Setting Performance Standards

Evaluating Employee Performance

Ian Pratt

Determining what to Measure

In reality, selecting performance criteria comes down to one thing, determining how you will know if a job is being done well, identifying the elements that you are looking for from a job role and describing these elements specifically.

Example of Performance Standards that Sound Good

Setting Performance Standards

Example 1

A team leader might have a performance standard "holds their people accountable for delivering results". Great, however it is not specific and is difficult to measure.

To clarify you may add some guidelines or clarifications such as

  • you quickly address performance issues
  • you keep diary note records of your performance conversations
  • all employees who do not meet expectations 2 months in a row have a documented performance improvement plan in place

Example 2

A numeric target, such as “serving 6 customers per hour”, sounds good. However, if the employee does not control the rate of customer arrivals then the measure is not within the employee’s control, as there may be times when there are less than 6 customers per hour.

It can be a challenge to evaluate part time customer service employees who only work a few hours per day and tend to work off peak service times, as these employees cannot be compared to employees who work peak times for customer traffic.

Example 3

For a Sales Person: Meeting sale targets, may seem logical, however do you require a sales person to meet their annual sales target or all 12 monthly targets?

Considerations for Setting Performance Standards

When setting performance standards you will need to consider the following points, performance standards


Must reflect the performance of the individual, not the team or the business


Should be an absolute measure of performance not indicative of probable performance


Should be within the employee control to influence their performance


Should be free from measurement contamination. The measured result should be accurate

Other Considerations when Establishing Performance Standards

The measures should be motivational

Motivating people is a challenge, one that is help by developing performance standards that are motivational. You can ensure that your performance standards are motivation by avoiding these common killers of motivation.

If the goals are too soft

If the targets are too soft your people will have no need to stretch, you will quickly find that no one is motivated to achieve soft targets.

If it's too much of a stretch

If your people do not believe that they can achieve their goals, they will not be motivated to try.

Measures are too complicated

All to often measurement systems are too complicated and not understood by the employees that they are designed to measure. If your people do not understand how they are being measured you will not be able to motivate them to achieve the required level of performance.

Employees do not know what they are being measured on and how

Sometimes managers do not adequately communicate the performance measures to their people. Whilst they may communicate the performance standards once at the beginning of the year, they often do not revisit the measures and current results throughout out the year. Reinforcement is required to ensure your people understand their measures, and how they improve their results.

Setting a New Minimum Expectation

One way to determine a reasonable minimum expectation is to have no target. Instead calculate the average output for the team (only counting outputs that meet or exceed quality expectations) and make the average the new minimum for the next 12 months.

Then during the year you can measure individual performance and, instead of giving feedback how they are going to target, you can give them feedback on how they are going against the rest of the team, i.e. each employee is either high, middle or below average performer.

If any person in your team improves their performance then the average will also increase slightly.

A Final Note

When setting performance standards it is best if you are consultative with your people, listen to what they have to say and listen to their concerns.

Once you have worked with your people to develop the performance standards you should trial them for a few weeks, maybe six or eight weeks. During this trial period give your people feedback on their performance – according to the system you developed together.

Then, listen to your people again; see if they have any issues or if there is anything they don’t think is fair about the new performance standards. Assess their concerns and make changes where it makes sense to make the change.

You will get higher productivity if you let you people have some influence over the way that they are measured and what they are required to achieve than if you insist on developing the standards in isolation and trying to force compliance.

The Real World

Off course this is not always possible, you will find that there are areas where you cannot accurately measure the individual’s performance. Here are a couple of common examples

  • Adopting one-size fits all approach to establishing performance standards and as a result everyone in a certain job classification has the same set of performance standards. However it is common that there is role variation within a job classification

  • When using satisfaction or engagement survey results as part of their measurement systems the results are not provided to teams with less than, say, 12 responses. Organisations often use the department average for these team leaders

  • Often team leaders are measured on the level of unplanned absence in their team. Though occasionally you will have an employee who has a high level of unplanned absence and even with close management these employees still tend to have high level of unplanned leave.

    This one person with high unplanned leave contaminates the team leaders level of unplanned leave and can make a good leader look like an average leader.