Vexxit Business

Employment Forecasting

Developing Employee Performance Goals & Metrics

Clock5 min. read
byVexxit Expert onSeptember 30, 2020

Employee performance directly impacts the overall health of your business and is a critical component of business success. Employee performance measurement evaluates an individual employee’s work (productivity) against the business goals and objectives established for the company.

The performance metrics you use for each employee (or group of employees) will depend on these business goals and objectives. While many small businesses can operate effectively without formally measuring employee performance, if you’ve set a growth objective for your company, measuring and monitoring productivity becomes indispensable. 

Benefits of Goal Setting

By establishing employee performance goals (short and/or long-term objectives), you give your employees a sense of purpose and accomplishment. Each employee knows what is expected of them and can take ownership of their performance. Studies have shown that setting achievable goals for employees motivates them to improve performance and prioritize work. Employees that feel accomplished feel more engaged in the business and tend to have higher job satisfaction. Ultimately, better employee performance leads to an improved company bottom-line. 

Key Steps to Establishing Employee Performance Goals and Metrics

Setting employee performance goals and metrics doesn’t have to be an arduous task. Once you have identified your key business drivers (those key inputs and activities that drive your operational and financial results), it becomes a simple matter of aligning employee work activity to those key drivers. As an example, if you have set growth revenue targets, then setting monthly sales objectives would be a valuable key performance indicator (KPI) to establish for your sales teams. Depending on your business, you could use other quantifiable metrics such as the amount of time spent to complete an activity, the number of widgets produced in a specified period, time spent on a project, the number of customer returns or the number of complaints received. Use these next steps to help set valuable, quantifiable, and rewarding employee goals:

Step 1: Review Business Goals with Employees

Sharing your overall business objectives with employees helps them better understand your goals for the business and how they can impact success. Every business should have a business plan (formal or informal) describing what you plan to achieve and how you plan to achieve it – it’s your strategy for success. Share it. Let your employees know your plans and how they can contribute. 

Step 2: Involve Employees in Goal Setting

When employees are involved in goal setting, they become accountable and motivated to achieve the targets that they helped set. Involving employees in goal setting also makes them feel part of the process. They feel heard and acknowledged. They may also be able to spot challenges or issues that you might have missed. Bottom-line, involved employees are engaged employees and engaged employees are driven to succeed.  

Step 3: Use SMART Goals and Metrics

SMART is an acronym for “specific, measurable, achievable, realistic or relevant and timely”. Using the SMART method (attributed to Peter Drucker’s Management by Objectives concept), of goal setting allows you to clarify your direction, focus efforts and make better use of your time and resources. When applying the SMART method focus on:

  • Specific-identify the goal, what needs to be achieved and by whom. Specific goals or targets should be set for individual employees, as well as teams. Goals should be easy to analyze and monitor. 

  • Measurable-the goals set should be quantifiable, which will allow you to track successes and provide insights into what’s working and what’s not. 

  • Achievable-the goals established should be achievable and attainable. Goals should be stretched to challenge employees but defined well enough to ensure that they can be achieved with the resources and capabilities you have. 

  • Realistic-set goals that can realistically be achieved given your available resources and time. Make sure goals are relevant to your overall business objectives.

  • Timely-the timeframe in which a goal or set of goals are to be achieved.

Step 4: Monitor and Evaluate Results

Once your SMART goals and metrics are established, you can regularly monitor and evaluate the results achieved. Results will help guide your strategic planning, allocate or re-allocate resources to improve performance or implement new programs, systems, or projects to better achieve your overall business objectives. 

One of our most valuable assets as business owners, are the people we employ. Once we understand how employees bring value to the company, we can create realistic performance standards and measurements that help drive productivity and ultimately, the success of your business. Setting employee performance goals and metrics helps to boost employee engagement and productivity. Employees have a sense of purpose and are more productive. Engaged employees are also happier. They are actively involved in the workplace, feel more job satisfaction, and they are committed to the success of your company. 

Find a Human Resource Consultant

To implement proper employee performance measurements within your company or organization, connect with a Human Resources consultant today.

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