If annual reviews are your only tool for performance measurement, it’s probably time to make a change to employee performance analytics. 

Traditional employee reviews are shockingly outdated. They aren’t going to cut it if you want a performance-driven workforce. Not only are reviews usually measured annually (which means loads of unnecessary work for your managers), but they don't capture real-time data or offer timely feedback. 

This, to be honest, is way below the standards of a tech-driven world. 

Employee performance analytics is the new gold standard in performance measurement. And the good news is that upgrading to this standard is relatively straightforward. 

When you have access to software that can provide constant, real-time feedback without your managers breaking a sweat, it makes high-performing talent management and measurement strategies a breeze to implement and maintain.

In this article, we go through the basics of employee performance analytics: what it is, why it’s so important if you want a high-achieving team, and how to choose the right KPIs to analyze.

What is employee performance analytics?

Employee performance analytics is the act of analyzing HR data to measure how your employees are performing against KPIs. These KPIs are role-specific performance goals, metrics, or standards that are tied to your larger business goals. 

Like any kind of data-driven approach, this kind of HR data analytics strategy is important because it removes biases, personal preference, and guesswork. It makes your decisions more consistent, accurate, and informed — the best way to improve how you do business. 

How to analyze employee performance

There are four broad categories you can use to analyze employee performance: 

1. Quantity 
2. Quality
3. Efficiency
4. Organizational performance

Of course, each category will only tell you so much, so a combination approach based on the specific insights you're seeking will give you the most well-rounded and in-depth information. In the next section, we’ll go into more detail about each category. 

4 KPI-based approaches for employee performance

All of these KPIs are great indicators of how your employees are tracking. They work in tandem with each other, but they are best measured individually. This will allow you to achieve the most accurate measurements and detailed, actionable employee insights. 

While breaking down your employee performance analytics into separate KPIs may feel overly meticulous, it’s the most efficient way to assess all the separate parts to see exactly where your employee performance is strongest, and where it is lacking and letting down the whole. 

1. Quantity 

Measuring quantity KPIs is measuring the sheer volume side of things. The quantity-based KPIs you choose will depend on your industry and will likely also vary from department to department. 

Quantity-based KPIs include:

• Sales closed 
• Calls made 
• Contracts signed 
• Units produced 
• Active leads acquired 
• Projects and tasks completed 

Quantity is a good indicator of how efficient your employees are over a long period of time, if you average out their numbers. Plus, it gives you a black-and-white way to compare your employees' performance: clear numbers against numbers. 

2. Quality

Quality assesses to what standard your employees are completing their tasks. Quality can be measured through KPIs like: 

• Product defects 
• Client feedback
• Number of errors 
• Customer reviews 
• Peer reviews 

The relationship between quality and process 

At its core, quality is directly related to process. It’s impossible to fix quality metrics without also taking a deep dive into process.

If you really want to change employee quality outcomes, you first need to address any issues related to process metrics like maker time, meeting load, manager 1:1s, skip-level 1:1s, time in the role, and the number of job changes. 

These metrics are your breadcrumb trail to the root problem.

For example, maker time is important for quality because it's the time when productive work is actually being done. It takes almost 30 minutes to get into a state of productive, deep focus where maker time can take place. 

If your employees are consistently being pulled out of this focus state due to an excessive meeting load or jumping from role to role, no wonder their quality metrics are suffering. The more you drill down into employee processes and the factors influencing performance, the more specific your metrics can become. 

3. Efficiency

Efficiency ties together your quantity and quality metrics – measuring the quantity of time, money, and resources it takes your organization and its employees to meet specific quality metrics. Efficiency metrics come into play when you start piecing together your own performance measurement plan. 

This is done by combining the specific metrics you need to measure for the type of insight you’re seeking. You can do so by combining the different KPIs we've talked about above or finding your own more relevant ones.

If you’re struggling to find the right KPIs, it's good to remember that efficiency has a lot to do with engagement and productivity – which can be measured with metrics like out-of-office days, absent days, and goal attainment percentage. 

Engaged employees have a 41% lower absenteeism rate than disengaged employees. And, of course, absent employees are going to get through less, so their goal attainment percentage will be lower. 

So, as you set out to measure employee efficiency, start pulling the thread by looking at these simple engagement and productivity metrics. Based on what you find, go deeper into the process metrics that may be the foundation of the issue.  

4. Organizational performance

Organizational performance KPIs are going to give you a broader idea of how your workforce is performing as a whole.

Metrics like profit per full-time equivalent (FTE) or revenue per FTE will give you insight into the financial status of your organization and how your people resources stack up. These metrics are calculated by adding up your total profit or total revenue and dividing by FTE.

Organizational performance is an important piece to the puzzle. It gives you a birds-eye-view into whether or not your people resources are adequately supporting your larger performance goals. 

But remember that organizational performance KPIs are not as specific or as actionable as insights regarding individual employees. To truly measure employee performance, employee-centric metrics (those related to quality, quantity, and efficiency) should be central to your strategy. 

Using talent analytics as part of your performance measurement strategy

All of this sounds well and good. But not every company has access to a data analyst who can gather and make sense of employee performance metrics.

When you use a talent analytics platform as part of your employee performance measurement strategy, you don't have to go seeking clues or combing through mountains of raw data. You don’t even need to be proficient in data analytics. 

Instead, you have real-time, AI-driven insight into all relevant performance-based metrics. An AI-powered talent analytics platform gives you straightforward answers about employee-centric metrics whenever you need them.

You’ll have access to a broad range of information about your workforce at your fingertips — everything from productivity and talent acquisition, to performance management and risk management. 

Yet, these insights come to nothing without actionable analysis. So the cherry on top is that talent analytics also uses machine learning to alert you about early warning signs and deliver recommended interventions at every stage of the game. 

Building a performance-driven workforce with Praisidio

Praisidio’s talent analytics platform is a one-stop shop for performance management and workforce planning. 

To give you talent insights on demand, Praisidio seamlessly combines your people-related business data, then applies advanced analytics and generative AI. It delivers accurate, instant answers about your workforce whenever you have a question. 

With real-time information about the productivity of your existing team, plus the talent acquisition insights to help you build an even stronger team, Praisidio does everything to ensure you have the best possible workforce that performs at its peak.

Book a demo to see how Praisidio can help you improve your employee performance.

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FAQs

Q: What are the potential challenges or barriers a company might face when implementing employee performance analytics, especially in terms of data collection and interpretation?

A: Implementing employee performance analytics may encounter challenges related to data collection, especially if the necessary data isn't readily available or if existing systems are not integrated. Interpretation of the data can also pose difficulties, as it requires expertise in data analysis and understanding of the specific context of the organization. Additionally, resistance from employees or managers accustomed to traditional review methods could hinder adoption. Learn more abut how to improve performance and productivity with instant AI analysis and insights.

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Q: How does employee performance analytics impact employee morale and satisfaction, and are there any strategies suggested in the article for managing potential concerns in this area?

A: Employee performance analytics can have implications for morale and satisfaction, particularly if employees perceive it as overly intrusive or if they feel their performance is constantly under scrutiny. To manage these concerns, it's essential for organizations to transparently communicate the purpose and benefits of analytics, ensure data privacy and confidentiality, and involve employees in the process, allowing them to provide feedback and suggestions for improvement. Read our guide on how to build your people analytics strategy.

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Q: Can the effectiveness of employee performance analytics vary depending on the size or industry of the company, and are there any specific considerations or adjustments recommended for different organizational contexts?

A: The effectiveness of employee performance analytics may indeed vary based on factors such as the size and industry of the company. Smaller organizations might face challenges related to limited resources for data collection and analysis, while larger companies might grapple with complexities in managing vast amounts of data. Industry-specific metrics and benchmarks may also need to be considered to ensure relevance and accuracy in performance measurement. Therefore, customization and adaptation of analytics approaches according to the unique characteristics of each organization are crucial for maximizing effectiveness.

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