The way we measure employee performance has seen major changes in recent years as the organisational structure of companies continues to evolve and shift, with hybrid and contingent workforces becoming the new norm. The effectiveness of traditional performance management has seen a resultant decline due to its static, linear and top-down structure which can be excessively subjective and unhelpful in gleaming the intended data and information.
In alignment with the changes in the business world, employers must adapt their employee performance strategies to that of an ongoing and collaborative dialogue that captures a more accurate picture of an employee’s productivity and efficiency. There are many alternative performance indicators available and employers should use a combination of different options which align with both the purpose of their performance reviews and the operational style of the company.
This article will delve into methods of tracking employee performance in an efficient and objective manner that benefits both the employee and employer.
Effective tools for measuring employee performance
1. 360-Degree Feedback
The 360-degree feedback method is an innovative and effective employee performance metric that is used by over 85% of all Fortune 500 companies. It presents an alternative approach to the static feedback approaches of traditional performance reviews by gathering not only the input of an employee’s manager but several other parties that they engage with as part of their work.
Utilising the feedback of coworkers, clients and other professionals who witness the performance of the employee helps to reduce any single-party bias and provides a more detailed picture of an employee’s current abilities, skill gaps and growth potential.
The implementation of the 360-degree feedback tool is also accompanied by additional benefits such as strengthening team dynamics and offering insight into emerging work trends.
However, It is important to remember that getting feedback from multiple parties does not necessarily mean you should be asking the same questions from all of them. Depending on their role, each person will be able to contribute a different aspect of the employee’s overall performance – for example, asking a coworker about an employee’s ability to meet deadlines is not helpful since they don’t actually report task completion to the coworker.
2. 180-degree feedback
The 180-degree feedback takes on the core elements of the 360-degree feedback metric but narrows input of an employee’s performance to that of their direct co-workers and managers. It is a simpler version of the 360-degree feedback metric that, whilst not being as holistic as the former, can help save valuable time, money and resources.
Furthermore, your aim in examining employee performance may align better with an approach that has limited input as too many voices and opinions can sometimes muddle feedback and ultimately reduce clarity in the information you seek. The 180-degree approach to measuring employee performance is popular amongst those whose roles do not require people management or direct engagement with customers or clients.
3. Graphic Rating Scales
Graphic rating scales (also referred to as Likert scales) make use of a numbered scale on which employers are able to rate the performance of an employee in terms of both behavioural traits and work quality.
For example, ratings could be made on teamwork, punctuality, autonomy, growth potential, job knowledge, leadership, responsibility and accountability. The pre-determined numbers form a sequential range where the highest value is typically indicative of excellence in that area and the lowest value signifies a severe lack of the trait.
Obtaining quantitative data in this form enables employers to clearly identify performance levels and make adjustments that will help bridge an employee’s skill gaps. The scale can also be used to understand the different strengths and weaknesses of employees and maximise their potential accordingly.
Graphic rating scales can be used in two main ways when evaluating employee performance; discrete and continuous. A discrete scale uses responses that are specific and ranked; for example, a scale of 1 to 5 could have ‘very poor, ‘needs improvement’, ‘average’, ‘good’ and ‘excellent’ as its potential values.
In the continuous scale method, a set of two extreme values (typically opposing in nature) are placed on either end of a scale. From there, a manager then ranks the employee’s performance at a point along the scale that they feel represents the employee’s performance of that trait or behaviour.
4. The 9-box Grid
The 9-box grid method is a way of measuring employee performance by plotting their work quality and potential across nine data points.
It serves well as a visual tool and capitalises on two of the key factors managers pay attention to when evaluating the work of an employee, the level of their current performance and their growth potential for the future. Based on their rating in each of these dimensions, they are organised into one of the nine categories which range from “Low potential/low performance” to “High potential/high performance”.
This categorisation can provide you with insight into how you can cater to each employee – personnel within the ‘high performance/low potential’ category are typically best suited to their current role and should remain there, whilst those with ‘low performance/moderate to high potential’ may benefit from being placed in a role better united to their skills or additional training and support to help realise hidden potential.
Employees in the ‘high performance/high potential’ category are probably your most considerable talents and investing in them as they progress through the company ranks will likely prove beneficial. You should also pay attention to those with ‘low performance/low potential’ to identify any issues and figure out how to guide their improvement.
When utilising this approach, it’s wise to keep in mind that whilst it can be useful for managing employees with different capabilities and potential, the purpose isn’t to put your workers into metaphorical boxes and label them a certain way. The real goal is to understand how you can build your development strategies and help guide employees to realise their potential and support their growth.
5. Management by Objectives (MBO)
Management by objectives is a method through which the employee and the manager are able to meet in the middle between the organisation’s best interests and the employee’s personal sims.
It works by having the pair discuss and agree on individualised performance-based objectives and creating a plan to achieve them within a certain time period (subjective to change). It’s an effective way of limiting the subjective bias that occurs when managers typically appraise employee performance because a key part of goal setting includes ensuring that they are measurable and trackable.
The MBO method allows for regular feedback, tailors to individual needs and fosters communications between the company and employees. However, it can also be excessively target driven and prioritise the mere completion of objectives rather than the process of getting there which can push employees to take shortcuts and undermine the purpose of MBO. Being aware of this and ensuring that you work with your employees to set realistic goals, monitor progress and adapt them as needed can help prevent these issues from hindering growth.
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Measuring employee performance is one of the central tasks of an employer and a difficult one to do, regardless of the type of organisation you may operate. The method you choose for appraising your employees’ performance will depend on your organisational needs, but by being open to trialing different approaches you are more likely to eventually find the right option for your workplace.