Gallup research reveals a concerning trend: only 20% of employees strongly agree that their performance is managed in a way that motivates them to do outstanding work. Despite companies investing countless hours and vast financial resources, these practices fail to yield positive results and risk driving away their most valuable employees. Rather alarming, isn’t it?
Globalization, rapid technological advances, distributed teams, stretch or hybrid roles and the overwhelming flow of information mean that traditional management approaches are becoming outdated. It’s no longer feasible to just look at end-of-year results to distribute bonuses and plan career advancement. We need to keep up-to-date and provide ongoing feedback to employees. This is where employee performance tracking becomes essential.
What Is Employee Performance?
If hiring an employee is an investment for a company, then employee performance is the return on that investment, measured by the outcomes they achieve. Employee performance offers data-driven insights into task execution effectiveness, assessing both deadline adherence and the visibility of work outcomes. The aggregated performance of all team members translates into the overall performance of the company, which in turn directly influences customer satisfaction and financial growth.
The key to achieving positive business results is to establish a performance management system that links company goals to individual performance expectations and motivates delivery against those expectations.
Perhaps the best definition of the performance management process was created by Scott Keller and Mary Meaney:
“(…) People aren’t against being evaluated, and, in fact, they want to know where they stand. They just want the process to be fair. They want a process that differentiates without false precision, that is both forward- and backward-looking, that happens far more frequently than once a year (but not so much as to create feedback fatigue), that involves an honest, two-way conversation, that is based on more data and input than just the boss’s view, that considers not just what was achieved, but also how, and links rewards and consequences to performance”.
What Are Performance Metrics?
Performance metrics are measurable data used to assess essential aspects of an organization’s operations, from employee productivity and behavior to overall business performance. These indicators may have various forms: ratings, rankings, goals, or objective metrics. They are crucial for tracking and improving the efficiency of various business processes and are essential for achieving strategic goals.
There are different types of performance metrics, for instance:
- Business performance can be measured using metrics such as return on investment (ROI), profit margins, and market share to assess financial success and operational efficiency.
- Sales performance might use metrics like lead conversion rates, total sales revenue, customer retention, and overall market reach to evaluate the effectiveness of sales teams.
- Project management can be evaluated using metrics such as project completion times relative to planned schedules and budget adherence to gauge project execution efficiency.
Finally, employee performance can be measured using indicators of work quality, quantity, and efficiency.
The key to effectively using performance indicators lies in their meticulous selection, alignment with strategic goals, and ongoing evaluation to ensure they remain relevant to business needs. However, as Gallup emphasizes, organizations must avoid fixating on selected metrics during annual evaluations without adjusting them to changing business conditions. Over the long term, this approach neither serves the growth of the company nor inspires employees to develop.
📌 A performance metric is not the same as a Key Performance Indicator (KPI). Performance metrics are measured within a business area relative to a set goal and provide broader data. A KPI uses a specific target metric to measure performance.
<
How to Effectively Track Employee Performance?
Effective employee performance monitoring can be achieved through various approaches and tools, but only by combining different approaches can a comprehensive picture of performance be ensured. Here are several effective performance management strategies to consider and tailor to your organization’s needs:
Time Tracking
Effective time management is essential for improving performance. Time-tracking software monitors how much time employees spend on tasks and projects, aiding productivity assessment and time management.
⚠️ Cons: An excessive monitoring can lead to micromanagement, reducing creativity, engagement, and job satisfaction. Additionally, it doesn’t always reflect the quality or impact of work, and hasty conclusions can demotivate employees.
Project-Based Evaluations
For project-oriented roles, evaluating performance based on completed projects and tasks can be effective. Project management tools help track progress and individual contributions, enabling timely problem detection and resolution.
⚠️ Cons: This approach can overlook other work aspects, such as training, planning, or developing soft skills. Employees often juggle multiple projects, which can skew performance assessments if only one project is evaluated.
Traditional Performance Reviews
Regular annual or semi-annual performance reviews allow managers and employees to jointly analyze achievements and set new goals. These reviews help identify employees’ strengths and areas for improvement, forming the basis for career development plans.
⚠️ Cons: The infrequency of these reviews can be a drawback. Feedback might become outdated by the time of the review, leading to delayed recognition of issues or successes, which can impact motivation and timely development. This method can also discourage employees and requires significant effort from managers. Reducing an employee’s efforts to a single performance review or rating can lead to disengagement and questions about the manager’s understanding of their work.
360-Degree Feedback
360-degree feedback gathers opinions from various colleagues, including managers, peers, subordinates, and clients, offering a comprehensive view of an employee’s performance, interpersonal skills, and impact on the team and organization. This approach can significantly enhance employee engagement and performance by fostering a culture of feedback.
⚠️ Cons: Similar to traditional reviews, it can suffer from delays, making it difficult to address behaviors promptly. Excessive frequency might be burdensome and costly for the organization. Additionally, qualitative feedback can introduce bias, making objective assessment challenging.
OKRs (Objectives and Key Results)
OKRs involve setting specific, measurable goals and 3-5 key results in quantifiable terms, helping employees focus on top priorities. Regularly tracking progress and adjusting actions to achieve these goals supports transparency and alignment with organizational objectives.
⚠️ Cons: An overemphasis on quantifiable results may lead managers to overlook qualitative outcomes, such as teamwork quality.
KPIs (Key Performance Indicators)
KPIs measure current business activities and help assess how well employees achieve tasks relative to strategic goals. They are useful for monitoring efficiency and identifying areas needing improvement, but they must be tailored to individual roles and aligned with overall business objectives.
⚠️ Cons: KPIs seem ideal for measuring performance, provided they remain current and based on real, variable data. Companies use KPIs as benchmarks to assess progress towards a wide range of business goals, such as sales growth, customer satisfaction, and operational efficiency. They collect data and then measure progress against these indicators. This means that what KPIs measure is more important than how they are measured. Given the rapidly changing economic conditions and degree of digitization, both what is measured and how it is measured are critical. According to an MIT Sloan Management Review report, 6 out of 10 managers agree that improving their KPIs (in terms of what and how they are measured), rather than just improving results, is crucial for effective decision-making.
To achieve better outcomes, companies should review their KPIs using artificial intelligence. AI can help uncover sources of value and differentiation that might otherwise go undetected or underutilized, and can also prevent undesirable outcomes stemming from the lack of regular re-evaluation of the assumptions underlying current KPIs. Without algorithmic support, KPIs struggle to track progress, align people and processes, prioritize resources, and increase accountability, thereby undermining operational efficiency and hindering the achievement of strategic goals and results.
Why Your Current Employee Performance Tracking Tactics Aren’t Working
There are many reasons why performance monitoring in your company might be failing, but let’s focus on the three most obvious ones.
Your Process Is Ineffective
When was the last time you updated your performance tracking process? Was it back in 2019 when the pandemic hit? Have you adapted to the increasing number of hybrid and fully remote positions? Are you considering employees’ preferences for flexible contracts over stable jobs? The performance of a dispersed workforce needs to be measured differently than that of in-office employees.
Your Process Is Slow Because You’re Not Using Software
Or rather, you are using software, but it’s outdated. You’re not collecting data in one place, but instead searching through various spreadsheets. Different programs for communication and time tracking make it impossible to consolidate data on one dashboard or generate reports predicting future trends.
Without the right tools, employees are less likely to engage in processes, making it challenging to collect and analyze quantitative data and wasting time and resources.
Your Managers Aren’t Thoroughly Prepared
As a team lead, you need to ensure your managers are equipped to handle project management tools, understand functionalities, interpret data, generate reports, and so on. Additionally, they need the soft skills necessary for conducting conversations and providing feedback.
It might turn out that your long-standing manager, who excels in crisis management, completely fails to make employees feel valued, resulting in low team productivity.
What is the Performance Management Cycle, and How Can Your Team Navigate It?
The performance management cycle is a repeatable process aimed at enhancing employee success and business efficiency. It consists of four stages: goal setting, performance monitoring, plan evaluation, and employee achievement recognition.
To ensure your team navigates these stages smoothly, here’s what you can do:
Start Early
Do not keep new employees in the dark or wait a year to share feedback. Implement performance monitoring during onboarding to develop their time management and task prioritization skills from the start. Clear goals help them integrate quickly into the company.
Foster Open Communication
When setting goals, provide clear explanations for your decisions. This promotes transparency, eliminates misunderstandings, and shares responsibility with employees.
Automate Performance Monitoring
Utilize tools that offer quick insights into performance results. Intuition alone isn’t enough, especially when handling vast amounts of data. Choose software supported by algorithms similar to CBS, which enhanced its production efficiency by using AI to process 50 years of consumer research, improving their KPIs. Can your current tools do that?
Include Employee Perspectives
The performance management cycle requires regular meetings or coaching sessions. Incorporate employee needs and suggestions to evaluate the effectiveness of the plan.
Provide Constructive Feedback
Offer clear feedback and address even sensitive issues. Highlight positive paths for improvement and recognize small achievements, especially early in the collaboration.
How to Evaluate Employee Performance?
Evaluating employee performance is crucial for both the employee and the employer. The company aims to achieve higher productivity, while the employee seeks recognition for their achievements or a second chance if their performance was not optimal. Here’s how you can organize this process to benefit both parties:
Establish Clear Expectations and Goals
To ensure employees know how to perform and what to achieve, clearly communicate these expectations. The foundation is the job description. Then you need to set clear, SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for employees. This helps them understand what is expected and aligns their objectives with the company’s.
Select Short- and Long-Term Metrics
Choose key performance indicators that reflect both quantitative metrics (e.g., task completion rates) and qualitative (e.g., non-technical skills like communication skills) aspects, relevant to the goals and roles being assessed.
Use Various Evaluation Methods
Gather employee performance data through multiple strategies. Aggregate information from diverse sources, such as project evaluations for project-based roles and time tracking for dispersed responsibilities, to ensure unbiased and clear assessments. Regularly validate evaluation processes, especially when using AI tools, to avoid biased data.
Provide Constructive Feedback Without Over-Criticism
Schedule regular check-ins (monthly, quarterly, biannually) and give timely feedback on ongoing tasks through one-on-one meetings. Conduct comprehensive 360-degree evaluations annually. Balance positive and constructive feedback to motivate employees effectively.
Document Everything
Maintain thorough records, whether paper or digital, of each performance review. This documentation helps employees recall priorities, identify areas for improvement, and track progress over time.
Leverage Tools to Simplify the Process
Utilize performance management software to track and document results, facilitating easy data comparison and aiding in career development and promotion planning.
Do not Forget Rewards
Effective performance management includes setting expectations, monitoring progress, and applying appropriate rewards and consequences. Recognize employees’ achievements through both financial (bonuses, raises) and non-financial (recognition programs, career advancement opportunities, professional development) rewards. As Mick Delany, an American College Football coach, said: “Any business or industry that pays equal rewards to its goof-offs (low performers) and eager beavers (high potentials) sooner or later will find itself with more goof-offs than eager beavers”.
Provide Resources and Support
If performance reviews indicate skill gaps, employers should offer support through coaching or training programs to help employees improve.
Additional Tips on Performance Evaluation
✅ Involve your team, including temporary and remote employees, in developing and refining evaluation methods through surveys or discussions.
✅ Use clear examples to support evaluations and refer to specific situations, ensuring personalized and understandable feedback.
✅ Focus on future improvements, not just past mistakes, to foster a forward-looking perspective.
✅ Apply consistent standards across similar roles, but tailor criteria to different positions or employee’s work modes.
✅ Address issues or acknowledge achievements promptly to maintain employee engagement and motivation.
✅ Encourage employees to self-monitor and regularly review their own performance. Teach them to use tools proactively to manage their work time and job duties efficiently.
✅ Track employee performance trends over time to quickly identify problems and find effective solutions. Use scalable tools that expand functionalities, and choose future-proof solutions supported by AI and offering mobile access for employees and managers.
✅ Remember that constructive feedback should be two-way and boost employee morale. Engage in dialogue and listen to employees’ feedback to ensure they feel valued and foster employee growth.
The Business Advantages of Employee Performance Evaluation
Employee performance evaluations are a cornerstone for organizational success. Here’s why:
Boosting Employee Productivity and Accountability
Regular performance evaluations provide essential feedback, guiding employees to hone their strengths and address weaknesses. This process fosters a culture of continuous improvement and accountability, motivating employees to excel.
Strategic Alignment
By aligning individual objectives with company goals, evaluations ensure everyone is working towards the same targets. This synchronization enhances overall organizational performance.
Data-Driven Decisions
Evaluations generate valuable data, informing decisions on promotions, training, and resource allocation. This strategic approach optimizes workforce capabilities.
Enhancing Employee Engagement and Retention
Recognizing achievements and addressing issues through evaluations boosts morale and engagement, leading to higher job satisfaction and reduced turnover.
Identifying Training Needs
Performance reviews highlight skill gaps, enabling targeted training programs. This investment in development enhances the overall skill set, driving innovation and efficiency.
The Benefits of Performance Management from an Employee Perspective
Performance management processes significantly enhance business efficiency, but they also impact employees. When you monitor employee performance, expect changes within the team.
Clear Goals
Performance management helps team members establish clear goals and responsibilities, knowing what’s expected and how to improve.
Increased Motivation
Recognizing and listening to employees boosts morale and engagement, leading to a more motivated team and better customer experiences.
Positive Employee Experience
Regular performance measurement identifies improvement areas, offering personalized learning opportunities, enhancing promotion chances, and skill development.
Stronger Employer Relationships
Performance management focuses on providing resources and support, fostering open and honest communication.
Prompt Action
Systematic evaluations help quickly identify and resolve issues, reducing stress and increasing job satisfaction, improving time management and prioritization skills.
When Is the Right Time to Monitor Employee Performance?
Yesterday. Monitoring employee performance is not a moment, but a continuous process that starts on the first day of work and ends on the day of separation. The frequency of meetings to discuss results and the choice of tracking tools may vary.
Employees often dislike being evaluated. According to a McKinsey survey, most CEOs believe their assessment processes fail to identify top performers, and over half of employees feel their managers do not assess performance accurately. However, this isn’t a reason to abandon performance monitoring. You should remember to:
- Avoid over-monitoring: Choose unobtrusive tools, such as simple clock-in/clock-out functions, rather than complex spreadsheets.
- Balance check-ins: Regular check-ins are essential, but not three times a week. Excessive monitoring can feel oppressive and lower employee morale.
- Provide constructive feedback: Focus on significant milestones rather than every minor mistake. Feedback should be helpful, not overwhelming with criticisms of minor errors.
- Clarify new responsibilities: When an experienced employee is promoted, do not assume they know their new KPIs. Discuss their new duties and expectations clearly. This common oversight can lead to confusion and reduced performance.
- Communicate changes in goals: Inform your team when organizational goals change as the company shifts direction.
Which Employee Performance Monitoring Tools Do You Need? Movo only.
💡 Movo’s solution offers an efficient approach to tracking time and project progress, simplifying performance evaluation for each team member.
Secure Communication: Corporate chat and communication platform ensure regular check-ins, keeping temporary and remote employees aligned with their tasks.
Accurate Time Tracking: Geotagging for mobile employees and a mobile clock prevent time theft.
Reliable Planning Data: Precise task time calculations provide trustworthy data for better planning and time-saving.
HR Efficiency: AI-based planning, leave management, substitutions, and workforce forecasting free HR from repetitive tasks.
Regulatory Compliance: Ensure all shift changes are compliant, supporting work-life balance with quick and efficient swaps.
User-Friendly Interface: Dynamic dashboards offer real-time HR data and analytics.
Integration Options: Wide range of integrations with various tools.
Employee Empowerment: Self-service features and gamification with points, rewards, and challenges enhance employee experience.
Tracking Employee Performance: A Multifaceted Approach
Tracking employee performance is a multifaceted process requiring strategy, tools, and consistent application. Transitioning from purely quantitative methods to a focus on behavior and quality, a well-planned approach incorporating two-way communication and balanced feedback supports company scaling. Establish clear evaluation methods and metrics to notice employee growth and improved relationships.
Utilize valuable tools that integrate time tracking, project management, communication, and data analysis. Provide mobile access to save time, and regularly update processes to reflect changes in the work environment and business conditions.
Regular evaluations, combined with appropriate tools and a supportive environment, lead to a more motivated and productive workforce, driving overall business success.
