Performance Management

How to Improve Employee Performance

We’ve said it before, and we’ll say it again — your people are your business. Even with a strong product or a recognizable brand, your business won’t get far without the right employees to keep it running and in demand. Effective employees drive profitability and growth, which is why businesses place so much importance on performance.

But employee performance is a nuanced topic, and good performance management is about understanding these nuances and addressing them proactively. Here are some in-depth strategies for improving employee performance.

Defining Employee Performance

Employees want to be good at their jobs. Managers want to build powerful teams. And HR teams want to drive business results. To do this, there needs to be a clear understanding of what success looks like at all levels within the organization.

Employee performance is defined by how well an employee executes on responsibilities and contributes as a team member. Strong employee performance can offer great value to businesses by driving quality and efficiency while delivering an improved customer experience

Performance vs. Productivity

When defining employee performance, it’s important to note the distinction between performance and productivity. Productivity is relatively easy to measure — you can assess the productivity of your employees based on the number of goals they meet, as well as how much time and effort is spent to accomplish them. The thought process here is very results-driven, so there is little room for interpretation or subjectivity.

Performance, on the other hand, is not binary — meaning that it can’t be boiled down to a simple “good” or “bad.” In reality, performance encompasses a variety of aspects of an employee’s work that can’t be oversimplified. Some employees enrich the development of their teammates. Others exhibit technical savvy in specialized areas or drive valuable cultural initiatives. These qualities may not translate into numerical benchmarks, but they undeniably contribute to the success and growth of your organization and should be recognized when evaluating your employees’ performance.

Factors That Affect Employee Performance

There are a number of factors that can influence employee performance, and businesses don’t always have control over them. With so much of the employee experience hidden beneath the surface, it’s important to avoid making assumptions about what might be causing an employee to underperform in certain areas. The best way to avoid this is to rely on data and employee engagement to gain an understanding of the root causes for performance issues.

Some common factors that affect employee performance are:

1. Skill Gaps

This one might seem obvious, but skill gaps are a common underlier in performance issues that can take a while to recognize. Even experienced employees will run into situations where they are not equipped with the right skills or knowledge to perform successfully. In these situations, rather than blaming employees for lacking skills, businesses and managers should focus on identifying and bridging the skill gap, either by providing additional training or seeking outside help.

Of course, it’s important for employees to have the right technical skills for their respective roles, but it’s equally important to acknowledge proficiency in soft skills, like negotiating or public speaking. A new manager, for example, may be fully caught up in technical certifications but require some training on leadership and management. Addressing this gap in job competencies is imperative for teams to be successful.

2. Unclear Goals and Responsibilities

If your employees are confused about team and business goals, their performance will inevitably suffer from a lack of focus and direction. When your employees are fixated on individual tasks and deliverables, they miss out on the bigger picture of their role in your organization and are less likely to exceed expectations. Likewise, if your company’s goals are unrealistic, your employees will experience burnout, and their performance will suffer as a result.

Goals that are specific and measurable lead to higher performance compared to goals that are vague and undefined. If your employees seem stuck in the mentality of checking items off a list, maybe it’s time to review your goals for clarity and direction.

3. Inefficient Workflows and Processes

Sloppy workflows are a major drain to your employees’ productivity. If your processes are inefficient or fragmented, it’s likely that they’re hindering your employees from accomplishing their goals. Studies show that 39% of employees think document management processes at their company are broken, and 55% of new hires feel that they lack access to the tools they need during onboarding. That’s a big portion of the workforce who feels unable to perform at their best due to process-related issues.

If you’re unsure whether workflows at your company are enabling or hindering your employees, you can spend some time thinking about how accessible knowledge and information are across your organization. Is there transparency on processes for different departments? Do all decisions need to be approved by one stakeholder? Don’t get complacent — remember to continue evolving these processes over time as business realities and needs change.

4. Physical and Mental Health

We’re more likely to make mistakes and underperform when we’re stressed out or overwhelmed. Even the best employees get sick and need to take breaks in order to continue performing at the expected level. Businesses need to remember that employees are human, and expecting them to be unphased by changes in physical or mental wellbeing is unreasonable. Having a holistic view of employees’ experience can help businesses proactively create an environment that promotes healthy behaviors and expectations.

The Importance of Measuring Employee Performance

When it comes to improving performance, the more you know, the better. Measuring employees’ performance is crucial for understanding how well your company culture, processes, and goals are translating into action. The following are among the many reasons it pays off to keep track of employee performance:

1. Driving Profitability

The insights you get from monitoring employee performance can help inform you in making decisions that drive ROI or profit for your business. A great example of this is the rise in remote and hybrid workforces. By keeping track of employee performance before and after shelter-in-place went into effect, many businesses discovered that employees are actually more productive and satisfied when working from home. As a result of this insight, a growing number of organizations feel comfortable offering flexible working options to their employees and re-thinking their office structure. Decentralizing the workforce allows organizations to save considerably on overhead costs and positively impacts overall profit margins.

2. Identifying High-Performers

Measuring employee performance on an individual level helps businesses identify and nurture their best talent. Companies that keep track of performance indicators, like efficiency, reliability, and collaborativeness, are better equipped to provide fair compensation and recognition to their employees. They’re also more likely to develop high-performers into future leaders and provide support to employees who are struggling to meet expectations. On the other hand, with 40% of employees saying they’d put more effort into their work if their efforts were recognized, businesses that reward exceptional performance are more likely to lose their most valuable employees.

3. Uncovering Workflow Issues

We’ve touched on how ineffective workflows can hinder employee performance, which brings us to another advantage of measuring performance. If employees are spending a disproportionate amount of time on simple tasks or struggling to provide customers with a certain level of care, tracking performance is the first step to understanding what is causing them to fall short of expectations. Workflow issues can look different across teams. For some, it might be a bottleneck caused by a shortage of resources. For others, it could be an unclear division of responsibilities. In most cases, workflow issues are not easily apparent and require insights that can only be gained from consistent performance measurement.

How to Measure Performance

Given how important measuring performance is for businesses, it’s no wonder that organizations are constantly pursuing better ways to evaluate employee performance. There is no single “correct” way to measure employee performance, and deciding which one is best for your team depends on a variety of factors, including size, industry, department function, and product or service type. A few common criteria for evaluating performance are:

  • Deliverables: To what extent does an employee deliver on expectations? Do they bring in a certain number of leads or save a significant amount on costs?
  • Efficiency: How much time and resources does an employee need to meet goals? Can they accomplish more or fewer tasks than the average employee in a given period?
  • Quality: How well does an employee’s output compare to the output of their peers and teammates? Does the employee improve upon quality standards or require excessive quality control?
  • Reliability: Can team members trust this employee to follow through on promises? Is this employee mindful of deadlines and dependencies?
  • Sufficiency: Does this employee require hands-on management to complete tasks? Do they demonstrate a willingness to learn new skills and take on new responsibilities?

In the end, measuring performance effectively is all about asking the right questions. But performance measurement is only part of the equation. Businesses are quickly embracing the idea of performance management, which focuses on turning employee performance measurements into actionable performance improvements.

How to Improve Performance

Improving performance doesn’t have to mean spending a lot of money or completely revamping your company processes from the ground up. There are a few basic principles that can be used to level up your performance management practices.

6 Tips for Managers

  1. Match tasks to skills: Set your employees up for success by giving them responsibilities that play to their strengths. If your employees are lacking the skills needed to perform certain tasks, ramp them up with incremental assignments that will help them develop and take ownership in necessary areas. It’s okay to challenge your employees as long as you’re realistic and mindful of their bandwidth.
  1. Keeps goals clear, focused, and realistic: Instead of assuming that your expectations are obvious, lay them out clearly for your team: What is the anticipated timeline? How should a certain project be prioritized in relation to others? How often would you like to be updated? What benchmarks will be used to measure progress? Make sure that your performance goals are directly within the control of your direct reports and linked to larger business objectives. When in doubt, stick to the OKR or SMART methods for goal-setting.
  1. Don’t micromanage: Maintaining a healthy management style is a valuable lesson for every manager to learn. Micromanagement can negatively impact performance by creating bottlenecks and stifling creativity. On the other hand, thoroughly explaining deadlines and dependencies can boost employees’ sense of purpose and encourage them to perform better. Get comfortable with delegating and sitting out on meetings, and don’t obsess over the details of how things get accomplished — you’ll be surprised to see how your team steps up to new opportunities.
  1. Celebrate success: Acknowledging excellent employee performance doesn’t just motivate high-performers,  it also demonstrates to others the kind of work that is valued and encouraged on your team. Actively recognizing accomplishments on a regular basis creates a work environment where growth and hard work are rewarded. This provides an incentive for employees to improve their performance.
  1. Communicate effectively: Taking the time to establish communication norms can help your team collaborate easily, answer questions quickly, and share feedback productively. For example, some teams prefer to use specific channels for different types of communication (e.g., emails for lengthy discussions, Slack messages for quick updates, video conferencing for meetings and discussions, etc.). Other teams aim to cut out excess meetings and maximize necessary ones by creating meeting agendas, inviting only necessary employees, and ending with clear action items.
  1. Model healthy behavior: It’s in every manager’s best interest to make sure their teams are following healthy practices that support better performance. The best way to do this is to emulate positive behavior for your employees. Exhibit work-life balance by refraining from after-hours communications. Participate wholeheartedly in wellness programs. Encourage “do-not-disturb” blocks for deep work, and provide the option for mental health days. Your employees can’t deliver results when they’re fighting burnout, so show them why taking care of yourself matters.

6 Tips for HR leaders

  1. Engage your workforce: Lack of employee engagement can lead to chronic underperformance and high employee turnover, which can have a negative impact on your business’s bottom line. Engaged employees, on the other hand, are passionate about their work and are actually 22% more productive than their disengaged counterparts. Some things to consider about your company’s employee engagement efforts are: How closely does your leadership interact with the rest of your workforce? Do you hold regular all-hands meetings and give employees the opportunity to ask questions? Are teams aware of major milestones in other departments? Consider running regular pulse surveys to learn about pain points and suggestions for improving employee performance.
  1. Invest in learning and development: As employees progress in their careers, they will need to refresh their skills and knowledge. Businesses can overcome skill gaps by allocating budget for workshops, certifications, courses, and conferences that provide training for both hard and soft skills, and by allowing employees to focus on learning and development during working hours. Giving your employees the chance to upgrade their skills is not only a great way to build engagement and confidence — it’s also a great strategy for improving long-term performance and productivity.
  1. Update your review process: If your company is serious about improving employee performance, it needs to build a consistent and reliable review process that goes beyond the superficial level of traditional annual reviews. Many companies have adopted the 360 performance review model, in which employees are evaluated by themselves, their peers, and their managers. This method provides a balanced view of employee performance that considers behaviors and competencies in addition to goals and results. 360 reviews work best when combined with a culture of ongoing feedback that encourages employees to voice their ideas, opinions, and appreciation for colleagues outside of regular review cycles.
  1. Prioritize morale: If you’re experiencing employee performance issues across your organization, it might be worth re-examining your workforce’s overall job satisfaction. Does your business offer competitive benefits, salaries, and perks? Are your company’s mission and values present in employees’ daily work? Do you need to provide more incentives to boost employee performance? Perform a market analysis to see how your employer brand compares to competitors, or have your employees fill out an anonymous survey. Some companies have successfully implemented PTO, rewards, and wellness programs — which have been shown to improve productivity for 66% of businesses.
  1. Improve your onboarding program: An onboarding program is only successful if it equips new employees with everything they need to be a productive part of your organization. To ensure this, share goals and expectations early on, and educate new hires on company, team, and individual key performance indicators (KPIs). It’s also a good idea to discuss potential growth and advancement opportunities within the organization, so that new employees can enter their current roles with a focus on long-term performance goals. Lastly, consider implementing mentoring or buddy programs for new hires, which have been shown to improve new hire efficiency for 87% of companies.
  1. Use the right tools: For HR teams, improving performance is about driving business results. Communication platforms, project management software, and file storage and sharing programs are all different types of tools that can help teams scale and employees save time. Automation can help streamline workflows for 45% of employee activities, and HR tech can provide analytics and insights for employees to monitor their own performance over time. But just because a solution works for another organization doesn’t mean that it’s the right fit for yours. Focus on finding the best tool (or tools) for the size of your organization and the problems it’s facing.

There’s no quick fix for improving employee performance. But investing in performance management isn’t just a best practice, it’s a prerequisite for business success. Lattice’s HR software empowers your team to share feedback, set and track goals, manage performance reviews, and more  — helping you make a return on that investment even sooner.

An independent study by Forrester Consulting found that Lattice’s software had a three-month payback period and delivered a 195% return on investment. To read the full study, click here. If you’d like to see our platform in action, schedule a demo today.