Employee key performance indicators (KPIs) are objective performance standards that set benchmarks for success. KPIs quickly reveal whether your employees are on track to meet their goals. They reduce bias, increase transparency, and provide insight into performance trends. Understanding KPIs helps your company determine the best ways to maximize employee talent.@ClearCompany lists 5 #KPIs that leaders can use to enhance their #PerformanceManagement strategies in their latest blog:
Why should you measure key performance indicators?
Defining employee KPIs is essential for goal-driven organizations — you need benchmarks for comparing progress and informing new goals. KPIs enable you to monitor performance closely and quickly recognize excellent work or the need for support. They make it possible to respond to challenges and successes in real time to increase goal achievement at every level.
KPIs are also an excellent way to clarify expectations, helping managers create specific goals and eliminating confusion for employees.
Employee KPIs unlock vital insights about performance and productivity, like which managers drive high-achieving teams, which new hires need more training, and productivity trends at your organization. These insights inform strategies from recruiting to sales to marketing and provide direction for team and individual performance goals.
Employee key performance indicators benefit the entire organization:
- Create transparency around real efficiency and output
- Establish realistic goals and metrics for success at individual and company levels
- Provide performance insight to identify top performers, skills gaps, and growth opportunities
- Enable leadership to adjust expectations according to patterns and trends
- Motivate and engage employees to do their best work with clear, attainable goals
Define your most important KPIs so managers and employees can understand expectations, set goals that make sense, and raise performance standards. Reevaluate your KPIs when business goals change or if employees consistently beat or fail to meet the standards.
5 Types of Employee KPIs
Don’t Confuse KPIs with Control
Measuring employee KPIs doesn’t mean over-monitoring your employees, like tracking keystrokes or time spent online, according to Robin Corralez, chief people officer at PandaDoc. That level of surveillance, says Corralez, “crosses a line and portrays a lack of trust.”
There are different types of key performance indicators that tell you if employee performance is on track, exceeding expectations, or falling short. A variety of KPIs also makes for well-rounded performance appraisals.
Let’s look at five types of employee KPIs that help you understand and improve performance for employees and the entire business.
1. Financial KPIs: Quarterly sales goals or money saved through employee retention
Revenue-generating teams often employ straightforward financial key performance indicators, setting quarterly and annual sales benchmarks. If the sales team isn’t hitting their KPIs, leadership can see if one employee is falling behind or if the decline is due to market trends and address the issue appropriately. HR teams might set a goal for reducing hiring and onboarding costs through retention efforts and can track whether their cost-cutting measures are working or if they need to pivot their strategy.
2. Productivity KPIs: Number of tickets resolved or parts produced
Productivity key performance indicators give a quick overview of both team and individual output and enable managers to gauge those who are under vs. over-performing. Tracking productivity KPIs regularly shows how output varies over time so that managers can adjust KPIs according to changes in team size, seasonality, and other factors.
Managers of customer support teams can measure employee key performance indicators like the number of tickets completed or the number of calls handled and make adjustments for slower times, like holiday weekends. Manufacturing plants can set KPIs for the number of parts employees need to complete per shift.Focus on the right #KPIs to maximize employee talent. See the 5 KPIs @ClearCompany says you should focus on:
3. Customer KPIs: Customer retention rate or repeat website visitors
Tracking a customer KPI is a great way to determine if customer-facing strategies are hitting the mark. Marketing teams look at metrics like the number of repeat visitors to the website and the open rate of customer emails to see if their digital marketing strategies are generating the exposure and lead volume they expect. Sales and customer service teams can maintain customer satisfaction KPIs by sending out satisfaction surveys after they place an order or talk to a representative.
Retention rate is another useful metric since acquiring new customers is five to seven times more expensive than retaining your existing customers. When employees improve one of these customer KPIs, like increasing the average customer satisfaction score or click-through rate in customer emails, you can recognize their success and include achievements in their performance reviews.
4. People KPIs: Employee engagement score or retention rate
Just like customer experience determines their retention and satisfaction levels, employee experience determines theirs. Monitoring employee engagement and implementing a regular performance review process, like with performance management software, can help you identify excellent employees, as well as those who are at risk of quitting or need additional training.
By giving employees clear goals, measuring performance, and checking in with them regularly, you get a comprehensive picture of overall engagement and productivity levels. Key performance indicators that look at both employee feedback and performance help create a better employee experience and support a productive, motivated workforce.
5. Time-based KPIs: Hold time reduced, faster call resolution, or overtime hours logged
Time-based key performance indicators indicate when a process becomes more efficient or issues are resolved more quickly. Customer support teams can use time-based KPIs to monitor efficiency for individuals and teams. Tracking customer hold times and average time to resolution helps management set realistic expectations and focus on improving customer experience where it counts. Managers can also keep track of overtime hours to see if output expectations are realistic or if overtime hours should be adjusted.
KPIs offer insight into employees’ efficiency, productivity, and engagement levels. They give managers a framework for addressing successes and challenges during performance evaluations. KPIs are an excellent way to set clear, achievable goals and keep up with each person’s output and growth.
Now more than ever, it’s essential to develop performance management strategies that center your people, prioritize transparency, and recognize their achievements. Your HR team can use performance management software to measure employee performance metrics, set KPIs, and track goal progress for every employee.
ClearCompany’s award-winning Performance Management System has the tools you need:
- Goal Planning to set aligned SMART goals
- Performance reports and analytics to establish accurate benchmarks
- Standardized performance reviews for fair, consistent evaluations.