Let’s explore a very important and fundamental question about the employee performance management process. “Is it better to measure employee performance by time spent or by tasks completed?” In my opinion, the answer is unreservedly “Tasks Completed!” We should measure employee performance by the number and types of tasks completed correctly over a specified time interval. Thus, time should become of secondary importance to performance management rather than of primary importance as it is now used.
An ideal employee performance management process should measure both competency and productivity. Competency is best measured at the end of each task when a manager reviews it for correctness, and as such should be measured continuously. A direct measure of productivity should be based upon the total labor value of all tasks that can be completed correctly by a given employee over a given time interval. One such measure can be the difference between the total labor value of all tasks completed and the total employee compensation received. With these two measures of employee performance, each employee will have a clear and unambiguous understanding of where he stands at all times and can become the master of his own most important commodity; time.
Regrettably, most employee performance management processes are built upon some measurement of total time spent at work, total time spent on billable tasks, and total time spent on nonbillable tasks. We typically measure employee performance on an annual basis during formal reviews. Competency in these reviews is a secondary metric determined long after the tasks that can demonstrate it have been completed. We try to associate competency with types of projects completed and do so in a subjective manner. We also measure employee productivity in these annual reviews; but typically as an agglomerate of various subjective measures such as: opinions from direct supervisors; opinions from group members who work closely with the employee; profitability of projects worked on; or, overall productivity of the group with an assessment of each employee’s individual contribution. The result is at best a highly subjective and very approximate snapshot of any given employee’s performance on an annual basis.
So long as an employee is performing adequately, this highly subjective and very approximate measure of performance is sufficient. However, with an underperforming employee, there is a lot of potential gray area that opens our businesses up to the potential for costly legal action if that employee must be terminated.
In addition to the challenges just described in measuring employee performance, our reliance on time as the fundamental unit of measure sends a very powerful negative unspoken message to our employees:
“Your time spent on the job is most important! Make sure that you charge enough billable hours to meet your utilization goal each week.”
Unfortunately, when we measure billable time, we tend to get more billable time. If all employees are sufficiently motivated to optimize the use of their billable time, then such an outcome is entirely acceptable. However, we see ample evidence that such is not the case in normal businesses. Various research institutions have been tracking levels of employee engagement over the years and have concluded that only a small fraction of employees in a typical business are engaged. The vast majority of employees are disengaged or actively disengaged (www.gallup.com).
By changing the primary focus of our employee performance management process to the completion of tasks correctly and by assigning a labor value to each of these tasks, we can avoid the pitfalls just described above. If we track the types of tasks that have been completed correctly and require each employee to work their tasks until they are correct, we can measure competency directly and routinely throughout the year as each task is completed. If we track the labor values for all tasks that are completed correctly over a fixed time interval and use these in a direct comparison to an employee’s total compensation, we can unambiguously measure productivity.
Using this measure of productivity, an employee can be rewarded dollar for dollar when the labor value of all of his tasks completed correctly exceeds his total compensation. Employees that understand their level of competency by direct feedback from their manager at the completion of each task, that have an unambiguous measure of productivity, and that are rewarded directly for that productivity will be able to optimize the use of their time to achieve a desired level of compensation and/or amount of time off while significantly increasing their productivity and consequently the profitability of the business.
Glen R. Andersen, ScD, PE
Author of “The Optimum Manager” http://www.theoptimummanager.com
Available at https://www.smashwords.com/books/view/293552