How to Measure Employee Performance for Business Growth?

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Business Growth
Business Growth

I want to measure the results, it is necessary to measure them. In this article I will tell you why it is most often difficult to measure employee performance and, of course, how to deal with it. First, I want to say that it is possible to accurately measure the result of any employee or manager, and it is not difficult. You just need to deal with a couple of tricky moments.

Using KPI’s

It is almost impossible to manage a modern company without a KPI (key performance indicator). Separation of functions and specialization help improve the efficiency of the business as a whole, but at the same time pose a threat. If one of the employees lacks results, the whole company may suffer. 

For example, when a hiring specialist cannot recruit the right people, the entire company stops growing. If the supplier fails, production stops, etc. To maintain constant control over all processes, it is necessary to regularly measure the results. Only KPIs enable executives to see bottlenecks in company processes that are holding back growth. You could say that leading without a KPI is like trying to catch a black cat in the dark.

Factors to consider
If you have an accurate understanding of what the result is – the product of the employee, it is easy to come up with a way to measure. What is so hard about that? But often an employee has several different products, each of which is important. But the truth is, not all of them are equally important. Even an ordinary seller has several different products: order in the trading floor, display on shelves, satisfied customers, etc.

There are several products, but his main product is one – revenue. If the seller does not make the revenue, not all other products are important, and no one else in the company will make the revenue for him. Therefore, we can say that the main product of the seller is revenue. This is obvious and so there is usually no problem with measuring salesperson results. Taking the example of email marketing agencies in USA, since they have used this to get ultimate profits in their businesses.

Learning through examples

The situation with measuring the results of an accountant is more complicated. If you ask company leaders what is the most important product of an accountant, we will get many different answers: low costs, no tax claims, good accounting, timely reporting, etc. Moreover, according to experience, there will be no unity of opinion. The leaders themselves do not know which of his products is the main one. It is this “not knowing” that is the reason why they cannot come up with a good KPI to measure its results. At the same time, most accountants have very similar responsibilities. And even in the standard job descriptions it is said that its main tasks are to define accounting policies and organize accounting.

His job is to create an accounting system in the company that will allow you to quickly keep records and receive reports. We can say that the main product of the chief accountant is a flawlessly working accounting system, in which all transactions are reflected in a timely and accurate manner. Once you understand that its main product is the accounting system, it becomes clear how this can be quantified. For example, it is easy to measure the number of individual transactions that have been recorded accurately and in a timely manner per week or per month.

But as soon as you start measuring the results of the chief accountant in this way, you will immediately receive the question: “How can I influence this? After all, I can influence the number of operations?!” Fair objection, as a rule, the accountant really cannot influence the number of business transactions performed. It only affects the fact that all business transactions are on time and accurately reflected in the accounting. If the sales department does not sell, and the warehouse does not ship, there will be no operations, which will immediately reduce the KPI of the accountant. But pay attention, because the results of the accountant in this case really decreased – there are fewer business transactions reflected in the accounting than before. And the superior leader must see this.

What not to do?

The drop in KPIs due to the fact that someone else has reduced productivity is the moment when the manager is faced with the fact that employees do not like this approach to measuring their performance. They don’t want results to be measured, but their efforts or willingness to work. These disagreements become especially acute when trying to tie salaries to KPIs. This is a common mistake during KPI implementation.

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