Employee Key Performance Indicators: Identifying the Vital Signs of Your Business

When you stop and take a good look at your company, what are the key performance indicators for employees? When you return from a vacation, where do you start? What’s going on? Are there any problems? Do you fire up the computer and start going through emails? Your assessment of your company’s state may depend on a few factors.

It’s crucial for entrepreneurs and C-level employees understand the importance of employee performance. Here are some tips on assessing the state of your business—the key is understanding your company’s “vital signs.”

What Are Vital Signs?

employee kpis

One of the best shows for my generation was Emergency 51. It featured two paramedics dealing with medical emergencies at a Los Angeles fire station. Every time the paramedics called the hospital to report on the condition of a patient, they included the vital signs: pulse, blood pressure, condition of pupils, breathing status, and whether the patient was stable. They gave these vital signs to the hospital before even detailing what happened. They knew the doctor needed those vital signs to make an assessment before diagnosing or making any decisions on treatment.

Vital signs of your business

Performance management starts with understanding your company’s vital signs, (or developing them if they don’t already exist). Can everyone on your team identify and monitor KPIs? Or is it up to one person to keep watch and sound the alarm? It’s important that your team’s actions, roles, and responsibilities are aligned to monitor employee KPIs, and then communicate when they are deteriorating. Your team needs to understand what to do to improve them.

Your Key Performance Indicators for Employees

Let’s start with the basics: What are the vital signs for a company? Typically, a company’s vital signs are called key performance indicators (KPIs). There are potentially hundreds of KPIs depending on the type of business.

Employee KPI examples include:

  • Sales activity levels
  • Sales versus plan measurements
  • Revenue per activity
  • Cash levels
  • Days sales outstanding (DSO) of accounts receivable
  • Size or changes to backlog
  • Turnover rate of front line personnel

It’s crucial for you as a leader to determine your company’s relevant vital signs. Once you do, you can better track employee performance and strengthen your team if they’re struggling to reach goals.

Select the right key performance indicators for employees

Determining key performance indicators for employees will require some thought and planning. They should be specific to your company’s needs. For instance, if you’ve ever been blindsided by something such as the amount of overtime, you might want a KPI of overtime.

If there are too many KPIs, however, people may become overwhelmed either preparing them or monitoring them, which could result in the KPIs losing effectiveness. Think back to the vital signs the paramedics gave to the doctors. You should select the key items that would help you immediately make an informed assessment about your company.

Determine where to give more detail

After an initial assessment of key performance indicators for employees, you should next determine how things are going in specific areas of the company. Smaller departments like sales, marketing, production, personnel, and finance can have their specific KPIs which ideally support the company’s KPIs.

In the sales department, the KPIs would have more detail, instead of just overall sales versus plan. The sales’ key performance indicators would be tailored to how the department is organized. If it is organized by region or product type, the sales department KPIs would measure how well each segment is doing.

It’s most important that the KPIs for the different departments give the leaders the vital information they need to assess employee performance. The department’s KPIs would be the measurements that the department head would discuss with the company leadership team and let them know when the department’s KPIs were below target levels and the necessary corrective actions.

Managing employee performance

After each department is equipped with the right measurement tools, the next stage is implementing individual key performance indicators. Each person needs to know their vital signs. For someone in sales, are they generating the sales compared to their plan? Someone in the production department, on the other hand, would need to know if their productivity and scrap rates are in line with plan.

Employee KPIs provide the starting point for an individual to discuss the current situation with their supervisor. When people know all the three levels (company, department, and individual) of vital signs and know each is important, they are more likely to align their actions to improve and sound the alarm when the vital signs are deteriorating.

So now, when returning from vacation, it’ll be easier to know where to start and what your team should communicate so you can assess the situation for the company, department, or individual and determine if there is an emergency.

Performance Management and More with Assured Strategies

At Assured Strategies, we understand the importance of a strong leader. If your business is struggling to name its KPIs or if you’re having a hard time managing your team, explore our services in behavioral coaching. Our coaches can help you identify, track, and reach your business goals.

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