Subscribe to Entrepreneur for $5
Subscribe

How to Find and Assign a Production Statistic to Every Single Employee — Even the CEO

Using statistics to measure employee performance goes a long way in boosting your company's production. Here's how to do it.

By
Opinions expressed by Entrepreneur contributors are their own.

When you hire someone into your company, they’re supposed to add value in some way. After all, you’re not paying them to sit around and watch YouTube videos. But how can you really see what everyone is worth in a way that lets you justify every penny you put into them? Perhaps even more importantly, how do you communicate that value in a way that helps everyone steer the company in the direction you want?

Related: How to Manage Your Organization Solely Through Performance Statistics

Breaking goals down with the OKR framework

Probably the simplest way to look at the value you or someone else adds to your business is to find and assign one or more production statistics. To do that, you can turn to the Objective and Key Results (OKR) framework. This is based on the initial work of Andy Grove, with John Doerr expanding and solidifying Grove’s ideas.

The first step of this framework is to set a goal. For example, if you’re a CEO, then a goal might be to increase the company’s profit or expand growth.

Next, find some metrics that let you measure the progress being made toward that goal over time. If you’re honing in on market penetration, for example, then a key result could be the percentage of the market you have. Elements like earnings per share (EPS) and annual recurring revenue (ARR) are examples of performance metrics, too. You can use as many metrics on a dashboard as you want to monitor progress on a single objective, but the big idea is that you have a way to quantify what you’re doing and run based on the results. 

This applies to anyone at every level of the company — a salesperson would likely track dollar value sold, IT might track help desk tickets successfully closed, a content creator could track number of blog posts published, and so on. Tracking these on a weekly or monthly basis, depending on the metric, is of vital importance.

Once you have everyone’s objectives and key results decided, you need a way to keep everything organized. This is where a software-based OKR management system comes in. You have many choices here, but an ideal system will help you come up with good goals and make it easy to track and communicate them.

OKRs versus KPIs, and why the difference matters

As you use this process, it’s important to realize that there’s a difference between OKRs and key performance indicators (KPIs). KPIs just give you a snapshot of where you’re at on something. You might have 100 sales one month and 150 the next, for instance. They can clue you in on the immediate health of the company and let you objectively analyze what’s working and what’s not, which has its own value. But an OKR always starts with a clear Objective “as measured by” its Key Results. So, when you use OKRs, every employee has definite direction regarding how and what they need to produce to support the company’s growth. 

This might seem like a superficial difference, and there’s a relationship between KPIs and OKR in that KPIs can often be a jumping-off point for building OKRs. But when you’re clear about what you want to achieve and everyone knows what you stand for, it’s easier for them to decide whether their goals align with yours. 

When you can show employees how they fit into the grand scheme of things and that they really are bringing something to the table, they usually feel more included and like they make a difference. They not only know what their purpose is, but they can also hold themselves accountable through their key results. 

That usually means they work better and stick with you for the long haul. It’s as much about morale and motivation as it is about a finished product. And, it gives you something to base production bonuses on, if that’s a way you like to motivate employees at your business.

Related: How Google and Others Succeed with OKRs

With clear goals and quantifiable metrics, everyone knows their worth 

Every person on your payroll is there for a reason. It’s easier to see the value someone has when you use the OKR framework, which uses production metrics to quantify whether the employee is progressing toward specific goals. This principle applies from the mailroom all the way up to the boardroom. So, even though you might measure different points based on a person’s role or department, you should have at least one metric for everyone on your team. The more you work together to decide what goals to aim for, and the more you break down exactly what needs to be measured to prove that progress is happening, the faster everyone will move forward for the collaborative success you want.

Stu Sjouwerman

Written By

Entrepreneur Leadership Network Contributor

Stu Sjouwerman (pronounced “shower-man”) is the founder and CEO of KnowBe4, Inc., which offers a platform for security awareness training and simulated phishing.