If you want to improve your profitability you need to measure employee performance regularly, using effective standards of measurement.

Some activity, such as production work, is relatively easy to measure, but other activities are not. How do you measure the effectiveness of your secretarial or accounting staff, your graphic designer, or your IT manager? One way is to agree performance standards or quality of service criteria with them and review these on a regular basis. When setting such standards, however, bear in mind that inefficiencies in these areas often arise from not working smartly rather than not working hard.

Quality

Whoever you are measuring, it is important to consider quality as well as quantity. A production line worker might be achieving high output figures but skimping on quality, a secretary might spend hours filing but have an inefficient system, and a firm partner might be clocking up chargeable hours but producing little in the way of client satisfaction. Performance statistics are not much use if they conceal inefficiencies that will reflect badly on the bottom line in the future.

Profitability

Always keep an eye on profitability. Again, a production line worker's high output figures do not mean much if the goods he or she is producing are stacking up in the warehouse, a salesperson's figures are worth little if he or she is selling at narrow margins, and a partner's workload is not so impressive if he or she is concentrating on low value clients. You need to be smart to be profitable.