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Employee Evaluation and KPIs for Better Employee Performance

With the rise of technology, the customer expectations have increased, the market trends have been changed, and the competition is getting tougher day by day. Businesses need to be very productive in order to be able to survive in the current market landscape of UAE. An effective performance management is the solution to level up your game and out-perform your competition. Businesses operating in Dubai, Sharjah, Abu Dhabi and other parts of the country are well-aware of the competitiveness of the market and the skyrocketed demands of the customers.

That is why businesses are continuously seeking ways to optimize their internal processes, operations and workforce. Most of the large businesses, enterprises and organizations are using some kind of performance management process, to monitor and improve their performance. Whereas, small and medium sized businesses usually don’t focus much on this aspect. However, the performance management is equally important and effective for all types and sizes of businesses and organizations.

Employee Evaluation and KPIs for Better Employee Performance
Employee Evaluation and KPIs for Better Employee Performance

It is important for a business to understand where they need improvements and how they can leverage the true potential of their workforce to achieve the business goals. For any business employee turnover is a very challenging aspect of HR. Employee retention is connected to employee satisfaction. The employee satisfaction and employee retention is linked to employee engagements. If you are providing a highly engaging environment to your employees where they are given a productive organizational culture, your employee turnover will be less.

See Also: The Role of Performance Management in Employee Engagement

Not only that the employee satisfaction also results in higher customer satisfaction which translates to growth and profitability. When it comes to performance management the employee evaluation and KPIs are they key factors. A good performance management system must provide a comprehensive framework to evaluate employees and monitor their KPIs. In this blog we will discuss how employee evaluation and KPIs can help businesses improve their performance.

For any business employee turnover is a very challenging aspect of HR.
For any business employee turnover is a very challenging aspect of HR.

What is the difference between a KPI and a metric?

People often confuse a KPI and Metric, however, both are different. A KPI or key performance indicator is a high-level indicator which provide context about the business goal and it tells how these goals are related to different business functions. The metric is a low-level perspective and it is used to track activities and processes of different business functions. For example, a business wants to increase its customer satisfaction by 20%. That would be a KPI.

See Also: Employee Performance Management Process with PMS

In order to achieve that goal, different business functions such as customer service team, sales team, marketing, management and various other departments will have to improve their performance, each department or business functions’ metrics will be used to measure the impact of their activities and processes on the high-leave business goal. The best metric to measure customer satisfaction is the NPS or net promoter score, businesses can also use other metrics such as customer satisfaction index to understand their progress towards their goal.

What is the difference between a KPI and a metric?
What is the difference between a KPI and a metric?

How to set KPIs which are aligned with high-level business goals?

The most common mistake businesses made during their performance management campaign is not aligning their KPIs with their high-level business goals. Here are a few key points to consider while creating KPIs:

  1. Start by setting up or analyzing your business goals, for example, if you want to increase sales, or raise customer satisfaction, etc.
  2. Define what you will measure, for example, in case of customer satisfaction you can measure customer satisfaction index, and in case of sales you can measure the increase in sales.
  3. Once you know what you will measure, you have to understand how you can collect that data, for sales, it is easier you can just see how much sales you made, for customer satisfaction you can use NPS or customer happiness gauge, etc.
  4. In order to measure the performance you must have to be able to communicate and relate the KPI to the employees and managers. Your KPI should be able to engage the employees and it should be able to raise the morale and motivate them to put efforts towards achieving it.
  5. Adopting SMART framework is a great way to boost employee engagement. The SMART stands for Scalable, Measurable, Attainable, Realistic and Time-bound. Implementing SMART framework and defining the targets or target range is crucial.
  6. Make an action plan for if the KPI falls outside of the target range, and ensure your action plan is realistic and executable given the circumstances and available tools, workforce or skillsets in hand.
  7. Reviewing and analyzing the performance data is a continuous task, the KPIs should be monitored regularly and the data should be analyzed properly to extract meaningful insight from it.
  8. It is important to fine tune your KPIs over the time to ensure your KPIs deliver value to your business and will remain relevant to your business goals, industry benchmarks and competitive landscape.

If you will follow the above steps it would be much easier to set effective KPIs and if you have to redefine them or improve them you can also do easily with the above mentioned steps.

See Also: Characteristics of a Good Employee Appraisal System

How to set KPIs which are aligned with high-level business goals?
How to set KPIs which are aligned with high-level business goals?

How to collect employee performance data?

When we are measuring something it is usually a number, however, the human performance is not something which can entirely be measured on the bases of hard numbers. Although a good performance management system measures employee performance in quantifiable metrics but this is not as that simple as measuring the weight or height. Here are a few most effective methods of measuring the employee performance:

  • Rating Scales: Using the rating scales or graphical rating scales is one of the best way to measure employee performance in different performance areas. The graphical rating scales are usually sequential numbers such as 1 to 10 or 1 to 5. Usually the rating scales are used to measure the behavioral competencies, for technical competencies other tools are used.
  • Feedbacks: The feedbacks or 360O Feedback is one of the most commonly used and most effective method to collect employee performance data. The 360O Feedback includes taking feedback from supervisor/manager, peers, customers, suppliers, cross-team management, and any other stakeholder and then it is analyzed for common trends and similarities.
  • One-to-One: The one to one meetings are a great way to quickly evaluate the performance and identify the areas of improvement. A good performance management system also facilitate one-on-one meetings and provide intuitive features to document them. The one-on-one meetings and discussions can help bridging the communication gap between the managers and employees which is essential for improving the performance.
  • Management by Objectives: The Management by Objectives or MBO is a process where the employees and the managers define the objectives with mutual understanding. Thus the employees have a better understanding of what is to be expected from them and how the success would be measured. This is a great way to increase employee engagement and improve communication between employees and the managers.
  • Self-Evaluation: The employee self-evaluation is one of the best way to increase employee engagements and motivation. Often employees are more critical of their performance than the managers are. Which help managers to compare the employee’s self-evaluation with their evaluations. It help finding similarities and provide a better understanding of the employee performance, it also help managers to build good employee development and training programs.
  • Check-list Forms: A simple check-list form is a great way to quickly evaluate an employee. It could be used for both behavioral and technical competencies. It will help managers identify the employees with major deficiencies in important performance areas and help them improve training programs and also in forming high-performing teams.

There are several other ways and methods to collect employee performance data, however, the most important thing to understand is that the employee performance management requires continuous monitoring and tracking of the employee performance.

See Also: The Impact of Performance Management on Organizational Culture

How to collect employee performance data?
How to collect employee performance data?

Conclusion

No matter how high-tech or advanced your IT infrastructure, assembly line, production plant or customer service center it, one thing is essential and it is your employees who will be utilizing those technologies and resources to generate value. The value which will help you satisfy and retain your customers and help you build a good brand image. Markets in Dubai, Sharjah, and Abu Dhabi or in any other emirate of the UAE are very competitive, the customers tend to switch very quickly if a business fails to meet their needs or expectations.

In such a tough and competitive market landscape it is important to ensure you are utilizing your resources at their full potential whether it is human resource or non-human resource. That is why the performance management system is so crucial for a businesses of all types and sizes. The two core aspects of performance management are employee evaluation and KPIs. In this blog we have discussed what KPIs are and how businesses can utilize them to harvest the highest possible value form their resources.

If you want to learn more about the subject or if you want our help to implement a highly cost-effective and tailor-made performance management system for your business, please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.

See Also: How to Develop Custom Performance Appraisal System in UAE?

Employee KPIs and Performance Management

Employee KPIs and Performance Management

Businesses in Dubai and all around the UAE are proactively seeking ways to improve productivity and employee efficiency. The market is very competitive and the customer’s expectation are high. In such situation it is crucial to perform well at all touch points to make sure the customer have satisfactory experience. Apart from customer satisfaction, the businesses also need to improve performance in other functions such as production, finance, purchase & supply chain, HR, etc. That is why the employee KPIsand performance management system is critical. Moreover businesses are always seeking ways to prepare themselves for the disruptive events and unprecedented scenarios. The performance management system gets them ready by highlighting their capabilities. Businesses also need to solve the problems and obstacles that their employees are facing on daily bases. By rectifying the most obvious problems, an enterprise or organization can gain significant boost in the employee performance.

Employee KPIs and Performance Management

The performance management system is crucial for any business or organization to achieve its long term goals. These goals are flown from top to bottom and dictates individual, team and department goals which altogether contributes to achieve the organizational goals and objectives. The goals and objectives often interchanged however, they are entirely different. The goals are a stated in broader terms, set for longer period of time and also influenced by the vision and mission of the business. For example the goal of a business could be to become the number 1 service provider in the UAE. That is a goal and it is not quantifiable. However, in order to achieve this goal the objectives are set such as to achieve raise in customer satisfaction by 20%, customer retention by 15% and customer churn rate should be reduced by 30%, and all these goals are quantifiable.

Employee KPIs and Performance Management

Similarly these goals are propagated downwards to the individual employees and the teams. Hence the KPI or Key Performance Indicators are set accordingly. These KPIs will measure the actual and precise amount of growth and progress towards the individual and high-level organizational goals and objectives. The KPIs are a critical part of the performance management.

Importance of Employee KPIs in Improving the Performance

For any business the employees are the greatest asset, it is not only about hiring the right people but it is also about putting them in right places where they can perform well and groom to raise their level of expertise and skills, in order to enhance their performance over the time. That is why it is absolutely necessary for any business to have high performing employees. That is why the employee KPIs are also crucial for business success. A business’s success is a very broader term, it is measured with so many different scales and matrices. However, for any business their success is to achieve their high-level organization goals and objectives. The employee KPIs help managers to obtain higher performance form the available resources to maximize the efficiency which results in success and is considered a key to get desired results. For any business the simplest form to achieve their goals is to simply maximize the performance and minimize the operational cost. Which is only possible when the employees are working at their maximum potential and are able to produce the desired or expected outcomes.

Importance of Employee KPIs in Improving the Performance

The KPIs can not only simplify the evaluation process but it also help businesses in measuring and monitoring both the quality of the work and the quantity of the work as well. The KPIs can be implemented using a performance management system or software, which not only measures the KPIs but also automates the process of collecting the data and on top of that it also allow the managers to easy analyze the data and prepare actionable reports from it. This way the managers can easily learn about the strengths and weaknesses of the employees, they can train them, encourage them or motivate them to boost their performance. Furthermore the employee KPIs are also used for self-assessment, which also increase competitiveness and motivate the employees. That is why the employee KPIs are so crucial for achieving the high performance from the employees which is a key to long term success.

Importance of Employee KPIs in Improving the Performance

Employee Performance Management System

The employee performance management is totally different from just taking a few KPIs. In fact the KPIs are just a part of the overall organizational performance management. The performance management’s primary goal is to increase employee engagements and build a strong relationship between the employees and the business and higher management. It gives employee confidence, it motivates them and it boost their moral which results in higher performance. The employee performance management is a very complex and lengthy process which is being executed over a longer period of time to gradually enhance the employee performance and improve the overall productivity of the business. Measuring all those matrices manually and collecting that much of data is not possible. That is why businesses and organizations use Performance Management Software, or Enterprise Performance Management Systems. The Performance Management System or Software is integrated with different enterprise systems and business tools, in fact it is linked with the central information center of the organization which allow it to gather performance data and measure all sorts of matrices, KPIs, OKRs, and other performance indicators.

Employee Performance Management System

Here are some key features of a performance management system:

  • The user interface and user experience of the system should be very customer friendly
  • The system should have in-built templates and helping materials to help management with initial set up
  • The entire operation should be automated, the data integration and even the basic level of analytical process should be done automatically to facilitate the users
  • The features to aid the employee performance management process and support both employees and the managers with communication, interactions and meetings
  • Features to easily set up goals and objectives and ability to blend and modify goals during the performance management cycle
  • Highly customizable and intuitive feedback collection module to aid, upward, downward, or peer to peer feedback
  • Data sharing, distribution and protection features to allow easy access to the data and to prevent the sensitive data from unnecessary exposure
  • Comprehensive features to aid data analytical, historical stats analysis, comparison and other data processing techniques
  • Flexible design and scalable infrastructure to support customization, upgrade, and scalability in future

Employee Performance Management System

These are some key components of a performance management system. There are several off-the-shelf employee performance management systems and tools branded with different names. However, we always suggest our employees to go for a customized or tailor-made performance management system. Because the customized tool can provide more accurate data and can be very helpful for the users which also enhance the efficiency of the system.

Employee Performance Management Process

The employee performance management process begins with communicating the job roles of the employees. This will tell them what they should do and what the business is expecting from them to deliver. The job role is the day-to-day tasks which require a certain level of competencies both technical and behavioral competencies. The next step of the performance management process is to set quantifiable/measurable, specific, achievable, realistic, and time bound. These goals will then communicated with the managers, H.O.D.s, Line Managers and other senior staff. That top level and senior management then define goals and set up KPIs. Basically the very first step of an employee performance management process is planning. The HR and/or the senior managers sit together, they set the high-level organizational goals, then they set the goals for teams and departments and then they set individual goals.

Employee Performance Management Process

When employees are also engaged in setting goals and making pans their feedback is taken, they feel more empowered and connected to the business. It also give them a sense of personal attachment with the goal and in such situations people tend to perform well. By increasing employee engagements businesses can boost their performance and it also help improving employee retention rates too. Employee engagement is crucial for improving the performance. The feedback is a very important factor in performance management. The employees who receive feedback at least once in a week from the manager are tend to show performance improvement of 8% to 15%. The performance management is not a one-time job, it is a continuous process and it keep improving the employees and their performance. Here is a quick summary of how the performance management starts:

Set Goals and Objectives

The goals and objectives are the most important part of performance management, if the goals and objectives will be realistic and achievable they will encourage employees to perform better to achieve those goals. The high-level organizational goals and objectives are set as per the mission and vision of the business. Then the strategy and planning department make plans to achieve those targets. The same goals and objectives further divided into department, teams and then the individual goals as well. There are several different methods followed to build goals and demands however, the most commonly known methodologies for goals and objectives are SMART and 5As.

Set Goals and Objectives

Strategy and Planning

The goals are based on the vision, desire, projection and expectations, however, the goals doesn’t define themselves and doesn’t tell how business can and should achieve them. For that businesses made strategy and plans. For example if the goal of the business is to become the number one service provider in their niche. Then they need a strategy and a plan to become the top leader in the market. For example, the business might need 30% increase in the customer satisfaction, in order to achieve that 30% the business will have to improve the service delivery process, the customer waiting experience and the customer sales staff and a lot many other things. That is how the strategy and plans are built. The same applied to the departments, teams and even individual employees as well.

Strategy and Planning

Set Up KPIs and Performance Matrices

Once the strategy and plan is made, the management should set measuring matrices and performance indicators which will tell how successful or unsuccessful the business was during the performance cycle. There are several different types of the performance matrices however, here are the few most commonly used performance matrices:

  • Key Performance Indicator – KPI
  • Key Responsibility Areas – KRA
  • Objective and Key Results – OKR
  • Balanced Score Card – BSCs

Businesses can easily measure and monitor performance at any level using the above mentioned matrices. The KPI or Key Performance Indicator is the most widely used performance indicator.

Set Up KPIs and Performance Matrices

Real-time Monitoring

The best thing about a performance management system is that it enable businesses to monitor performance in real-time. The managers can monitor the performance of their subordinates in real-time. Which provide them advantage of making quick adjustments, make course corrections and prepare for the unexpected scenarios. As soon as an employee deviates from their expected path, or their performance slows down, the manager can immediately know about it. This provide enough space for the manager to take appropriate action to resolve the problems and to boost the performance. The employee performance management system also enable the management to effectively and efficiently handle unexpected situations and identify the areas of improvement. This help businesses in dealing with the challenges employees are facing and also help businesses gain their trust.

Real-time Monitoring

Conclusion

Businesses in Dubai and all around the UAE are facing several challenges which require them to perform at maximum operational efficiency to ensure customer satisfaction and cost-effectiveness. The employee KPI or key performance indicators are used to measure the performance of the employee, the performance management system is used to deal with challenges and obstacles your employees are facing on daily bases. The main objective is to increase employee engagements, boost communication and encourage feedbacks. The performance management system is capable of monitoring employees directly and it can also be linked with other enterprise systems and solutions. The main objective of the performance management system is to effectively communicate the job role, individual & high-level goals and closely monitor the performance of the employees. This can significantly boost the performance of the businesses. RSI Concepts is a leading name in Employee Performance Management System (EPMS), if you need any help or want to learn more about the subject, please feel free to contact us through our Contact Us page or leave a comment in the comment box below and we will get in touch with you soon.

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