Why is it important to measure employee work performance?

By Ashni walia & Priya Chetty on April 13, 2020

How the employees of an organization perform their daily work has a significant impact on business success and failure. An employee’s work performance involves various aspects such as quality, quantity, work productivity and workplace conduct (Sauermann, 2016). Work performance can typically be defined as how well an individual executes their tasks and responsibilities (Koopmans et al, 2014).

The performance of an employee can be evaluated with respect to the:

  • responsibilities that have been documented,
  • objectives and the goals set,
  • the expectations set with the role,
  • professional or the industry (Pradhan and Jena, 2017).

Based on the type of industry or profession, work performance can be divided into different types such as (Sonnentag and Frese, 2005):

  • Revenue
  • Design
  • Creativity
  • Strategy
  • Decision making
  • Communication
  • Leadership, etc.

Importance of measuring work performance

Measurement of work performance is one of the most important constituents of modern leadership and business management. It is important to measure and manage employee performance since it gives businesses the ability to properly gauge worker efficiency. Furthermore, it helps in identifying productive workers and determining how best to improve the overall productivity of the workplace (Koopmans et al., 2014).

  • Maintaining increased work performance: It helps organizations to keep their employees working at a highly efficient and productive rate. Here the performance measurement ranges from the annual reviews to the quarterly quotas. This ensures that employees will work hard or otherwise face poor evaluations. Once the employees are evaluated they can be encouraged to keep up the good work or through the provision of further training (Lyld, 2014).
  • Determination of the appropriate compensation: In some work environments, performance evaluation is tied to compensation. Outstanding work is rewarded with good pay and bonuses, whereas poor performance can lead to a negative outcome (Akinbowale, Lourens and Jinabhai, 2014).

Tools to measure work performance

There are various tools that are used to measure employees’ work performance. The most common ones are:

  • appraisals,
  • productivity records,
  • 360-degree feedback and,
  • employee-manager structured objectives.
Work performance management tools
Figure 1: Work performance management tools

Performance appraisals

Performance appraisal has proven to be one of the most effective and efficient ways to measure employee performance. Managers and supervisors use a plethora of performance appraisal methods (Giblin, 2019). Performance appraisal methods can be referred to as systematic processes that help to evaluate an employee’s performance in terms of productivity with respect to the pre-determined objectives. This is generally an annual activity that helps employees to reflect on their duties performed. It helps evaluate employee attitudes, personality, behaviour, and stability in their job profile.

Identify key formative works in 50 days with a comprehensive literature survey order. Use 5E25A5EE63214 to get a discount of 5000 for 15001 - 20000 words standard delivery.
Order now

Various areas of application of performance appraisal include compensation, promotion, termination, and test validation. It also fosters better communication between managers and employees, thus leading to stronger professional bonds (Van Dijk and Schodl, 2015). Some of the common performance appraisal methods include:

  • Assessment center method.
  • Behaviourally anchored scale.
  • Critical incident technique.
  • Essay evaluation.
  • Paired comparison method.

Productivity test

This technique is useful while measuring the performance of frontline workers. It helps managers evaluate if employees are meeting their expectations. This technique is also popular in the case of factories and production facilities where work can actually be measured in quantifiable terms (Palvalin and Vuolle, 2016). Various types of productivity tests that can be conducted depending on the requirement of the business type include:

  • Measuring productivity quantitatively.
  • Measuring sales productivity.
  • Measuring service productivity.
  • Measuring time management.
  • Measuring productivity by profit.

360-Degree feedback

This tool is useful in measuring management effectiveness. In order to successfully implement it, the human resources of the organization need to develop training modules on how workers can provide the right feedback and input to other colleagues. It is important to provide training to the evaluators so that they understand the critical elements of the 360-feedback method (Ramdani, Marliani and Rahman, 2019). It typically involves taking feedback about the employee from subordinates, supervisors, peers, and customers who interact with the employee. Further, this could also include employee perception of their duties at the workplace.

Thus, this tool for measuring work performance helps to get insights into employee behaviour, personality, and attitude towards their responsibilities. Although this method is time-consuming, it is cost-effective and comprehensive (Mukhopadhyay and Hrm, 2016). The procedure for the 360-degree performance appraisal is as follows:

360-degree feedback
Figure 2: 360-degree feedback

Management by objectives

This is particularly useful in areas such as employees’ technical skills, interpersonal communication, motivation, and productivity. Here, employees are evaluated based on the proportion of goals they have attained. Under this strategy, leadership goals are responsible for team performance. Further, it ensures that the employee’s objectives do not collide with organizational objectives. However, the key to the success of this tool lies majorly in the employee’s involvement in the creation and attainment of these goals. This can possibly result in better measurement of performance (Kock, 2017). There are four major elements of management by objectives:

  • Goal specificity: The objectives in this strategy should be clear, specific and transparent so that the expected accomplishments are conveyed.
  • Participant’s decision-making: The goals set are not unilateral, i.e. set by the boss and simply assigned to the employee. Rather, in this approach managers and employees jointly set goals and agree on the process of achievement of these goals.
  • An explicit time period: this implies that each objective is time-bound.
  • Performance feedback: the final ingredient is continuous performance feedback so that employees can address their shortcomings proactively.  

Application of work performance tools

With the growing importance of measuring work performance, different businesses have adopted different techniques and tools according to their work culture. For example Google, Hubspot and Facebook place great emphasis on peer reviews. Moreover, they have provided their employees with different social software through which they can facilitate this program. For instance, Facebook has given employees access to software that allows them to recognize, acknowledge and show appreciation for their team members who are doing good work. Thus making sure that every person working in the organization is getting timely feedback from their colleagues.


  • Akinbowale, M. A., Lourens, M. E. and Jinabhai, D. C. (2014) ‘Employee performance measurement and performance appraisal policy in an organisation’, Mediterranean Journal of Social Sciences, 5(9), pp. 342–347. doi: 10.5901/mjss.2014.v5n9p342.
  • Van Dijk, D. and Schodl, M. M. (2015) ‘Performance Appraisal and Evaluation’, International Encyclopedia of the Social & Behavioral Sciences: Second Edition, (December), pp. 716–721. doi: 10.1016/B978-0-08-097086-8.22034-5.
  • Giblin, M. J. (2019) Measuring Individual Performance, Leadership and Management in Police Organizations. doi: 10.4135/9781483398006.n10.
  • Kock, N. (2017) ‘Which is the best way to measure job performance: Self-perceptions or official supervisor evaluations?’, International Journal of e-Collaboration, 13(2), pp. 1–9. doi: 10.4018/IJeC.2017040101.
  • Koopmans, L. et al. (2014) ‘Measuring individual work performance: Identifying and selecting indicators’, Work, 48(2), pp. 229–238. doi: 10.3233/WOR-131659.
  • Lyld, F. (2014) ‘the Importance of Measuring Individual Performance To Increase’, Romania.
  • Mukhopadhyay, K. and Hrm, L. (2016) ‘“ 3 6 0 – D e g r e e A p p r a i s a l ” – A P e r f o r m a n c e A s s e s s m e n t T o o l’, (September 2006).
  • Palvalin, M. and Vuolle, M. (2016) ‘Methods for identifying and measuring the performance impacts of work environment changes’, Journal of Corporate Real Estate, 18(3), pp. 164–179. doi: 10.1108/JCRE-11-2015-0035.
  • Pradhan, R. K. and Jena, L. K. (2017) ‘Employee Performance at Workplace: Conceptual Model and Empirical Validation’, Business Perspectives and Research, 5(1), pp. 69–85. doi: 10.1177/2278533716671630.
  • Ramdani, Z., Marliani, R. and Rahman, A. A. (2019) ‘The individual work performance scale: A psychometric study and its application for employee performance’, Humanities and Social Sciences Reviews, 7(5), pp. 405–414. doi: 10.18510/hssr.2019.7545.
  • Sauermann, J. (2016) Performance measures and worker productivity. Bonn.
  • Sonnentag, S. and Frese, M. (2005) ‘Performance Concepts and Performance Theory’, Psychological Management of Individual Performance, (January), pp. 1–25. doi: 10.1002/0470013419.ch1.