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KPIs for measuring employee performance

Last updated on
September 24, 2021
KPIs for measuring employee performance

Measuring employee performance is an essential part of assessing your business’ health. Since your people are your biggest asset, you need to ensure everyone is meeting their full potential, with access to the right support and opportunities. Key performance indicators provide teams with useful metrics to try and benchmark progress. We’ve put together some of the best universal KPIs businesses can use to quickly check high-level employee productivity and effectiveness.

The value of employee performance KPIs

Make no mistake—KPIs should not be used in isolation to assess the individual value or contribution of your employees. Performance appraisals depend on a broad application of qualitative and quantitative feedback, which don’t just focus on productivity. Your employees’ worth cannot be reduced down to a number, and that is not the purpose of using KPIs.

These employee KPIs are purely intended as high-level markers to indicate overall employee productivity. They allow businesses to quickly identify potential problems, which are often the result of wider operational issues, resource availability and workflow bottlenecks.

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Universal employee performance KPIs

Here are some of the best universal KPIs we’ve come across:

Revenue per employee

= Revenue/number of employees

This is the most basic indicator of what each employee brings in. It’s useful for ensuring your workforce aren’t costing you more than they’re making you. It’s often used to gauge the profitability of companies.

Profit per employee

= Total profit/number of employees

Similar to the above, this employee performance KPI breaks down raw profitability (free from expenses), which may be useful for companies with remote or freelance workers who don’t incur the same expenses as in-house employees.

Utilization rate

= (Total weekly billable hours logged/total weekly hours logged) x 100

This KPI shows you the overall ratio of directly profitable work to internal cost each employee engages in. Different companies have very different stances on the value relationship between “billable” and “non-billable” time, and we’re of the opinion they are equally important. However you view it, you need to see how much time your team spends on non-billable time to be able to price and plan work competitively.

Average task completion rate

= Total time to complete the same task (across set timeframe)/number of times performed

Again, this should be taken as a rough guide to inform the overall efficiency of your team. It’s useful for understanding how long different phases of a project usually take your employees, so you can improve budget estimates and resource management.

Overtime per employee

= Total hours overtime/number of employees

The average overtime metric can be interpreted in a whole of different ways. Some companies use it to understand the health of their employees—both in terms of engagement and physical wellbeing. But it shouldn’t be taken as an indicator of employee dedication, since “presenteeism” alone doesn’t translate to “quality of work” or “enthusiasm”. If your staff are constantly performing overtime, you might actually need to increase your workforce. In the interests of your company culture—whether you embrace or reject overtime—it’s a good idea to keep an eye on it.

👉 How to track overtime

Employee capacity

= weekly capacity - total hours logged

Employee capacity is a great measure of productive performance. Similar to overtime, it shows you who is close to burnout and who has room to take on a little more work. It’s super helpful for distributing work evenly across your team and understanding who needs extra support.

How to track employee performance KPIs

Many companies work across complex Excel sheets to get the figures to track these employee KPIs. But apps do exist to track them for you in the background.

Automatic time trackers like Timely can track all of the figures needed to work out the above KPIs while you work. They automatically capture all time spent on different tasks and projects, and even break down hours worked by total capacity, overtime, and billable status.

📈 Get real-time KPI updates with automatic time tracking

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