How to Track Employee Performance?

  Published : November 20, 2023
  Last Updated: May 22, 2024
How to Track Employee Performance


Employees are the life force of your business. They manage different aspects of your business operation so that your business can generate revenue. Without a proper employee management system, you won’t know the strengths, weaknesses, and contributions of your workforce. 

No insights equal no strategic resource planning. You’ll be shooting arrows in the dark. And that’s not good for your business. So, what exactly is employee performance tracking? Let’s take a look!

What is employee performance tracking?

Employee performance tracking tracking is the systematic process of monitoring, evaluating, and managing your employees’ work-related activities and behaviors. Monitoring work performance guides your business toward optimal productivity, efficiency, and excellence. 

In 2022, American businesses encountered huge productivity losses of $ 450 – $550 billion annually. This was because 52% of U.S. employees didn’t remain engaged in their jobs.

What are the benefits of managing employee performance?

Let’s take a detailed look at why you should track employee performance and how it’s linked to your business success.

Alignment with Organizational Goals

When employees understand how their individual efforts contribute to the company’s overarching objectives, they become more engaged and committed to achieving those goals. This alignment is the key to driving business success.

Identification of High Performers

High-performing employees are often the driving force behind innovation, customer satisfaction, and revenue growth. Employee performance management helps identify these stars in your organization. Recognizing and rewarding their contributions motivates them to excel further. It also sets a positive example for others to follow.

Team performance management template

Continuous Improvement

Employee performance management allows you to identify areas for improvement. Regular assessments and feedback enable employees to grow, enhance their skills, and contribute more effectively to the company’s success. In 2023, 94% of employees want proper feedback from them and an opportunity to enhance their performance level.

Data-Driven Decision-Making

Employee performance tracking provides valuable insights and data points that leaders can use to make informed decisions. Whether it’s optimizing workflows, reallocating resources, or fine-tuning strategies, data-driven decision-making is crucial in today’s fast-paced business world.

It ensures that investments are directed towards areas with the highest potential for return on investment, ultimately driving profitability.

Legal Compliance and Risk Mitigation

Monitoring work performance also aids in ensuring compliance with labor laws and regulations. It helps your business mitigate risks associated with employee disputes or legal issues, protecting the company’s reputation and financial stability.

Weekly employee performance tracking template

Competitive Advantage

Organizations that excel in employee performance management often gain a competitive edge. You can attract top talent, retain skilled employees, and adapt more effectively to market changes – all of which contribute to long-term business success.

Challenges in Employee Performance Tracking

When you initially start to track employee performance or introduce a new tool for employee performance management, you might face certain challenges. Knowing these challenges beforehand can help you prepare strategies and seamlessly handle them. 

Subjectivity vs. Objectivity

Striking the right balance between subjective observations and objective data can be challenging. How do you measure soft skills like teamwork or creativity objectively?

Privacy Concerns

Employees may be apprehensive about their privacy when it comes to performance tracking. Striking a balance between monitoring and respecting personal boundaries is crucial.

Data Overload

With the abundance of data available today, it’s easy to drown in information. Knowing what to track and what’s meaningful is an art in itself.

Resistance to Change

Employee resistance doesn’t mean your employees fear their work being monitored, but they fear their personal data might be used against them or tracking processes might disrupt their routines. Proper training and onboarding are essential to make them comfortable with new software.

How do we track employee performance?

Performance tracking shouldn’t be imposed or enforced but carefully implemented. So, how do you efficiently track employee performance? Here’s a step-by-step guide:

Define Clear Performance Metrics

You can’t just purchase a performance-tracking tool and start using it. You first need to determine what you want to measure.  

Key Performance Indicators (KPIs) for Different Roles

KPIs, as the name suggests, are performance-measuring elements for monitoring work performance. You need to have KPIs tailored to each role in your organization. 

For example, KPIs for your marketing team might be website traffic and conversion rates. For your sales team, it could be sales revenue and customer acquisition. 

SMART (Specific, Measurable, Achievable, Relevant, Time-bound) Goals

Random and unrealistic KPIs will get your business nowhere. In fact, it might put excessive stress on your employees, leading to increased resignation rates. 

It’s essential to make your goals SMART:

  • Specific: Define your goals with laser precision. Instead of “increase sales,” aim to “increase monthly sales by 10%.”
  • Measurable: Numbers don’t lie. Ensure your goals are quantifiable so you can track progress objectively.
  • Achievable: Dream big but stay grounded. Make sure your goals are realistically attainable with your available resources.
  • Relevant: Align your goals with your organization’s mission and vision. They should contribute directly to your success.
  • Time-bound: Set a clear timeline for achieving your goals. This adds urgency and accountability to your objectives.

Create a Performance Evaluation Framework

So now you know “what” you want to measure. In the next phase, you need to select methods or ways to track employee performance. 

Self-assessment vs. Manager Assessment

In the American work culture, the journey to self-improvement often begins with self-awareness. Employee self-assessment is a powerful tool that allows individuals to reflect on their performance, identify strengths and weaknesses, and set personal development goals.

However, it’s not a solo act. Manager assessments complement self-assessments, providing an external perspective and helping employees align their goals with organizational objectives. The synergy between self-assessment and manager assessment creates a dynamic framework for growth.

360-degree Feedback

360-degree feedback offers a comprehensive approach that gathers input from various sources: peers, subordinates, managers, and even clients or customers. This holistic perspective paints a full picture of an employee’s performance, highlighting blind spots, uncovering hidden talents, and fostering a culture of continuous improvement. 

360-degree feedback might be essential for sales, business development, customer management, and other client servicing teams.

Prohance Work Output Module: Employee Performance Management Template

Knowing the “what” and “how” of employee performance management isn’t enough if you want a smooth implementation. You also need to take care of the legal and ethical angles. 

Privacy and Data Protection

Americans are keenly aware of their rights, and organizations must respect them. When monitoring work performance, ensure that you:

  • Clearly communicate the data being collected and how it will be used.
  • Obtain explicit consent when collecting sensitive information.
  • Implement robust data security measures to safeguard employee data.

Compliance with Labor Laws

The United States has a complex web of labor laws and regulations, from the Fair Labor Standards Act (FLSA) to the Family and Medical Leave Act (FMLA). Ensuring compliance is not just a legal obligation but also a demonstration of ethical responsibility.

Stay informed about federal regulations and state labor laws, especially when it comes to working hours, overtime, and employee rights. Maintaining ethical practices during employee performance management is crucial for building trust with your employees.

Legal and Ethical Considerations

Enhance employee performance management with ProHance.

By the end of 2022, 80% (34 million) of US-based employees in digital and tech industries were working from home. 

It has been estimated that the number of employees working remotely will reach 63 million within the next 4 years. In such scenarios, you need an efficient and sophisticated system that can track employee performance. 

ProHance is a new-age software that streamlines the employee performance management process. It offers real-time data collection, advanced analytics, and customizable templates for different roles. 

With ProHance , you can make data-driven decisions, identify scope for improvement, and ultimately drive business success.

Also Read: Performance Review: How to Find the Best Employee Performance Review Software?

Frequently Asked Questions

Q1: Can I use employee performance management data to predict future success or identify leadership potential?

A: Absolutely! Employee performance data can provide valuable insights into potential future leaders. Look for patterns of consistently high performance, strong collaboration traits, and the ability to adapt to changing circumstances. These traits often indicate leadership potential.

Q2: Can performance tracking be used for employee development beyond annual reviews?

A: Absolutely! Performance tracking should be an ongoing, dynamic process. Beyond annual reviews, organizations can use tracking to identify opportunities for skill development, offer personalized training, and create individual development plans (IDPs) to nurture employee growth continuously.

Q3: Can performance tracking help with diversity and inclusion initiatives?

A: Absolutely! When you track employee performance, you get valuable data for diversity and inclusion efforts. By tracking metrics related to diversity and promoting unbiased evaluation processes, organizations can identify and address potential disparities and create a more inclusive workplace.

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