January 30, 2024

Top Performance Metrics Examples & What They Measure

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Tags: HR

Key takeaways

  • Employee performance metrics measure an employee’s productivity, efficiency, and contribution to an organization.
  • You can separate employee performance metrics into four categories: quantity, quality, efficiency, and effectiveness.
  • Identifying and tracking the critical performance metrics for your company helps clarify employee expectations, reduce turnover, and support business objectives.

Check out our video overview below.

What are performance metrics?

Performance metrics are the quantitative and qualitative measurements that assess how well employees are doing their jobs. Companies typically represent performance metrics as key performance indicators (KPIs) or objectives and key results (OKRs). This makes them easier to track within performance management or HR software and connect them directly to your company’s goals.

Moreover, representing performance metrics in the form of KPIs and OKRs standardizes what success looks like in various roles. Plus, you can monitor these quantitative measurements over time to understand what factors contribute to long-term success or failure.

A word of caution, however: Performance metrics should not be the only data you use to understand your employees’ contributions and value. Employees are human, and a healthy balance of objective data and anecdotal evidence provides a more holistic look at their overall impact during performance reviews.

Employee performance metrics fall under the umbrella of human resources (HR) analytics. Learn more about the importance of performance management and which metrics are worth tracking:

Key employee performance metrics to track

There are four distinct categories of employee metrics to track, and they include:

  • Quantity: The amount of work produced.
  • Quality: The standard or excellence of work compared to others.
  • Efficiency: The ratio of input (time and money) to output (products or services).
  • Effectiveness: The impact of the work produced.

Depending on the role or your company’s industry and location, you may measure individual and organizational performance metrics in one or all of these categories. For instance, an artisan furniture store may prioritize the quality of their carpenter’s furniture pieces compared to a big box store furniture distributor’s focus on quantity.

You can also subdivide these categories based on individual or organizational metrics and then even further by industry, department, or role. Although it’s impossible to cover every performance metric companies use, understanding the most common ones will give you a foundation to develop your own.

Quantity metrics

Perhaps the easiest to define, a quantity metric measures the amount of something that is produced, sold, or executed. For example, a restaurant would need to know the quantity of each menu item it sells in a day, whereas an email marketing specialist should know the number of newsletters they send in a month.

Although quantity metrics are important to monitor, they often don’t reveal much about how employees produce their work or the impact it has on the business.

For instance, perhaps Mary, a factory line worker, produces only five widgets one day compared to John’s 15. Those numbers reflect only surface-level data points — they don’t capture the fact that seven of John’s widgets were defective and unusable, or that Mary was suffering from a cold.

Thus, it’s best to evaluate quantity metrics in the context of other performance metrics to understand the whole picture.

Individual quantity metrics
Metric Measurement Impact
Unit output Number of tasks, services, products, or units produced in a certain period Demonstrates how much work the employee produced over a timeframe
Number of sales Number of sales made in a certain period Showcases a salesperson’s ability to find and onboard new clients
Number of calls/emails handled Number of calls or emails resolved in a certain period Illustrates the number of inquiries an individual managed in a customer service role over a specific timeframe
Organizational quantity metrics
Metric Measurement Impact
Total production value Number of products or services produced at a department or organization level Demonstrates an organization’s overall productivity
Total sales Number of sales or leads at a department or organization level Showcases the company’s ability to find and onboard clients for continued growth

Quality metrics

Quality metrics measure the caliber of a product, service, or deliverable. Because quality is largely subjective, companies often use third-party feedback from customers, clients, and industry experts to evaluate quality.

A clear definition of quality is vital for cementing your company’s brand. Faulty products or unreliable services can hurt your image, causing customers to lose trust and look to your competitors instead.

Like quantity metrics, though, you cannot focus entirely on quality to paint an accurate picture of performance. One quality product does not make you successful unless you produce enough to turn a profit. Instead, measuring quality within the framework of other KPIs allows you to maintain customer satisfaction alongside growth.

Individual quality metrics
Metric Measurement Impact
Error rate/defect rate Number of errors or defects in someone’s work Determines how well a product was produced without compromising overall functionality, especially in manufacturing or software development
Customer feedback Direct customer reviews about their interactions with an employee Indicates the degree to which the employee is able to meet customer needs
Rate of return Number of products returned or complaints lodged due to an employee’s work or service Demonstrates the degree of customer dissatisfaction
Organizational quality metrics
Metric Measurement Impact
Customer satisfaction score (CSAT) Sum of all positive customer survey responses divided by the number of total responses, then multiplied by 100 Demonstrates customers’ overall happiness with a company’s products and services
Product defect rate Percentage of products that do not meet quality standards at an organizational level Reflects the success of quality assurance measures throughout the production process

Efficiency metrics

Efficiency metrics measure the number of products or services produced compared to the resources needed. The goal is maximum output (products, services, or tasks) with minimum input (time or money).

Efficiency metrics allow you to monitor how employees use their time and resources to benefit the company’s bottom line. For example, memorizing the answers to frequently asked questions and creating shortcuts to various internal systems might help a customer service agent improve their efficiency and lower their average response time as a result.

That said, an employee’s efficiency isn’t a reflection of their work quality. Continuing with the same example, a customer service agent who is primarily focused on efficiency may cut corners that leave customers feeling rushed, frustrated, or disappointed. However, efficiency metrics can pinpoint employees, departments, or locations needing additional resources or support.

Individual efficiency metrics
Metric Measurement Impact
Task completion time Duration of time needed to complete a task or project Determines the speed at which an employee can complete a task
Response time Duration of time needed to respond to internal or external requests Indicates the speed of employee communication, especially for customer service or administrative roles
Cost per task Total cost of completing a task (salaries, wages, benefits, material, overhead, tools, and software) divided by the number of tasks completed Demonstrates how much money it costs the business per task the employee completes
Absence rate (individual) Average number of days an employee was absent (minus approved absences) in a defined timeframe Provides context around dips in employee productivity
Organizational efficiency metrics
Metric Measurement Impact
Cost per acquisition Total marketing and advertising costs divided by the number of customers onboarded Indicates how expensive it is to onboard a new customer
Human capital ROI Revenue minus operating and labor expenses divided by total compensation and benefits paid to employees Assesses how much you spend on your workforce to generate a profit
Revenue/profit per employee Total revenue/profit divided by the total number of employees Determines how much each employee contributes to your financial health
Absence rate (organizational) Average number of workforce absences (minus approved absences) in a defined timeframe Indicates potential work expectations or resource management inefficiencies that lead to employee burnout

Effectiveness metrics

Effectiveness metrics measure how an employee’s work impacts overall business outcomes. For example, an effective employee meets or exceeds goals and deadlines, manages priorities, and follows quality standards.

While efficiency metrics show how your business uses its resources, effectiveness metrics evaluate end results. If you are more concerned with optimizing resources and streamlining processes, efficiency metrics will likely be your primary focus. But, effectiveness indicators are necessary to understand whether those improvements positively impact your company’s broader goals.

Effectiveness metrics, in particular, also help you strengthen brand loyalty, expand into new markets, and remain competitive and adaptable.

Individual effectiveness metrics
Metric Measurement Impact
Goal achievement Quantified progress toward completion of a goal Indicates whether an employee fails, meets, or exceeds expectations
Average performance review rating* Total performance review scores over a set time period divided by the total number of performance reviews in the same period Provides a high-level overview of an individual’s performance and whether they meet minimum standards
Average 360-degree review rating* Total 360-degree review scores over a set period divided by the total number of 360-degree review cycles in the same timeframe Provides a high-level overview of how peers and customers view an employee’s performance and whether they meet minimum standards
Customer issue resolution Total number of customer issues resolved divided by the total number of customer issues, multiplied by 100 Demonstrates whether an employee successfully assists customers
Conversion rate Total number of leads that become paying customers divided by the total number of leads, multiplied by 100 Indicates whether the employee successfully brings on a new customer per lead
Time since last promotion Number of days, weeks, months, or years since the employee’s last promotion Reflects the employee’s growth trajectory within the company
Organizational effectiveness metrics
Metric Measurement Impact
Customer retention rate Number of customers at the end of a period minus the number of new customers divided by the number of customers at the start, multiplied by 100 Showcases how well your products and services lead to long-term customers
Employee retention rate Number of employees at the end of a period minus the number of new employees hired divided by the number of employees at the start, multiplied by 100 Showcases how well your company’s processes, benefits, and culture lead to long-term employees
Net promoter score (NPS) Percentage of survey promoters minus percentage of survey detractors Indicates how likely customers are to recommend the company’s products or services to others
Employee Net Promoter Score (eNPS) Percentage of employee survey promoters minus percentage of survey detractors Indicates how likely employees are to recommend the company to others
Internal promotions vs. external hires Ratio of internal promotions to external hires in the same time period Reflects the degree to which open roles cannot be filled internally because of skill gaps and/or staffing demands

*Check out The Ultimate Performance Review Process: 6 Steps for Success for more information on performance review rating scores.

Benefits of tracking employee performance metrics

Employee performance metrics help you understand the financial and cultural state of your company. Furthermore, they create a standard measure of what success looks like across the company and create a foundation for a results-only work environment.

Tactically speaking, though, tracking employee performance metrics offers benefits for performance management, employee turnover, productivity, company growth, and employee engagement.

Metric-based performance goals make it clear to employees what aspects of their jobs to prioritize. As a result, they are more likely to focus on work that directly impacts the company’s overall success.In addition, clarifying role expectations helps you identify underperforming employees so you can take steps, like implementing performance improvement plans (PIPs), to help them succeed. This clarity also provides objective guidance for termination and promotion decisions.

Because performance metrics clarify role objectives, employees are less likely to separate from you for unclear expectations. In fact, knowing that incentives like performance bonuses, raises, or promotions are tied to meeting or exceeding the performance metrics in their roles, the more invested employees become in your company overall.

Employees are more likely to be productive when their performance is tied to metrics or goals since failing to meet expectations can result in PIPs or other disciplinary action. Plus, it reveals what areas the company prioritizes, making the work employees perform have a more direct impact on the bottom line and overall company productivity.

Performance metrics allow you to be more strategic regarding big-picture profitability or expansion goals since employees’ performance KPIs directly relate to these objectives. Cross-company goal alignment can help you stay competitive and even address areas suffering from inefficient or ineffective workflows.

Recording employee performance metrics and progress toward goals can help build a picture of their growth in the company over time. Employees who achieve their goals or outperform expectations are more likely to receive rewards, like bonuses or recognition from peers, managers, or senior leadership. In turn, employees remain engaged and invested in the company’s success.

How to start tracking employee performance metrics

You can manually calculate and track employee performance metrics; however, most performance management and human capital management (HCM) platforms were designed to do the work for you.

For instance, with apps like Trakstar or Lattice, you can:

  • Set individual or company-level goals.
  • Cascade goals from the top down for complete company alignment.
  • Create reports, dashboards, and visualizations for at-a-glance views of performance.
  • Import employee demographic data for more context around performance among various groups.
  • Use benchmarking data to see how your employees compare to other companies in your industry or region.

You can explore our favorites or access a complete list of solutions on our Performance Management Software Guide page.

Or check out our overview video below!


Jessica Dennis Avatar

About the author


Featured performance management partners

Deel

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Deel Engage helps your team reach their full potential. Align your team on goals, review performance, identify high-potential talent, and reward top achievers.

Learn more about Deel

ClearCompany

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Conduct better reviews, increase feedback quality, and simplify review cycle management. ClearCompany Performance Management helps you implement an employee-first approach by shifting the focus of performance reviews from evaluation and ranking to employee growth and future potential. ClearCompany helps your company drive engagement and focus with goal-planning tools while increasing the value and reducing the workload of performance review cycles.

Learn more about ClearCompany

Peoplebox

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Gen-AI powered platform for performance reviews, aligned goals (OKRs), 1:1s, surveys, KPIs, initiative management, strategic meetings and People Analytics.

Unlike other tools, its integration with Slack/Teams goes beyond notifications and lets you do entire performance reviews, engagement surveys, and OKR check-ins right within Slack/Teams.

Learn more about Peoplebox

Browse all performance management software →

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