How to Measure Employee Performance: A Guide for UK Businesses

Rachel Greenway
Last updated on December 08, 2023

Behind every successful UK company is a powerful workforce propelling it forward. 

Without this life force, it’s difficult for any business to survive (let alone thrive). So it should come as no surprise that getting ahead in today’s economy comes down to how you bring the best out of your people. Key to this is how you measure employee performance. 

More than just a ‘tick box’ exercise, measuring employee performance involves helping your people improve their skills and abilities so they can better fulfil their duties and roles. This ongoing process should involve periodic check-ins with personnel to determine what’s working (or not working), all while planning for the future. 

Let’s look at how to measure employee performance in the UK and why it’s vital to any People strategy. Let’s also explore some KPIs and metrics used to measure employee performance and one of the top methods for setting fair, performanced-based objectives.  

But first…

What is employee performance? 

As we touched on briefly just now, employee performance measures how well an employee fulfils their duties and responsibilities and is a crucial aspect of performance management

You can think of employee performance measurement kind of like a GPS for your team members. The metrics are helping them to find a path to success within your business. Along with meeting KPIs or OKRs, an employee’s behaviour, general demeanour, and attitude can also form part of their performance. 

The impact of performance, of course, extends well beyond just the individual. Leaders are invested in performance because it says much about a business and its health. More importantly, performance has a direct impact on the results these leaders hope to achieve.

All that said, performance is and always will be a people business. At the heart of any good performance program is great people enablement. When measuring employee performance is in the interest of helping people reach their potential, it always leads to the most positive, organisation-wide effects, as we’ll expand on shortly. 

So, what are the benefits of measuring employee performance?

As we’re beginning to explore, the results of employee performance measurement are twofold: for one, you get to keep hiring, retaining and developing the best talent. But this is only one part of the equation; you’re also helping personnel evolve in their roles, finding their own sense of purpose and fulfilment along the way. In addition to this, performance measurement:

  • Helps to identify strengths and weaknesses - We all have blind spots. A sound performance measurement process helps shed light on areas where team members shine and other spots where they need to grow a little more.

  • Pushes you to set clear expectations - Ever been in a situation where you didn't know what was expected of you? Not fun, right? Performance measurement helps to set clear expectations, ensuring everyone has a firm grasp on their roles and responsibilities.

  • Improves communication - Think of it as a two-way street. Regular performance check-ins open up channels for honest, constructive communication between employees and managers. 

  • Boosts morale and motivation - Performance measurement also provides space to acknowledge a job well done. Recognition boosts morale and motivation, leading to happier, more productive teams that have a strong sense of achievement.

And what’s in it for my business? 

Well, besides having a well-oiled, high-performing team, there are a few perks for management and leadership, too. 

For one, measuring employee performance results in better decision-making. Armed with accurate performance data, you can make better calls about who to train further, who to promote or who it might be time to let go of. 

Increased employee retention is another, given that happy employees are more likely to stick around. By addressing concerns and recognising achievements, you create a positive work environment that fosters loyalty.

Finally, you’re future-proofing your organisation. Because when everyone knows what's expected and feels valued, productivity soars. Plus, you get to identify and nurture talent within your team, which can help you weather the challenges of tomorrow.

In short, all of this leads to better deployment of people power at every level of your organisation.

The three pillars of performance measurement 

Unfortunately, there’s no one-size-fits-all approach for how to measure employee performance in the UK. Every role, and organisation for that matter, is different, so the metrics you’ll use to measure employee performance will vary. 

In general, however, there are three broad pillars under which we can sort criteria to measure employee performance, these: 


A core key indicator, quality of work provides a basis for assessing other performance aspects. With it, all other elements fall into place. Without it, it can be hard to tell whether or not the basic effort an employee puts in actually results in work that meets a specific standard. 

Efficiency and speed

Once the quality of work is established, then comes efficiency and speed. This usually has to do with how much an employee is able to accomplish in an average week, month or quarter and whether this meets expectations. 

Metrics within this bucket tend to be more numerical but can also deal with whether deadlines are being missed or corners are being cut. It's worth mentioning efficiency is also a key organisational metric - is your company getting the most output it can for the least amount of cost? 

Trust and Autonomy 

Finally, there are ingredients that boil down to trust and consistency. In other words, does the employee you’ve hired work independently enough that you don’t have to step in and micromanage tasks? Furthermore, do they embody the company values so you can rely on them to reflect your brand well? If the answer is yes, then you’re dealing with a high standard of performance. 

measuring employee performance at work

A word on Objectives and Key Results (OKR)s

While there are different methods for measuring employee performance, the Objectives and Key Results framework has risen to the top over the past few years, particularly in the UK.

Pioneered by John Doeer and more commonly referred to as OKRs, this goal-based performance measurement strategy has been embraced by organisations like Google.

Unlike Key Performance Indicators, which simply focus on tracking performance, OKRs involve a framework for setting and achieving goals. Individual objectives are tied with key results, which are then woven into the greater fabric of the organisation's objectives and goals, creating a more holistic way to assess performance. 


Performance Measurement: Your How-To Guide 

Now that we've established why measuring performance is essential and how to go about it, let's delve into the nitty-gritty of how employee performance is measured and managed.

1. Set Clear Goals and Expectations

Imagine trying to score a goal without knowing where the goalpost is. It's the same with work. Clearly defined goals and expectations give your employees a target to aim for. Be specific, measurable, and realistic when setting these goals.

2. Regular Check-Ins

Performance measurement isn't a once-a-year affair; it's an ongoing process. Regular check-ins, or performance reviews allow employees to discuss their progress, voice concerns, and seek guidance. Only by engaging in this at set intervals will you see any meaningful growth.  

3. Use Key Performance Indicators (KPIs)

KPIs are the vital signs of your organisation. They help measure specific aspects of performance that align with your overall goals. And, as we touched on, whether it's sales targets, project deadlines, or a customer satisfaction score, using KPIs to measure employee performance can help managers and their direct reports stay on top of their progress. 

4. 360-Degree Feedback

Let's face it; we all have blind spots. 360-degree feedback involves collecting input from peers, subordinates, and supervisors to provide a comprehensive view of an employee's performance. It's like giving employees multiple mirrors they can look through to better understand their performance. 

5. Recognition and Rewards

As we explored earlier, you can’t underestimate the power of recognition. Whether it's a simple shout-out in a team meeting or a more formal recognition program, acknowledging hard work goes a long way.

6. Professional Development Opportunities

No one wants to be stuck in a dead-end job. Providing opportunities for employees to grow and challenge themselves as professionals not only benefits them but also adds value to your team. 

7. Document and Track Progress

Keep a record of achievements, areas for improvement, and any feedback received during check-ins. This documentation serves as a valuable resource during formal performance reviews and helps track the growth of each team member.

8. Continuous Feedback Loop

Finally, you can think of performance measurement as a conversation, not a monologue. Encourage open communication, ask for feedback on your feedback, and be willing to adapt your approach based on the evolving needs of your team.

Software can help you measure employee performance 

Of course, technology can only take you so far. At the end of the day, sound employee performance measurement rests on your people’s ability to work well together and support each other along the journey of personal and professional development. 

But that doesn’t mean it can’t help. Employee performance review software can, in fact, facilitate performance measurement. The result? Conversations between managers and employees become supported and enriched by data, which leads to more meaningful change and action. 

Remember, it's not about creating a culture of surveillance but one of support and growth. It’s all in how you use and deploy technology in a way that feels safe and trustworthy so staff are happy and willing to engage. 

If you’d like to explore the option of employee review software further, we’d be happy to talk you through PayFit’s. Simply book a demo to speak to one of our friendly product specialists.  

Want to experience the future of payroll?
You may also like...
festival of work crowd 2024

CIPD Festival Of Work 2024 - Learnings & Recap

Read the article

Employee Retention Strategies Explored for UK HR Teams

Read the article
View of the expense management function

More Than Just Payroll - Expense Management With PayFit

Read the article
national insurance for company directors

National Insurance For Company Directors - A Guide

Read the article
value of HR

Demonstrating The Value Of HR & Getting The Budget You Want

Read the article

What is Holiday Entitlement? UK Employer’s Guide

Read the article