Key Performance Indicators (KPI’s) are an important metric for both employers and employees. By using Specific, Measurable, Achievable, Relevant and Timely (SMART) KPI’s, employers are able to measure how an employee is performing based on clearly defined expectations, targets and budgets and employees are able to clearly understand what is expected of them. KPI’s may include financial, behavioural, engagement or loyalty levels as targets for contributing to the company’s overall success.

We think that an article we read recently based on a book written by Bernard Marr in the UK titled “25 Need to Know Key Performance Indicators” which identifies the five most important employee metrics amongst other KPI’s for business success is well worth a read. In summary it identifies the top five as:

Employee Advocacy Score:

As employers we all trust that the employees we employ and the contractors we supply regular work to, are strong advocates for our business. We involve them in decision making and trust that they believe in what the company is trying to achieve and that they gain a personal satisfaction from being involved and working together to achieve goals that are set. In most cases if they do not share that passion and drive to see the company as a whole succeed then they are likely to be looking elsewhere for employment and are likely to be under performing.

It is the responsibility of an employer to ensure their employees are happy, motivated and performing optimally to everyone’s benefit. If an employee is unhappy and without appropriate motivation and direction as to what is required of them, then quite possibly they aren’t reaching their potential.
A valid question to ask about ‘employee advocacy’ in a staff satisfaction survey is “Would you recommend this company as a great place to work to your friends?” If qualified and experienced people in your employment are happy then it is a good sign that you will be able to attract key talent when you need to. For employers this is a key metric that you should not take lightly, nor overlook.

Employee Engagement

This measures how committed an employee is to contribute to the goals and vision of the company. When an employee is not satisfied they may feel that the company is not moving in the right direction to achieve the goals set or that their skills are not being fully utilised in order to achieve the goals. This means the employee feels ineffective to make the contribution they desire.

A recent Gallup poll showed that companies with a high engagement score are more profitable, on average 3.4 % higher than those with low employee engagement. Employees who are not really engaged just turn up to work and go through the required motions without feeling the desire to go the extra mile to drive success. Disengaged employees may have a higher rate of absenteeism and decreased productivity.
In order to get truthful answers from employees it is often advisable to employ a third party to conduct the surveys to ensure employees have no fear of repercussions with honest answers.

 Absenteeism Factor

It has been researched and proven that that multiple short periods of absenteeism are far more damaging to productivity than single longer term periods where cover can be easily arranged and proper planning of work distribution can be completed.
To calculate this factor called the “Bradford Factor” you take the number of absences over a specified period such as a year and multiply by the number of periods of absence squared. This can be a useful factor to help gauge the effect absenteeism is having on your organisation and can be used to tackle problems by setting limits at which point staff can be called to account for the absenteeism and suitable measures put in place to mitigate the damage. This is often a lot more effective than just counting the sick leave taken.

Human Capital Value Added (HCVA)

This is clear measure of the net financial value that the employee is adding to your business. It is then clear that if an employee’s salary is higher than the value they are adding to the business that it is time to take a look at that employee’s position. This can be a rather cold statistic to consider but it does affect a company’s bottom line.
HCVA can be tricky to calculate for employees working in support roles for an organisation who are not direct revenue generators, but if required an average score for the total number of company employees can be calculated. An accepted method to calculate is to deduct all non-employee related expenses (that is everything other than salaries, sick pay, pensions, bonuses and any other benefit values) from the company’s revenue and divide by the number of employees.
Using an initial calculation as a baseline, a company should be striving to improve this average HCVA score continually.

360 Degree Feedback Score

The process of asking your employees to complete satisfaction and engagement surveys, even when anonymously completed can contain bias.
The 360 degree feedback process involves obtaining the opinion of other co-workers, managers or customers who work alongside and have a stakeholder interest in the performance of the employeebeing reviewed.
Although running 360 degree feedback surveys can be time-expensive to run due to the number of people that need to be surveyed, the results can provide invaluable feedback for both employers and employees.
360 degree feedback tools can act as guidance and motivation as well as direction for further staff development required for the assessed employee.

If you would like to learn more about these (and other) KPIs then check out Bernard Marr’s book ’25 Need-to-Know Key Performance Indicators’  as well as his free online KPI Library.
For more free articles, white papers and case studies, check out the knowledge hub of his website: Knowledge Hub