Why Performance Analysis is Crucial for Your Business

performance analysis

Performance analysis is an essential aspect of managing any business and, if done correctly, can help management teams use data analysis to their advantage to further business growth. 

The adage “what gets measured gets improved” isn’t entirely true. What gets measured gives an empirical basis for improvement. I can stand on the scale and measure my weight every day, but if I change my eating habits despite being unhappy with what the scale is reading, that number will stay the same.

Metrics and measurements are valuable, but the ability to glean insights from numbers and implement changes accordingly is the true motivator of improvement. But before we jump into lean implementations of performance analysis in business, let’s first observe some of its benefits.

performance analysis

Who Benefits From Performance Analysis?

The knee-jerk answer here is that the business or organization benefits. The ability to hone insights into guided improvements for their members will result in increased productivity and smoother project execution. While this answer is correct, the truth is that the benefits from performance analysis methods are far more wide-reaching than just an organization’s bottom line.

Employees Grow from Performance Analysis

Quantifiable goals within your workflow allow team members to strive for completion markers. If a copywriter is tasked to “write blogs,” — there are many open-ended questions, primarily “how many blogs, and how often?”. 

When a metric goal is set — in this example, perhaps two blogs a week — not only is there a tangible goal set, but it allows for that employee’s time to be adequately budgeted leading up to that goal. Two blogs a week will enable the writer to sit back and say, “I’d like to have my first draft finished by mid-Tuesday, and to do so, I’d like my outline finished by mid-Monday.” A cascade of planning falls into place by setting a single, measurable end goal.

From here, employees can develop time management skills that help them thrive in their roles and flourish as individuals. Inversely, failing to meet the goals set for them allows them (as well as managers) to dive into daily workflow habits to see whether it’s the goal or the process that needs adjusting, which leads us to our second benefit.

Performance Analysis Sets Clear Expectations

Quantifiable performance goals with clearly set deadlines mean there’s no guesswork as to what’s expected from your team members, so credit and feedback are distributed fairly and predictably. Clearly defined and managed expectations drive performance reviews, workflow adjustments, and promotions.

By no means is this advocating to replace the human and interpersonal elements of collaboration and employment, but performance metrics create transparent expectations from which assessment can be derived, even if the metrics don’t determine all of these decisions within your organization by default.

A Better Process Means Better Results

Suppose the individual goals of employee workflows are clearly set and expertly met using employee growth and effectively embracing time management skills. In that case, the sum of these parts as a whole improves. First and foremost, the business succeeds, and motivated employees can stake their own in the individual initiatives that lend to the more significant objective. But let’s take a moment to consider outside of the business.

If your organization is a product company, an effective performance analysis process leads to a better product that can iterate, adapt, move, and evolve to match your customers’ needs and boost their overall satisfaction. If your team is a service company, your intimate client relationships will flourish, and referrals will come naturally as your projects move at predictably healthy paces. So, whether you sell kid’s toys on an eCommerce store or intend to start a podcast, you must ensure everyone is on the same track.

For instance, if your company is involved in software product development services, an effective performance analysis process ensures that the software products being developed meet the needs and expectations of customers, resulting in high-quality and user-friendly solutions.

Either way, project management efforts improve internally, as performance analysis boosts employee morale and growth and helps the business hone workflow processes. This means future initiatives can be planned with improved resource implementation accuracy and fewer bumps in the road.

Implementing Types of Performance Analysis in your Workflow

Performance analysis

Like most types of implementation in business, a gradual, goal-based rollout of performance analysis is often the best approach, as it helps everyone identify what they wish to track and how they wish to track if, not to mention makes introducing the concept to employees slightly more digestible from get-go. 

Identify Key Performance Indicators (KPIs)

You’ll want to recognize what will be tracked so it can be measured effectively. Deciding what you want to track is one of the most important parts of performance management. Fortunately, this can be done with help from a sample KPI library, allowing you to choose from examples of other metrics from different departments and industries. While the tasks will certainly vary for every role in your organization, how you track it might as well. Our example laid out the KPI of completed tasks, specifically two blogs per week.

Establish a Baseline for Performance Analysis 

This phase is focused on creating a reasonable goal for that role as it fits into the context of the company. Your understanding of the role may help with the initial goal for the KPI, but standardizing this amongst the members of your team in this role will assist in finding a number that is productive and inspiring without risking burnout.

Calibrate the Baseline

After a couple weeks to a month of testing the KPI baseline, sit down with the members of your team to review not only their metrics, but the KPIs themselves. You might find that most of your employees in a role can hit a certain number (two blogs) more comfortably than others, but perhaps there’s a slow writer who puts out extremely detailed, quality content. This may be a basis for adjusting that teammate’s personal goal based on how they work and the quality of their output.

If all of your employees are struggling to meet the KPIs, or the ones that meet them successfully are able to do so by sacrificing quality, then you might use this as an opportunity to adjust the target more broadly.

Manual performance analysis methods can be both time-consuming and prone to errors in today’s fast-paced and highly competitive business environment. However, using an AI writer to create content is always an option.

However, it’s important to consider potential risks associated with using generative AI, such as maintaining authenticity, avoiding biases, and ensuring accurate information dissemination.

Celebrate Success and Understand Performance Analysis Shortcomings

The point of analytics is not to reduce employees to a numerical reasoning test of output, rather to give performance goal examples to strive for. Success, whether it be first time or routine, is a reason to celebrate as a positive reinforcement towards a continued commitment of these goals. Celebrations can come in many forms (big or small), but such team-facing acknowledgments help establish visible patterns by which promotions are earned transparently and through indisputable meritocracy.

Similarly, if an employee is coming up shy–especially when they used to hit their baseline routinely–it may be a good time to have a discussion regarding what’s changed in their workflow and why. There’s a possibility that their performance may be currently impacted by forces in their day-to-day life, so this could also be an opportunity to better understand your employee’s personal plights or at least gain trust to have a conversation based around the fact that they’re facing challenges, even if they don’t wish to elaborate on what they might be.

Lean Implementation of Performance Analysis

Utilizing enterprise project management software such as Nifty will help you and your team start off with the meaningful basics of performance analysis software. Alternatively, you can use free tools like Google Sheets to create dashboards, but this is harder.

One way to start is perhaps the simplest KPI out there: the number of tasks assigned versus amount of tasks completed.

performance analysis outcomes

Assigning tasks with deadlines to members of your team on the project level will let them know what they’re responsible for on a per-project basis. Members of the team will be able to reference all of their assignments from their My Tasks screen to give them extreme actionability without needing to visit every project individually.

As a manager, you can track (and even export reports) open and completed tasks from Workloads to gauge whether or not members of your team are tackling their weekly assignments or if the volume of tasks assigned needs to be calibrated.

Resource-Driven Performance Analysis

The lean methodology above is a great way to get a framework in place for setting and measuring expectations, but the Task Volume KPI has a notable blindspot being that two tasks might not require nearly the same amount of work.

In this case, the Volume KPI belies the effort it might take for one employee to complete their four rigorous tasks when another employee has four fairly simple tasks.

To account for this, Nifty offers a resource methodology called Story Points. A single point represents a day of work and will actually reflect as such on a task’s duration in the Workloads tool.

Instead of tracking the volume of tasks, we can now track how many points a member of my team has assigned to them any given week. We might deem a one-point task to be high-velocity, whereas a three-point task is more likely to span multiple days.

Tracking the amount of points assigned and completed in the Workloads screen and reports now adjusts for the amount of time dedicated to the tasks instead of tracking pure task volume.

In Summary

Performance analysis isn’t meant to be some organizational boogeyman to reduce employee output into a metric. Instead, this device is meant to give context to employees’ workloads while providing transparency behind promotion decisions and teammate recognition.

The more collaborative the KPI setting process is with the members of your team, the more likely they’ll buy into the challenge instead of balking at what could feel like increased oversight.