Key performance indicators or KPIs are used to measure employee performance and provide insights on employee performance and productivity. There is a lot a company can learn by tracking KPIs and this information can be used to improve business functions and processes to ensure high levels of employee productivity as well as employee satisfaction.
There are four key factors to consider when defining KPIs for your employees. Quantity looks at anything that can be quantified, for instance, the number of sales made within a specific period or the number of products manufactured.
The quality of the performance is also important and KPIs like customer feedback and performance errors give employers an idea of the quality of the employee’s performance. Speed of performance or efficiency is another factor to consider when defining a key performance indicator and a KPI for employee speed may look at completion time for a project or task.
Cost is another factor that cannot be ignored and payroll cost, profit per employee, and utilisation rate are a few KPIs to measure this aspect of employee performance.
A KPI meaning in HR will help you define these key performance indicators, but you must also measure and improve them. These are a few KPIs that measure employee performance, with a definition, equation to measure it, and ways to improve the KPI.
Turnover rate
An employee may leave an organisation for various reasons. Involuntary turnover may be a result of poor performance or a violation of organisation policies, while voluntary attrition is when an employee leaves the company by choice, typically to work for a different company.
A high turnover rate brings with it high costs, as replacing an employee can be expensive. This is why high turnover rates are seen in a negative light, making it a key performance indicator any organisation should track.
Turnover rate refers to the percentage of employees that leave the organisation within a certain period of time and can be calculated by dividing the number of employees that left by the average number of employees and then multiplying this value by 100.
The average number of employees can be calculated by subtracting the number of employees at the end by the number of employees at the beginning and dividing it by two.
If your organisation has a high employee turnover rate, there are things you can do to reduce this important KPI for employee performance.
You can start by selecting the right people for the job during the recruitment process, focusing on their expertise, innate talents and how well their goals align with the goals of the organisation. An attractive and competitive benefits package can also encourage employees to stay with the organisation instead of seeking better opportunities.
While appreciating an employee’s efforts and achievements and ensuring work-life balance are important factors as well, the organisation should also provide employees with learning opportunities to enhance their knowledge and learn new skills.
These are a few ways in which you can improve this KPI to reduce the number of persons who leave your organisation and increase employee productivity.
Absenteeism rate KPI for employee performance
Absenteeism KPI meaning in HR looks at chronic or habitual workplace absence that is usually unannounced and unplanned. It does not consider legitimate absences from work, which are to be expected.
Absenteeism may also include situations where an employee is late to work, early to leave, or takes extended lunch breaks and this KPI for employee performance, when high, could impact other personnel in the workplace, undermine the trust between the employer and employee, and point to other factors that affect employee performance and productivity.
Absenteeism rate is calculated by dividing the number of unexcused absences with the total period and then multiplying this value by hundred. This is the percentage of employee absenteeism, which is best when it is close to zero.
If an employee has a high absenteeism rate, the organisation should take steps to improve communication between employees and the employer, so that an employee feels free to talk to their supervisor about a leave of absence even if it is not an emergency. Open channels of communication can reduce the number of unannounced absences from work.
Increased employee engagement and benefits can make an employee feel valued by the company, which may make them less likely to take advantage of their employer by not showing up for work without prior notice.
