Employee Performance Measurement Tools

As a small business owner, you depend on your employees to reach optimum performance levels, especially when many employees are cross-trained to perform distinctly different job functions. For instance, if you can't afford to hire an executive assistant and payroll clerk when you start your business, hire someone experienced enough to function in both roles.

You want someone who can function in both roles at top performance, and you want to be able to measure that employee's performance. There are several ways to measure performance, with common performance measurement tools including annual reviews, productivity records, 360-degree feedback and employee-manager structured objectives.

What Are Performance Appraisals?

An employee performance appraisal is one of the most comprehensive performance measurement methods to measure how well your company's work force is performing. Managers and supervisors can use a wide variety of performance appraisal methods and forms during an annual employee evaluation.

For example, you can ask the employee to review her job description to determine if she met all of her responsibilities. This is why detailed job descriptions are so important; they help employees stay on track during the year because they know exactly what's expected of them and how they will be evaluated at the end of the year. Adding Key Performance Indicators to job descriptions helps make annual employee evaluations more objective and less subject to the personal thoughts of a manager.

Regardless of the type of performance appraisal your company uses, your goal should be to improve managers' and employees' perception of the value and importance of measuring performance.

Use Productivity Tests

If your company is primarily concerned with measuring productivity of front-line workers, it's important to use productivity tests to determine if your employees are meeting your expectations. Productivity tests are common in factories and production facilities where the work can be literally measured in quantifiable terms.

Your company's quality assurance procedures can help in measuring employee performance qualitatively, although a summary of W. Edwards Deming's management philosophy cautions about relying solely on quality assurance measurements.

360-Degree Feedback

The practice of using 360-degree feedback is helpful in measuring management's effectiveness, according to Universal Class. For 360-degree feedback to be useful to your organization, your human resources leader and training specialist need to develop training modules for employees, supervisors and managers on how to provide objective feedback and input regarding colleagues.

Obtaining 360-degree feedback skillfully requires careful consideration of all feedback, regardless of the source. It's important to provide training because evaluators employees without performance management experience may not understand the critical element of 360-feedback: objectivity. 360-degree feedback can be extremely useful in measuring managers' performance levels, particularly in areas concerning employee feedback and leadership skills.

Management by Objectives

A typical appraisal or evaluation measures performance in areas such as the employee's technical skills, or skill set, interpersonal communication, motivation and productivity. Some employees are also evaluated according to what percentages of their goals they attained during the year–this is generally where Management by Objectives are best utilized.

MBOs identify goals and professionals responsible for leading a workgroup, explains the Corporate Finance Institute. In addition, MBOs track progress toward completion of each objective, and ensures the employee objectives correlate to the organization's objective. The key to establishing solid MBOs is employee involvement in creating goals and objectives.

When you have employee input in developing goals and appropriate action plans, the results of MBOs may be a better measurement of performance because there is employee ownership of those goals and objectives.