Key takeaways
In this article…
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:
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 | ||
| 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 | ||
| 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 | ||
| 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 | ||
| 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 | ||
| 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 | ||
| 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 | ||
| 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 | ||
| 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.
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:
You can explore our favorites or access a full list of solutions on our Performance Management Software Guide page.
Or check out our overview video below!
