How confident are you that you're effectively measuring employee performance?
There are countless ways to measure it, but it's not always abundantly clear which is best. In most cases, there's not a singular 'best' measure of employee performance. The real best measurement is often a collection of measures tailored to your team and even individual employees.
Let's take a moment to examine some different ways organizations measure staff performance, and some of the impacts those methods can have:
Output quantity
The number of units produced, processed, or sold is a simple and objective indicator of performance. In industries where sheer output quantity is prized over quality, this can be a useful way to measure performance. Here's an example:
Employee A produces 10 widgets per week.
Employee B produces 20 widgets per week.
All 30 widgets pass inspection.
According to this quantitative measure of employee performance, Employee B is outperforming employee A by a significant margin.
The problem is that this is not a universally effective measure of performance. In any industry with less objective criteria for success, measuring employee performance based on output can be quite problematic.
Here are a couple striking examples of poor usage of output quantity as a measure of employee performance to illustrate the point:
If a software company is measuring an employee's effectiveness by the number of lines of code they write, it will incentivize employees to crank out a bunch of overly verbose code. In a software development environment, that's far from optimal.
If a painter can paint three houses in a week, but does a poor job of prep work, the paint won't last, and the customer won't be happy.
Measuring employee performance by output can be useful under very specific circumstances, but it's not often the best choice.
Absenteeism
In an age of increased employee autonomy, remote work, and distributed teams, absenteeism is quickly losing its importance as an employee performance metric. If an employee can be just as (or more) productive from home, or in fewer hours, there's little benefit in measuring their performance by how long they can hold down an office chair.
Results-driven organizations focus on outcomes over the process it takes to achieve them.
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Manager appraisal
Manager appraisal is one of the oldest forms of employee performance measurement. It can still be a valuable tool when used effectively, but there are several limitations to this strategy.
First and foremost, managers aren't omniscient. They can't see everything that goes on in an organization; every great contribution; every misdeed, but that's OK.
As much as they try not to be, managers are biased. That's OK, too—it's human nature to live with some degree of bias. This becomes problematic when several other employees' compensation, trajectory, and happiness depend on biased appraisal.
Slow down. This isn't an argument for the elimination of managerial appraisal.
Managers are often keen observers of their team. They're skilled and educated in the art of motivation. They should absolutely be part of the employee performance measurement plan—they just shouldn't be the entire plan.
A manager can't be expected to witness, recognize, and reward every valuable contributions made by every employee. That's too high a bar set, even in a relatively small organization.
Peer appraisal
As an official method of measuring employee performance, peer appraisal is relatively new; however, peer appraisal is something that employees have participated in throughout history. There are a few reasons this performance management system is so effective.
For one, there are more people to distribute the cognitive load associated with witnessing and recognizing positive contributions to the organization. Small but valuable achievements that might be missed by a manager are often seen and appreciated by colleagues closer to the work.
Peer appraisal does an excellent job of distributing bias.
This isn't to say that coworkers don't succumb to the same biases managers do; but that the distribution of each employee's unique biases help to even out the picture overall.
There are several ways to integrate peer appraisal into your employee performance measurements, and peer-to-peer recognition programs are one of the easiest.
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