Companies have always used metrics to measure employee performance. We record outputs, error rates, absenteeism. We rank employee efforts against corporate-level KPIs like customer satisfaction and overall profitability. Nearly all managers used these metrics to evaluate employees on a biannual basis—at least, until we learned that frequent 360-degree feedback tends to work better. After years of hiring and firing based on metrics, quantitative employee reviews are now falling out of favor.
Recent reports show that less than half of employers believe their performance management programs are effective. In fact, over 50% of employers have changed or plan to change the annual performance review cycle in favor of more frequent manager touchpoints.
We now realize that metrics tend to miss the human element—which makes them less useful for determining continued employment. However, they can still be incredible tools for motivating and tracking performance. When it comes to employee productivity, it’s time to shift how we’re thinking about KPIs. How are we using metrics to incentivize, recognize, and reward employees?
Good Incentive Programs Run On Good Metrics
The operative word here is “good.”
Most negative outcomes are easy to measure. Errors, low quality products, lost sales, overtime hours, sick days, and so on. The positive metrics are infinitely more valuable and much harder to measure.
How do you adequately measure things like initiative? Potential? Innovation? Answering these questions is the key to creating an incentive program that inspires employees to be more effective, efficient, and growth-oriented.
When designing a powerful employee incentive program, you need to be prepared to reward the right behaviors. Identify which employee actions have the biggest impact on your company. Take things further and reward the behaviors have the biggest impact on your customers.
All too often, companies choose to reward secondary behaviors, simply because they’re easier to measure. They build entire incentive programs on quantitative outcome metrics rather than qualitative process metrics. In a call center environment, this might look like a points-based system that rewards employees based on service level instead of first call resolutions or net promoter scores.
Your employees know what’s really important. If you’re not rewarding the right things, they’ll quickly notice the disconnect and disengage from the program. But if you choose to reward good metrics, you’ll have a better chance at aligning your entire team with your greater company goals.
How to Choose the Right Metrics for Your Team
“What if I don’t have a good metric?”
We get this question all the time from CEOs and HR managers who are looking to revamp their employee incentive programs. If your team isn’t operating in a metrics-heavy industry (like sales or fulfillment), it can be hard to identify metrics that would be meaningful for your employees. Some data points feel inherently arbitrary and won’t motivate your team. Others might end up rewarding the wrong behavior.
Let’s say you’re a marketing manager looking for a way to reward the content writers on your team. You can’t place a reward on the total number of blog posts they write per week—because that would produce rushed, lower-quality content in the end. A words-per-hour metric would also be ineffective. Instead, try rewarding based on user time on page or total social media shares. Your writers will spend more time drafting quality work and less time trying to crank out volume.
To choose a good metric to incentivize, start with a behavior that is really important. Find a way to quantitatively measure this behavior. Then, meet with your employees to set goals that are attainable and exciting to them.
By setting program goals with your employees, you’ll be taking advantage of the “management by objectives” model and letting your team have ownership over their own rewards. This ensures a higher level of participation in your incentive program and makes sure everyone—not just the top 5% of performers—can get excited about earning the new incentives you’re going to offer.
A successful incentive program is built by using good metrics to measure employee performance—and results in even better metrics for your company at the end of the day.
When you incentivize employees based on important behaviors, and you offer high value rewards that everyone has a chance to earn, you can look forward to a whole slew of improved success points. Stronger employee engagement scores. Increased productivity. Higher revenue per FTE. Improved retention rates. Better employee satisfaction ratings.
You’ll also experience all the intangible, qualitative benefits of an improved company culture. Your employees will love coming to work every day. When they earn branded rewards, they’ll have instant bragging rights—so you’ll hear others asking, “How did you get that?” They’ll feel appreciated and respected for the hard work they do. And they’ll be excited to work even harder to earn the next reward, and the one after that, and the one after that.
Looking for an easier way to design a successful employee rewards program? Try partnering with Inproma. We have over 15 years of experience helping companies identify key performance metrics and implement incentive programs that produce incredible results. Let’s talk.