How to Measure Performance

With fewer employees in their talent pool than large enterprises, measuring performance is particularly pertinent for small businesses. Job performance measurements are useful in determining appropriate employment decisions, such as retaining or promoting high-performing employees or terminating employees whose performance fails to meet your company’s expectations. Absent a reliable form of performance management and a vehicle for providing employees with feedback, your employees can become demotivated, according to Human resources expert Carla Johnson in a March 2001 article titled, “Making Sure Employees Measure Up,” for “HR Magazine.” Your ability to attract qualified applicants and keep valuable employees is diminished without a good performance measurement system, according to Johnson.


Small businesses often employ workers with broad skills sets that enable them to function in more than one role, such as an office manager who also handles certain human resources tasks. Therefore, it’s particularly important for small businesses to regularly measure job performance to assess whether employees in multiple roles are performing successfully. Poor performance or even mediocre job performance can significantly impact a small business. Performance measurements should address the employee’s functional expertise or job knowledge and her core competencies. The results of these measurements enable supervisors and managers to determine whether the employee’s performance meets the company’s expectations.

Job Knowledge

Based on the employee’s position, measuring job knowledge may require an assessment of technical, clinical or functional expertise. For example, performance criteria for registered nurses include evaluating their clinical expertise, such as inserting PICC lines for administering intravenous medication or the nurse’s skills in intubating patients with constricted airways. Likewise, an IT application developer might be measured by her knowledge of several mobile operating systems, such as Android, Blackberry OS and iOS.


Production is another factor for measuring employee performance, which is especially useful in manufacturing work environments where employees have productivity goals based on their output. This measurement is probably the easiest of all because employee productivity or output can be measured quantitatively based on the employee’s production speed or rate. For example, factory workers are evaluated according to their knowledge of parts, logistics and the assembly process, as well as how many units they can produce.

Core Competencies

Employees use core competencies to perform their job functions. Core competencies such as communication skills, problem-solving capabilities, leadership abilities and analytical and critical thinking processes are necessary for virtually any position. However, evaluating the employee’s job knowledge separately and apart from his core competencies can be ineffective in measuring overall performance. Employers should rate how well employees utilize their core competencies to perform their job duties. For example, evaluating a supervisor’s performance requires looking at his communication and leadership skills to determine how effective he is at training his team on the use of complex machinery. The supervisor’s core competencies are communication and leadership skills; the supervisor’s functional expertise is knowledge about various types of equipment. The two have to be evaluated together for a meaningful performance appraisal.

Professional Characteristics

Evaluating an employee’s professional traits and characteristics is difficult without defining what traits are most valuable to the organization. A small business might value dependability as one of the most important of employee characteristics because employees who work for small businesses may be responsible for one or more functional areas. When they are absent or otherwise can’t be depended on, then those areas of business suffer. An office manager who handles administrative tasks for the company as well as human resources functions must be dependable. If she’s isn’t, it affects the functionality of both HR activities as well as the overall handling of the company’s administrative functions.

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