your business. 

That being said, let’s take a look at some of the standard ways to calculate employee performance: 

1. Effectiveness

All of the upcoming measurements are fruitless unless they are effective. Effectiveness comes down to measuring the degree at which the work is successful at producing desired outcomes. So, rather than focusing on the means to the end, you must focus on the end itself. 

Many companies will focus all their efforts on evaluating employee performance based on efficiency, but if the work that’s being done might not actually be helping the organisation reach its goals or could be producing waste, then efficiency is a moot point (and can even be counter-productive).

Ultimately, you want your employees to deliver value to the customer and business (all the while being efficient, see next point).

2. Efficiency 

In some cases, an employee’s output is easily quantifiable. For these types of work environments (i.e. sales, technical work, etc), you can measure an employee’s speed and efficiency. 

Maximum efficiency results from achieving the highest outputs at the lowest costs. To deduce efficiency, answer questions like: How much did said employee accomplish in X amount of time, and was that in line with what was expected? Have deadlines been met? Is the work product the best it can be?

3. Quality of Work

A key performance indicator often comes down to the quality of the work produced. This requires a set of standards to be set in advance by which the work can be evaluated against. 

When an employee’s quality of work is impacted, there are direct effects to the business, including decreased customer satisfaction, costly mistakes, and unhappy co-workers. That’s why it’s of great importance to keep an eye on work quality and address issues as they arise.

4. Consistency

Trust and consistency are pivotal within a workplace. Part of employee performance will come down to how well they work over time and whether or not they can reliably complete tasks on time and independently. 

Employees who feel aligned with business objectives tend to care more about their work and can therefore more reliably fulfill tasks to the best of their ability while upholding the company’s standards.

What Influences Employee Performance?

A workplace is an ecosystem in which many variables come together to impact overall outcomes. 

When it comes to employee performance, personal preferences, employers, goals, expectations, support systems and the like all play a role in how an employee works, feels, and behaves. 

Let’s take a look at some of the key factors that affect employee performance: 

  • Job satisfaction
  • Training and development 
  • Goals and expectations 
  • Employee engagement
  • Company culture 

All of these things have something in common, namely how an employee is made to feel and does feel while doing their work. An employee’s emotions impact their behaviour and work, and therefore, the overall company goals and customer experience.  

Employees need to be aware of how they feel so that they can continue to deliver their best work. Employers can help empower employees to do so by incorporating an employee wellbeing tool within the organisation. These tools help both employers and employees. 

With these tools employers can assess your employee’s mood anonymously, by providing true insights of what makes an impact on employee mental health and wellbeing. This enables employers to provide proactive support based on real time data. 

The tool also helps employees better understand their emotions through self diagnosis so they proactively support their own mental wellbeing and performance. 

When employees have the time to analyse with how they feel and actually be made aware of it, they will be equipped to resolve any issues or tension so that their performance doesn’t have to suffer and they can get the support they need. 

By Kraken Images from Unsplash

What is the Current State of Employee Performance at Work?

The question of “What is employee performance?” is an old favorite. But, the way in which it’s being measured is changing. In fact, across many organisations, the old method of conducting an annual employee review is being left in the past.

Over time, companies have come to realize that a single annual employee review doesn’t actually result in improved performance for the long haul. 

This is because an annual review happens once, and throughout the year, small issues may have been compiling and then become too large to manage all at once. Neither leadership nor employees tend to look forward to these reviews. 

And, when there is negative feedback given in an annual review, employees feel upset or down after receiving it, rather than motivated to turn things around. According to a Gallup study in 2019, 30% of employees felt so put off by a negative review that they started to look for a new job. 

Instead, organisations have taken a more holistic approach to caring about their employees and meeting their needs through performance motivation programs. 

Employers and employees that work together to set goals, evaluate capabilities, measure them consistently over time, address needs in real-time, and focus on employee’s wellbeing make room for improvement within the workplace that is sustainable, measurable, and beneficial for all. 

Rather than a one-and-done review each year, it’s best to consistently measure employee performance over time, at least once a quarter, if not more. Some would say performance reviews should be daily and ongoing. Any meeting or interaction is an opportunity for performance review and learning.

For a more holistic approach, you can also utilise an employee wellbeing platform which will allow employees to self-report how they feel on a regular basis. This way, employers are aware of what’s going on in the mind of the employee, which ultimately impacts their performance, outlook, and behaviour. 

How Do You Evaluate Employee Performance?

While a performance review is one way to measure employee performance, there are other methods that can do the trick. 

Some of these include: 

1. One-on-One Meetings

Set up a meeting between an employee and their direct supervisor to share feedback, pain points, and ask questions. During this meeting, it may be useful to review what can be remembered as GOOD, or: Goals, Obstacles, Opportunities and Decisions. 

2. Objective-based Performance

Managers and employees can work together to set objectives and deadlines. This way, employees get to retain a sense of ownership over their work and be a part of shaping the big picture. 

When employees have a say in their objectives, they tend to be more engaged with their work, which also results in higher and better quality outcomes.  In fact, 71% of managers believe that employee engagement is one of the most important factors for organizational success. 

3. Self-evaluation

An employer can draft up questions for an employee and the employee can answer them with regard to their performance. Having self-evaluations are a good way for a line manager to understand how an employee sees their own strengths and weaknesses, helping them to tailor support and learning and development opportunities. 

If a manager’s feedback is much different from the employee’s perspective, it can be a good starting point to have an honest and open discussion. 

4. Ranking 

Many employers choose to rank employees based on a scale of 1 to 5 or 1 to 10 on different areas of their job. The scale method can be a solid option because it allows for an objective understanding and is a good starting point for a conversation between employees and employers. 

Evaluations should be based on performance in key capabilities needs for success in the role rather than if KPIs or targets were met (the outcome of which can be out of their control). This way people are reviewed on and empowered to improve the required capabilities in role, rather than evaluated as successful or not based on things that could be out of their control.

How to Improve Employee Performance?

Once you have the meaning of employee performance down and ways to measure it, then you may look for ways to make it better. 

Improving employee performance is always going to be desirable for business leaders, and also employees themselves, as everyone wants to be proud of their work and their performance. 

But, how can it be done? 

We’ve compiled a few ideas that are proven to boost employee performance, which include:

1. Communicate Openly

When employees aren’t performing at their best, there could be a number of reasons why. Without having honest conversations about it, the reason will likely stay buried in the background. An employee may not be performing at their best because of issues at work, such as a lack of support or personal development opportunities. Or, their performance may be affected by personal issues outside of work... 

Honest conversations can help to save the day, as can an employee wellbeing tool. With an employee wellbeing tool, employees can self-report how they feel, which can aid them in proactively understanding what is affecting their performance.This way, they can find resolution or seek the help they may need. 

2. Discuss the Good, the Bad, and the Ugly

Whether a performance review is conducted or not, it’s always a solid idea to discuss both the highs and lows with employees. If you only focus on what’s going wrong, then employees may feel dejected and unmotivated. The key is to give feedback that is heard and appreciated rather than defended and resented. 

By praising their hard work and also sharing areas for improvement, the discussion is balanced and involves next steps for how they can get better. You may also need to adapt how the message is delivered based on the specific employee. Some need more softness in delivering the message than others. Giving examples are also a great way to make a point objective and transparent.

3. Deliver Continuous Feedback

Once goals are set and employees are working toward achieving them, continuous feedback means continuous improvement. This way, employees can stay on track over time and nip any small problems in the bud before they develop into bigger issues. Frequent feedback also makes it easier to talk about the highs and the lows, so that employees remain engaged rather than feel deflated. 

4. Foster a positive Work Environment

A positive work culture will shape employee engagement and motivation. When an employee is aligned with the company vision and is treated fairly, they’ll be more willing to remain focused and do their best. 

5. Prioritise Learning

A lacking performance may occur simply because an employee is missing a skill or some form of knowledge. In this case, providing adequate training and development is a key solution in turning things around. 

6. Set Realistic Goals

In order to meet expectations and/or goals, employees must be aware of them first. Employees can even be a part of setting the goals with managers. This way, employees clearly know what is expected and can be on the same page as their manager as to how their performance will be evaluated. 

A key here is to set goals and targets that reward employees for deepening their capabilities in role, rather than just achieving KPI numbers and outcomes. That way you create a culture that rewards people for improving their capabilities rather rewards them for gamifying results and fudging numbers. 

When goals are set too high or are unattainable, then employees are likely to feel stressed, overwhelmed, and even experience burnout when they can’t possibly meet the goal. 

7. Provide Recognition and Rewards

When good work is recognised and rewarded, employees are incentivised and excited to continue doing well. 

Rewards and recognition programmes are a great addition to workplaces. Not only do employees feel seen and appreciated, but it can set a very clear example to other employees as to what’s expected and considered to be good work. 

These rewards can also be used to reward employees for deepening capability, rather than gamifying targets and KPIs.

8. Focus on Mental Health and Wellbeing

When it comes down to it, an employee’s mental health and wellbeing is paramount in the recipe for success. Individually, and as a team, your mind’s health and willingness to approach problems head-on with resilience go hand in hand. 

By focusing on wellbeing, and actively listening to your workforce, you can be better equipped to provide employees with what they need to stay happy, healthy, and motivated. 

How Technology Can Help with Employee Performance?

HR technology is helping to take the guesswork out of employee performance. This type of software may be called different things, including performance management systems, employee engagement software, or employee motivation tech. 

With technology, HR managers and business leaders can set and track goals, monitor employee recognition, track feedback, and streamline meetings with employees. 

Technology like wellbeing platforms also play a big part in employee performance. Wellbeing tools provide the ability to take preventative action and address issues early on that could end up negatively impacting employee performance. 

When employers have firm knowledge on how their teams and departments feel, they are able to support them better. Data-driven decisions and an understanding of what affects employee mental health in the workplace works to direct the right choices to benefit the business and its people. 

Closing Thoughts 

The efficiency and effectiveness of your workforce means everything to your business because at the end of the day, your business doesn’t work without people. And, if people aren’t performing, then the organisation won’t either. 

Now, you have the answer to “What is employee performance?” It’s up to you to measure and manage it proactively. Employee performance is impacted by factors both big and small. The ability to understand why an employee’s performance is suffering can make all the difference in being a successful organisation. An employee wellbeing tool provides key insights to achieve this.

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