Ultimate guide to managing [Employee Performance] in the best way

Ultimate guide to managing [Employee Performance] in the best way

Employee performance is the number one factor that affects the productivity of a company. The very first question top management thinks of when it comes to employee performance is, what can they do to improve it.

But one thing that oft  en gets left out is what are the factors that play a role in employee performance, to begin with. Once you have the answer to this question, you will be able to make changes in them to improve performance drastically!

So, in this blog, I will cover,

What is Performance Management?

Performance Management (PM) is a process that aims to ensure that a set of activities and outcomes achieve organizational objectives efficiently and effectively and it focuses on the performance of employees and sees if they meet the expectations set for their positions.

Performance management can focus on the performance of an organization, department, employees, or processes used to perform certain tasks. In practice, the use of performance management is to perform an appraisal of employees and the development of management. 

So then, what is employee performance?

Put simply, employee performance is how a member of staff fulfils the duties of their role, completes required tasks, and behaves in the workplace. Measurements of performance include the quality, quantity, and efficiency of work. When leaders monitor the performance of employees. They can paint a picture of how the business is running. This not only helps to highlight what companies could be doing in the present to improve their business, but this information also feeds into future growth plans.

However, placing a focus on employee performance doesn’t just benefit the business. It helps employees to reach their full potential, while also improving overall performance – which can have positive effects on morale and the quality of work produced.

Lastly, but most importantly, when employees are underperforming, customers may be dissatisfied. As a result, the entire business may be affected by poor performance and struggle to reach goals.


How can you measure Employee Performance?

Every role is different so the metrics used to measure employee performance will ultimately depend on the type of business the company and employees operate in. But in general, the main ways to gauge performance are:

Quality of work

The Standard of work produced is a key performance indicator.

Are employees putting in maximum effort to ensure high-quality results? Are performance objectives being met? Quality of work provides the basis to analyze all other elements of their performance.

Speed and efficiency

Looking at how much employees accomplish in an average week, month or quarter, how does this match up to your expectations? Are deadlines met, vastly improved on, or is time wasted? Are corners being cut to produce work quickly? Efficiency is the result of maximum output at least cost so this is vital to be aware of within your company.

Trust and consistency

Ask yourself if you trust your employees to do all their work to a high standard and deliver it on time. Do they work independently or do you feel that you often have to step in? Do they consistently display company values? Are they punctual and present to the expected standard?

High-performing employees can be trusted with autonomy and continue to produce strong results without much supervision. Keep these performance metrics in mind when conducting individual employee performance reviews.

The specifics of these metrics will differ depending on the specific job function. The goals of all your employees (and their supervisors) should align with those of the organization (and each other!). By establishing clear objectives and timelines for achieving them, each employee should understand exactly what is expected of them.

Why is it important to measure employee performance?

Tracking employee performance is important for multiple reasons. Some of them are…

  1. It helps you understand whether or not the employee is on track with reaching his or her goal
  2. You will be able to track the percentage of goals that your employees are meeting much
  3. Tracking employee performance will give you a clear idea of how many employees are underperforming
  4. Similarly, you will also be able to keep track of your top performers
  5. Handing out salary increments based on performance becomes easier

You can check out our performance based pay hike (salary increment) calculator by clicking here!

What Factors Influence Employee Performance?

Employees don’t perform in a vacuum. Certain factors like the employer, immediate manager or supervisor, personal preferences, employee’s career aspirations and many other factors affect employee performance. We are not going to consider factors that hinder employee performance like personal problems because the organization cannot eliminate them completely.

Alternatively, we are focusing on factors that are in the control of companies. Companies being thoughtful about how to engage their employees can make all the difference. There’s no simple or easy way but there are certain key areas that employers can focus on to create powerful outcomes.

Let’s discuss the two primary factors that majorly affect employee performance.

1. Employee Engagement affects employee performance

The Workplace Research Foundation found a 10% increase in employee engagement can increase profits by $2,400 per employee. The numbers overwhelmingly prove employee engagement plays a vital role in revenue generation. But what constitutes employee engagement?

Factors that affect employee engagement and motivation  

  • Positive environment

The first step is checking if your work environment is create a positive working environment. This would mean, a workplace where feedback is encouraged and achievable goals are set for all. You can see significant productivity improvement if your organization has a positive work environment.

Setting unclear and unattainable goals usually results in lower productivity and loss of individual motivation.

  • Quick action on employee issues

The secret to any organization’s success is always communication. As a manager or founder, you have to power to define these communication protocols. Not just that, having open door policies in place will help increase workplace communication too. The executives should promote open communication across all levels. Team members should feel that they can raise issues. Not just that, employees should know that if they have a problem, their managers will act on them.

When employees feel directly connected to the organization, engagement increases and hence, productivity increases.

  • Work versus personal life balance

Yes, while employee engagement may seem like a factor where you keep employees constantly engaged, you need to know when to let go and give them personal time as well!

Employees often tend to overwork themselves, especially in a work-from-home setup. Very often, employees don’t even have a defined, clear line between work and home schedules. Ideally, they need to prioritize their mental health as much as their work. One way is that you can break down large tasks into smaller goals before assigning them to your employees.

Similarly, strategizing and planning one’s day can also be helpful. Learn about how to increase employee engagement in startups by clicking here

  • Company culture –

Employee engagement doesn’t happen all of a sudden, a company must focus on employee needs & wants over time and should drive a strong culture. Let’s have a look at some facts and discourse on the buzzword company morale and culture.

According to Glassdoor’s Culture Survey, 2019 report over 77% of adults across four countries (the United States, France, UK, and Germany) consider a company’s culture as the priority while applying for a job and more than 50% of respondents said that company culture is more important than salary when it comes to job satisfaction.

Culture is the backbone of the company that helps in employee retention and motivates your employee performance.

Company culture empowers employees to defy the odds and achieve greater performance. Also, culture needs to be cultivated regularly for long-term benefits, it’s not a one-time objective to achieve. The more the company invests in culture the more employees become engaged.

employee performance

2. Training and Development

Training focuses on immediate improvements such as mastering a change in your business software whereas development focuses on long-term objectives. Employee performance depends on the training he/she gets from the company.

Companies have different levels of training and employee performance expectations depending upon the situation. Moreover, training doesn’t end at onboarding.

If employees receive no training after their first few weeks on their job, they will feel like the company isn’t investing in their development.

Companies must provide a seamless learning environment for employees which fosters employee career advancement.

Factors that affect work performance  

  • Growth and development impact employee performance

As a manager and leader, there are a number of ways in which you can influence workplace productivity. They include various variables, such as the availability of training and growth opportunities. Employees need to think that their employers care about their professional growth and provide them with adequate learning and development.

  • Empowerment, coaching and motivation from leadership

Appreciation and support from managers and senior leaders can be extremely motivating for employees, thereby resulting in more productivity. Motivation, regularly, will empower employees to take on more opportunities, leading to not only increased productivity but also personal growth. 

  • Communication and collaboration and their effects on employee performance

You must have heard about peer-to-peer learning right? It is a massive part of employee learning and development Communication and collaboration are two key factors associated with employee learning and development at the workplace.

A constant flow of communication is necessary to keep teams updated, informed, and engaged. Lack of communication results in silos, therefore reducing employees’ ability to learn from each other. Collaboration, on the other hand, encourages employees to engage and innovate in the workplace. And engagement, combined with motivation, can lead to more productivity. 

How can you improve employee performance?

While I have given a brief of a few factors that improve employee performance, you can Click here for a detailed blog on how to improve the performance of your employees.

1) Investigate why the employee isn’t meeting expectations

The list of reasons why an employee isn’t performing as expected can be endless. If you don’t get to the bottom of these, it’s almost impossible to take the right steps to improve them.

Start with an open and frank discussion and find out if the employee feels anything is affecting their ability to perform. It could be that they feel the business is holding them back from reaching their full potential, they could be lacking resources, don’t feel aligned with company goals, or aren’t receiving the proper guidance or training. It’s also possible that factors affecting work may be unrelated to work itself.

Personal reasons such as an employee may be going through a time of poor mental well-being or experiencing issues in their personal life can also impact performance.

By using practical and accurate time-tracking software within your industry, you can gain insights into how time is being utilized, identify areas of improvement, and ensure deadlines are met. If you are looking for functional time-tracking platforms, read this post for recommendations and insights on the top options available in the market.

2) Encourage continuous communication

Clear and effective communication is essential for improving employee performance. Receiving negative feedback can be challenging and uncomfortable — both for management and the employee — but it’s important to foster an environment of transparency and direct communication. It’s unrealistic to expect employees to change and improve without giving them concrete feedback and specific action points to work on.

Also, you should encourage team members to communicate their perspectives, regarding progress, deadlines, expectations, and available resources.

A culture that rewards collaboration and sharing ideas can improve the energy on your team, help you cultivate innovation, and improve performance levels for everyone.

3) Discuss both high and low aspects of employee performance

Performance reviews shouldn’t just be focused on what’s not going well – even though improvement is your end goal. Focusing just on areas for improvement could knock your employees’ confidence and could lead to resentment if they feel that their hard work in other areas is going unnoticed.

Be sure to let your employees know what they’re doing well and point out any stand-out moments in performance since their last review, as well as the areas for development. When you recognize their hard work, employees will know that they’re valued members of the team and will continue to put this effort into their work. Nevertheless, when you do discuss challenges and areas for development, you have to be clear about any problems.

The easy road would be to ‘soften the blow’, but by not being clear on what the problem is exactly, you’ll make any problems worse in the long term and the relationship could become more hostile.

Make sure that the employee leaves the conversation with a clear understanding of their strengths, any areas for development, and the steps that should be taken to get there.

4) Provide consistent feedback as they progress

The most efficient way to improve employee performance is to provide regular feedback. By frequently feeding back, you can help employees stay on track as they work to improve, rather than keeping issues to collect while you wait for an annual formal review. By then, the effects of poor performance may have been detrimental to the team or business.

Frequent feedback helps employees to become more comfortable with receiving feedback in general. It can also stop any negative connotations that people associate with receiving feedback. That’s because frequent feedback is more likely to be a mix of positive and constructive comments, which can help to keep employees engaged and encouraged rather than disheartened.

It’s important for performance improvement that employees know where they stand and how they’re progressing. They’ll then be more aware of how they’re doing. Your employees will also know what steps they need to take to improve further.

5) Job satisfaction has a huge impact on employee performance

Often, employees only want to put in what they’re getting out of a role. If they feel they aren’t getting paid enough, aren’t getting the benefits that they could be getting elsewhere, or feel like their workplace is lacking in resources – they may not try as hard to perform.

Take a look at rival employers to ensure you are offering the right benefits to keep your staff happy, engaged and productive.

How can a concept like OKR contribute to Employee Performance Management?

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Continuous process management and OKR process elements are closely aligned with each other.

Although OKRs revolve around organizational and team-level performance, continuous performance management includes individual employee performance following are the basic elements as a foundation for continuous performance management.

  • Continued recognition and appreciation
  •  Regular conversations about goals
  •  Teaching

Performance and development goals. Of course, you need to include how key outcomes in discussions around performance and development. When key results fall significantly short of expectations, it is important to examine the reasons from a performance perspective, rather than blaming this on the performance of the employee.

OKRs are a great way to understand where things went wrong and hence make a positive difference in the performance of the employee.


Factors like both physical, emotional, and practical determine the Employee’s performance.

To motivate and empower your employees to achieve, grow, and succeed you will have to cultivate healthy open communication, create concrete goals, and provide ongoing training.