Performance by the Numbers: Navigating Employee Efficiency Metrics

employee performance

To dig deeper into what’s working within your organization versus what’s not and get the most from your employees, a manager needs to track employee performance. Employee performance data provides insightful information on how an employee is doing their job and also provides constructive feedback on areas for improvement.

However, too much data and numbers can also backfire and create stress. A manager needs to focus on the correct employee performance measures. But which are the important efficiency and effectiveness metrics? Also, do you need to track them monthly, quarterly, or annually?

You probably have these questions running in your head and we have the answers. Here’s a compiled list of the most crucial performance metrics one needs to track and guidelines on how to track them.

What is Employee Performance?

Employee performance is a gauge of how effective, efficient, productive, and high-quality an individual team member's work is within an organization. It refers to how effectively employees carry out their job duties, meet established objectives, and support the overall success of the company.

Employee performance is evaluated by more than just quantitative metrics. Qualitative factors like communication skills, teamwork, problem-solving abilities, and adaptability are also part of it.

We next look at some of the most commonly used HR (human resource) metrics used to measure performance.

What are Commonly Tracked HR Metrics for Employee Performance?

The most commonly tracked HR metrics for employee performance include:

  • Absenteeism: This shows what percentage of employees are absent from work on a given day or over a period of time. High absenteeism rates can be a sign of low morale, productivity problems, or health and safety issues.
  • Turnover rate: A measure of how many employees leave the company over a period of time. High turnover rates can be costly and disruptive to businesses.
  • Productivity: This tracks the amount of work that an employee completes in a given period of time. It can be difficult to measure productivity directly, so businesses often use proxy metrics such as sales figures, customer satisfaction scores, or product quality metrics.
  • Quality of work: This metric measures how well an employee performs their job duties. It can be measured subjectively by managers or objectively using metrics such as error rates, customer satisfaction scores, or product quality metrics.
  • Timeliness: This looks at how well an employee meets deadlines and commitments. It’s measured objectively by comparing set deadlines against an employee’s task submittal date.
resource forecasting and capacity planning

What is Employee Performance Efficiency?

Employee efficiency is an employee’s ability to deliver the highest amount of quality work in the shortest time frame. It is not measured like employee productivity. Productivity focuses exclusively on quantitative metrics and results. Employee efficiency also factors the quality of work into the equation.

What are the Five Performance Efficiency Measures?

Since performance efficiency tracks both qualitative and quantitative metrics, it can be tricky to measure. However, that doesn’t mean it’s not possible. The key to tracking efficiency is narrowing down the benchmarks for quality of work and employee outputs. We highlight four of the most common ways to measure employee efficiency. Remember, the best method will vary depending on the specific job role and the organization's goals.

  1. Number of Errors in a Task or Product

    Counting errors is a quantitative measure of performance efficiency that is commonly tracked in manufacturing settings. However, it can also be applied to an IT or service scenario. For instance, in programming, track the number of errors in the code. A single coding error can stop an entire program, update, or app from functioning.

  2. Output Per Hour or Number of Sales

    This is another quantitative measure of employee performance efficiency. This works easily with simple, short sales cycle products. For products and services with longer and more complex sales cycles (like software or consulting solutions that can take months or years to close), it’s more beneficial to measure other process metrics that capture all the steps the employee takes to increase the chance of sales.

  3. Productivity and Utilization Tracking

    Utilization Levels measure an employee’s workload balance and help you see which of them are overutilized and at risk of burnout or underutilized and able to take on more tasks. With insight into utilization rates, managers can step in and rebalance the workload, and/or provide additional support to empower employees.

  4. Customer Satisfaction Score

    This metric measures how satisfied customers are with an employee's performance. It can be measured using surveys or customer feedback forms.

    It can be advantageous to ask the customer about their likelihood of recommending the company's product or service to someone else. This qualitative efficiency measure gauges an employee's performance in front of customers.

  5. 360-Degree Feedback

    The 360-degree feedback is a qualitative tool to measure employee performance and efficiency. To assess an employee’s score, gather input from their peers, subordinates, customers, and managers on specific topics. The feedback typically represents an accurate and multi-perspective assessment of an employee's performance, skill level, and potential growth areas. For 360-degree feedback to be fruitful it’s important to have a benchmark for expected performance.

What is Employee Effectiveness and How to Measure it

Employee effectiveness is the ability of an employee to achieve their goals in a way that is aligned with the organization's goals. It is a measure of how well an employee is able to contribute to the organization's success.

Employee effectiveness is important because it can help to improve the organization's productivity and profitability. When employees are effective, they are also more inclined to deliver superior customer service, which will increase your business’s reputation and ability to retain customers.

Employee effectiveness, like efficiency, can be measured through qualitative and quantitative data points. Quantitative key performance indicators that can be tracked include the number of sales, the number of calls, the number of client visits, or the time taken to complete tasks. Quantitative data would be measured through customer and colleague surveys or feedback forms. Another way to measure effectiveness is through employee self-assessment, where they rate how well they are doing their role.

resource management and allocation

Difference Between Employee Effectiveness and Efficiency

It’s easy to confuse effectiveness and efficiency or presume that both mean and measure the same thing. But no, they don’t. Efficiency is about doing things quickly and accurately, while effectiveness is about doing the right things and achieving the desired results.

Characteristic Employee Efficiency Employee Effectiveness
Focus Process Outcomes
Goal Complete tasks quickly and accurately Achieve desired results
Example An employee who can type quickly and accurately An employee who can close a sale

How to Improve HR Effectiveness and Efficiency?

Employee efficiency and employee effectiveness are not mutually exclusive. In fact, the most successful employees are both efficient and effective. To improve both factors, try the following tips:

  • Set clear goals and expectations

    The efficiency and effectiveness of employees depends on them knowing what is expected of them. Make sure that your goals are SMART, meaning they are specific, measurable, achievable, relevant, and time-bound.

  • Provide training and development

    Employees need to have the skills and knowledge they need to be efficient and effective in their jobs. Provide employees with access to training and development opportunities so that they can continue to learn and grow.

  • Create a positive and supportive work environment

    Employees are more likely to be efficient and effective if they work in a positive and supportive environment. Your employees should feel valued and respected.

  • Provide regular feedback and recognition.

    Employees need to have the skills and knowledge they need to be efficient and effective in their jobs. Provide employees with access to training and development opportunities so that they can continue to learn and grow.

  • Create a positive and supportive work environment

    Employees are more likely to be efficient and effective if they work in a positive and supportive environment. Your employees should feel valued and respected.

  • Provide regular feedback and recognition.

    Employees need regular feedback on their performance so that they can identify areas where they can improve. Recognition for their accomplishments can help to motivate employees to continue to be efficient and effective.

Measure Employee Performance the eRS Way

eResource Scheduler’s employee management software takes a data-driven approach to managing and improving employee efficiency and effectiveness. eRS will give you access to crucial employee performance metrics listed above and help you make data-driven decisions. Measure employee efficiency metrics, set project benchmarks, and identify which employees might be under or overutilized with eRS.

Start a free trial today to learn more about how eRS can help increase your organization’s employee efficiency.

CEO & Founder
Rudraksh Vyas
Rudraksh Vyas, an accomplished CEO at ENBRAUN since 2011, has a proven track record in leading and growing technology-driven businesses. His expertise lies in product development, client management, and implementing effective business strategies, ensuring robust financial and resource management. Prior to his current role, Rudraksh honed his skills in business development, where he excelled in account management and export marketing. He holds a PMP certification from the Project Management Institute and an MBA in International Business from the University of Technology Sydney. Rudraksh's journey reflects a deep commitment to excellence and innovation in the tech industry, making him a respected leader and visionary in his field.

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